Medicare Program; Contract Year 2021 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program, 33796-33911 [2020-11342]

Download as PDF 33796 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 417, 422, and 423 [CMS–4190–F] RIN 0938–AT97 Medicare Program; Contract Year 2021 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS). ACTION: Final rule. AGENCY: This final rule will revise regulations for the Medicare Advantage (MA or Part C) program, Medicare Prescription Drug Benefit (Part D) program, and Medicare Cost Plan program to implement certain sections of the Bipartisan Budget Act of 2018 and the 21st Century Cures Act. In addition, it will enhance the Part C and D programs, codify several existing CMS policies, and implement other technical changes. DATES: Effective Date: These regulations are effective August 3, 2020. Applicability Dates: Except for §§ 422.166(a)(2)(i), 423.186(a)(2)(i), and 422.514(d)(1) and (2), the provisions in this rule are applicable beginning January 1, 2021. The changes to §§ 422.166(a)(2)(i) and 423.186(a)(2)(i) are applicable beginning January 1, 2022. The provisions of § 422.514(d)(1), are applicable beginning January 1, 2022. The provisions of § 422.514(d)(2) are applicable beginning January 1, 2023. SUMMARY: khammond on DSKJM1Z7X2PROD with RULES2 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. Melissa Seeley, (212) 616–2329—D– SNP Issues. SUPPLEMENTARY INFORMATION: CMS intends to address all of the remaining proposals from the February 2020 proposed rule in subsequent VerDate Sep<11>2014 00:36 Jun 02, 2020 Jkt 250001 rulemaking. Therefore, CMS plans to make any provisions adopted in the subsequent, second final rule, although effective on or before January 1, 2021, applicable no earlier than January 1, 2022. Notwithstanding the foregoing, for proposals from the February 2020 proposed rule that would codify statutory requirements that are already in effect, CMS reminds readers and plan sponsors that the statutory provisions apply and will continue to be enforced. Similarly, for the proposals from the February 2020 proposed rule that would implement the statutory requirements in sections 2007 and 2008 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (hereinafter referred to as the SUPPORT Act), CMS intends to implement these statutes consistent with their effective provisions. I. Executive Summary and Background A. Executive Summary 1. Purpose The primary purpose of this final 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 before the contract year 2021 MA plan bids (due by statute on the first Monday in June): • The Bipartisan Budget Act of 2018 (hereinafter referred to as the BBA of 2018) • The 21st Century Cures Act (hereinafter referred to as the Cures Act) The rule also includes a number of changes to strengthen and improve the Part C and D programs, codifies in regulation several CMS interpretive policies previously adopted through the annual Call Letter and other guidance documents, and implements other technical changes. We took a measured approach to review each provision proposed and focused finalizing in this first final rule those most helpful for bidding, those that address the Coronavirus Disease (COVID–19) pandemic and public health emergency, as well as those topics on which issuing a final rule now would advance the MA program. While we intend to address the remaining proposals from the February 18, 2020, proposed rule (85 FR 9002) not included in this final rule in subsequent rulemaking, we are focusing in this final rule on more immediate regulatory actions. CMS plans to make any provisions adopted in the subsequent, second final rule, although effective on or before January 1, 2021, applicable no earlier than January 1, PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 2022. Notwithstanding the foregoing, for proposals from the February 2020 proposed rule that would codify statutory requirements that are already in effect,1 CMS reminds readers and plan sponsors that the statutory provisions apply and will continue to be enforced. Similarly, for the proposals from the February 2020 proposed rule that would implement the statutory requirements in sections 2007 and 2008 of the SUPPORT Act, CMS intends to implement the statute consistent with its effective provisions. 2. Summary of the Major Provisions a. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 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 codifying this change with revisions to §§ 422.50(a)(2), 422.52, and 422.110. b. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 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 coverage for organ acquisitions for kidney transplants from the Medicare benefits an MA plan is required to cover for an MA enrollee, 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 1 These include the following BBA of 2018 provisions: Improvements to Care Management Requirements for Special Needs Plans (SNPs); Coverage Gap Discount Program Updates; and Part D Income Related Monthly Adjustment Amount (IRMAA) Calculation Update for Part D Premium Amounts. E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations acquisitions for kidney transplants described in section 1852(a)(1)(B)(i) of the Act. We are finalizing changes to our regulation at § 422.322 in accordance with these new statutory requirements. khammond on DSKJM1Z7X2PROD with RULES2 c. Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) Benchmarks (§§ 422.258 and 422.306) Consistent with how 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 are finalizing changes to our regulations at §§ 422.258(d) and 422.306 in accordance with these new statutory requirements. d. Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186) In the Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-forService, the Medicare Prescription Drug Benefit Programs, and the PACE Program Final Rule (CMS–4182–F) (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 §§ 422.160 through 422.166 and §§ 423.180 through 423.186. We have stated 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, we are finalizing the increased weight of patient experience/ complaints and access measures from 2 to 4. We are also finalizing our proposal to directly remove outliers prior to calculating the cut points to further increase the predictability and stability of the Star Ratings system, but we are delaying the application of outlier deletion until the 2022 measurement year which coincides with the 2024 Star Ratings produced in October 2023. We are also finalizing removal of the Rheumatoid Arthritis Management measure. Finally, we are finalizing the update to the Part D Statin Use in Persons with Diabetes measure weighting category. Unless otherwise VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 stated, data will be collected and performance measured using these rules and regulations for the 2021 measurement period and the 2023 Star Ratings. The remaining Star Ratings provisions of the proposed rule will be addressed later and, therefore, are not being finalized in this rule. Those provisions include codifying additional existing rules for calculating MA Quality Bonus Payments ratings, implementing updates to the Health Outcomes Survey measures, adding new Part C measures, clarifying the rules around consolidations when data are missing due to data integrity concerns, modifying the extreme and uncontrollable circumstance policy for multiple year-affected contracts and to clarify rules when data are missing due to data integrity concerns, and additional technical clarifications. e. Medical Loss Ratio (MLR) (§§ 422.2420, 422.2440, and 423.2440) We are finalizing our proposal to amend the MA medical loss ratio (MLR) regulation at § 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 (including under capitation contracts with physicians) for covered services furnished to all enrollees under an MA contract. This amendment will also 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 § 422.2. We are finalizing our proposal to codify in our regulations at §§ 422.2440 and 423.2440 the definitions of partial, full, and non-credibility and the credibility factors that CMS published in the May 2013 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). 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 codify these definitions and factors in the applicable regulations. Additionally, we are finalizing our proposal to amend § 422.2440 to provide for the application of a deductible factor to the MLR calculation for MA medical savings account (MSA) PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 33797 contracts that receive a credibility adjustment. The deductible factor serves as a multiplier on the applicable credibility adjustment. This additional adjustment for MA MSAs is appropriate because 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. This is the case because high-deductible health plan enrollees’ medical expenses must exceed a higher threshold before the plan begins to incur claims costs that can be included in the MLR numerator. The deductible factor reduces the risk that an MSA contract will fail to meet the MLR requirement as a result of random variations in claims experience. We are finalizing our proposal to adopt the same deductible factors that apply under the commercial MLR regulations at 45 CFR part 158. f. Medicare Advantage (MA) and Cost Plan Network Adequacy (§§ 417.416 and 422.116) We are strengthening network adequacy rules for MA plans by codifying our existing network adequacy methodology and finalizing policies that address maximum time and distance standards in rural areas, telehealth, and Certificate of Need (CON) laws. The authorization of additional telehealth benefits pursuant to the BBA of 2018 incentivizes new ways for MA plans to cover beneficiary access to 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. In order to expand access to MA plans where network development can be challenging, we are reducing 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) from 90 percent to 85 percent in order for an MA plan to comply with network adequacy standards. Also, MA plans will be eligible to receive a 10percentage point 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, Neurology, Ophthalmology, Allergy and Immunology, Nephrology, Primary Care, E:\FR\FM\02JNR2.SGM 02JNR2 33798 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Gynecology/OB/GYN, Endocrinology, and Infectious Diseases. Additionally, MA organizations may also receive a 10percentage 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 anticompetitive restrictions, that limit the number of providers or facilities in a county or state. We solicited comments from stakeholders on various aspects of our proposal, which informed the network adequacy methodology adopted in this final rule. 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 codifying a number of SEPs that we have adopted and implemented through subregulatory guidance as exceptional circumstances SEPs. Codifying our current policy for these SEPs provides transparency and stability to the MA and Part D programs by ensuring that these SEPs are known and changed only through additional rulemaking. Among the finalized SEPs are the SEP for Government Entity-Declared Disaster or Other Emergency, 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 establishing 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. 3. Summary of Costs and Benefits Provision Description Impact Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110). CMS is codifying requirements under section 17006 of the Cures Act. Effective for the plan year beginning January 1, 2021, CMS is removing the prohibition on beneficiaries with ESRD enrolling in an MA plan. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 422.322). CMS is codifying requirements under section 17006 of the Cures Act. Effective for the plan year beginning January 1, 2021, CMS is finalizing that MA organizations will no longer be responsible for costs for organ acquisitions for kidney transplants for their beneficiaries. Instead, Medicare FFS will cover the kidney acquisition costs for MA beneficiaries, effective 2021. CMS is codifying requirements under section 17006 of the Cures Act. Effective for the plan year beginning January 1, 2021, CMS is removing costs for organ acquisitions for kidney transplants from the calculation of MA benchmarks and annual capitation rates. CMS is finalizing an increase in the weight of patient experience/complaints and access measures. CMS is also finalizing the use of Tukey outlier deletion, which is a standard statistical methodology for removing outliers, to increase the stability and predictability of the star measure cut points. However, the application of Tukey outlier deletion will be delayed until the 2024 Star Ratings. To estimate the impact, we used a pre-statute baseline. The analysis shows that removing the prohibition for ESRD beneficiaries to enroll in MA plans results in net costs to the Medicare Trust Funds ranging from $23 million in 2021 to $440 million in 2030. To estimate the impact, we used a pre-statute baseline. This analysis shows that 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. Exclusion of Kidney Acquisition Costs from Medicare Advantage (MA) Benchmarks (§§ 422.258 and 422.306). Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186). khammond on DSKJM1Z7X2PROD with RULES2 g. Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62, 422.68, 423.38, and 423.40) VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 To estimate the impact, we used a pre-statute baseline. This analysis shows that 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. Updating the patient experience/complaints and access measures weight creates a cost which is offset after the first year by using the Tukey outlier deletion. The net cost to the Medicare Trust Fund from the increased weight is $345.1 million in 2024; the net savings from both the increased weight and Tukey outlier deletion will grow over time reaching $999.4 million by 2030. The net reduction in spending to the Medicare Trust Fund through and including 2030 is $4.1 billion. E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Provision Description Impact (MLR) and CMS is finalizing our three proposed amendments to the Medicare MLR regulations. (1) We will allow MA organizations to include in the MLR numerator as ‘‘incurred claims’’ all amounts paid for covered services, including amounts paid to individuals or entities that do not meet the definition of ‘‘provider’’ at § 422.2. (2) We also are codifying our definitions of partial, full, and noncredibility and credibility factors that CMS published in the May 2013 Medicare MLR final rule (78 FR 31296) for MA and Part D MLRs. (3) We are finalizing our proposal to apply a deductible factor to the MLR calculation for MA MSA contracts receiving a credibility adjustment. The deductible factor, which functions as a multiplier on the credibility adjustment factor, is calibrated so that the probability that a contract will fail to meet the MLR requirement is the same for all contracts that receive a credibility adjustment, regardless of the deductible level. Medicare Advantage (MA) and Cost Plan Network Adequacy (§§ 417.416 and 422.116). CMS is—(1) strengthening network adequacy rules for MA and cost plans and to make them more transparent to plans by codifying our existing network adequacy methodology and standards, with some modifications; (2) allowing MA plans to receive a 10-percentage point credit towards the percentage of beneficiaries residing within published time and distance standards when they contract with certain telehealth providers; (3) allowing MA organizations to 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 where CMS has not already customized the standards for that area; and (4) reducing the required percentage of beneficiaries residing within maximum time and distance standards in certain county types (Micro, Rural, and CEAC). CMS is codifying a number of SEPs adopted and implemented through subregulatory guidance as exceptional circumstances SEPs. CMS is also establishing two new 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. (1) Our change to the type of expenditures that can be included in ‘‘incurred claims’’ will have neutral dollar impact on the Medicare Trust Fund. These provisions will result in a transfer of funds from the Treasury, through the Medicare Trust Fund, to MA organizations. This transfer will take the form of a reduction in the remittance amounts withheld from MA capitated payments. The amount of this transfer is $35 to $55 million a year, resulting in plans obtaining $455 million over 10 years. (2) Codifying the definitions of partial, full, and non-credibility and the credibility factors is unlikely to have any impact on the Medicare Trust Fund. (3) The deductible factor to the MLR calculation for MA MSA contracts is estimated to result in a gradually increasing cost to the Medicare Trust Fund of $1 to $6 million per year, arising from the Trust Fund paying for benefits due to expected increased enrollment, and will result in a $40 million cost through, and including, 2030. Changes to network standards are unlikely to have any impact on the Medicare Trust Fund. Medical Loss (§§ 422.2420, 423.2440). Ratio 422.2440, Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62, 422.68, 423.38, and 423.40). khammond on DSKJM1Z7X2PROD with RULES2 33799 B. Background We received approximately 490 timely pieces of correspondence containing multiple comments on the provisions implemented within this final rule from the proposed rule titled ‘‘Medicare and Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly’’ which published February 18, 2020, in the Federal Register (85 FR 9002). Comments were VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 This provision codifies existing practice since MA organizations and Part D plan sponsors are currently assessing applicants’ eligibility for election periods as part of existing enrollment processes. Consequently, the provision will not have added impact. submitted by MA health plans, Part D sponsors, MA and beneficiary advocacy groups, trade associations, providers, pharmacies and drug companies, states, telehealth and health technology organizations, policy research organizations, actuarial and law firms, MACPAC, MedPAC, and other vendor and professional associations. The proposals we are finalizing in this final rule range from minor clarifications to more significant modifications based the comments received. As noted previously, we intend to address the proposals from the February 2020 proposed rule that are PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 not included in this final rule in subsequent rulemaking. Summaries of the public comments received and our responses to those public comments are set forth in the various sections of this final rule under the appropriate headings. We also note that some of the public comments received for the provisions implemented in this final rule were outside of the scope of the proposed rule. For example, we received comments about how much MA organizations pay network providers, and comments that recommend CMS adopt completely new Star Ratings measures or change HEDIS E:\FR\FM\02JNR2.SGM 02JNR2 33800 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations measures during the COVID–19 pandemic. CMS did not make any proposals in the February 2020 proposed rule on these topics, and as such, those out-of-scope public comments are not addressed in this final rule. However, we note that in this final rule we are not addressing comments received with respect to the other provisions of the February 2020 proposed rule that we are not finalizing at this time. Rather, we will address these comments in subsequent rulemaking, as appropriate. khammond on DSKJM1Z7X2PROD with RULES2 II. Implementation of Certain Provisions of the Bipartisan Budget Act of 2018 A. Special Supplemental Benefits for the Chronically Ill (SSBCI) (§ 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 proposed 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 § 422.102(f) to implement section 1852(a)(3)(D) of the Act. 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 providing these benefits to eligible chronically ill enrollees. We refer to these benefits hereafter as Special Supplemental Benefits for the Chronically Ill (SSBCI). The heading for 2 https://www.govinfo.gov/content/pkg/FR-201804-16/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. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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, we interpret the intent of this new category of supplemental benefits as enabling MA plans to better tailor benefit offerings, address gaps in care, and improve health outcomes for the chronically ill enrollee 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, at § 422.102(f)(1)(i), we proposed to codify this definition of a chronically ill enrollee. Section 1859(f)(9) of the Act requires us to convene a panel of 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 enrollment in 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. We proposed that 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. We explained that our proposal was based on our policy goal of allowing MA plans the flexibility to continue to innovate around providing care for their specific plan populations. This includes targeted chronic conditions. We stated that we recognize that there may be some conditions or a subset of conditions in a plan population that may meet the statutory definition of a chronic condition (for purposes of the statutory definition of a chronically ill enrollee), but may not be present on the list. To encourage plans PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 to identify needs within their unique plan population and to avoid preventing a plan from addressing a condition or need in their population that may not be on the list, we proposed regulation text permitting us to publish a nonexhaustive 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. This was proposed at § 422.102(f)(1)(i)(B). As we explained in the proposed rule, we did not propose that MA plans be required to submit to CMS the processes used to identify chronically ill enrollees that meet the three pronged definition of chronically ill enrollee. However, plans should describe the chronic conditions for which they will offer SSBCI in the notes field in the plan benefit package submitted to CMS. We emphasized that 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 proposed to codify this as a requirement at § 422.102(f)(3)(ii). In addition, we also proposed at § 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 proposed a definition of SSBCI at paragraph (f)(1)(ii). 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 proposed to codify this statutory requirement as part of the definition of SSBCI. Because SSBCI are supplemental benefits, they must also comply with the criteria for supplemental benefits that we proposed to codify at § 422.100(c)(2)(ii), which was discussed in detail in section VI.F. of the proposed rule. We are not addressing that proposal in this final rule and intend to address it in a future final rule. We considered whether the regulation for SSBCI should explicitly reference those requirements for supplemental benefits (proposed in § 422.100(c)(2)(ii)) to make this clear E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations and solicited comment on this point. Traditionally, CMS has required supplemental benefits to be 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 modified some aspects of this longstanding policy to address SSBCI. First, as the statute provides that SSBCI may be not primarily health related, we proposed specific text on this point in both §§ 422.100(c)(2)(ii) and 422.102(f)(1)(ii). Second, we proposed regulation text at § 422.100(c)(2)(ii)(B) that the requirement that the MA organization incur a non-zero direct medical cost for all supplemental benefits would mean, in the context of SSBCI that are not primarily health related, the MA organization must incur a non-zero direct non-administrative cost for the SSBCI. In all other respects not specifically addressed as part of our proposal, SSBCI would be treated like and subject to the same standards as other supplemental benefits. Although we are not finalizing the requirements for supplemental benefits proposed to be codified at § 422.100(c)(2) in this final rule, we are clarifying that our final rule for SSBCI at § 422.102(f) incorporates these concepts. 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 the 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 § 422.102(f)(1)(ii), we proposed to codify, as part of the definition, that SSBCI benefits may be non-primarily health related SSBCI benefits. Our proposed regulation text included a cross-reference to the regulation text we proposed at § 422.100(c)(2)(ii) to codify the definition of primarily health related. In the proposed rule, we made clear that 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 proposed to implement the statutory authority for MA plans to offer both primarily health and non-primarily health related SSBCI. We summarized in the proposed rule how the 2019 HPMS memo provided VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 examples of what could be nonprimarily health related SSBCI benefits, depending on the needs and health or overall function of the chronically ill enrollee. 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, 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 stated in the proposed rule that the 2019 HPMS memo this guidance was equally applicable to our proposed regulation and part of how we intended our proposed regulation to be implemented and enforced. We explained in the proposed rule another way that the statutory authority for SSBCI to be not primarily health related would be part of our proposed regulation. Unlike with traditional supplemental benefits, MA plans might not incur direct medical costs in furnishing or covering SSBCI. In the CY 2020 Call Letter, we issued guidance that so long as an MA plan incurs a nonzero 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 traditional supplemental benefits. For example, reductions in cost sharing for benefits under the original Medicare feefor-service program are an allowable supplemental benefit, as reflected in the definitions of mandatory supplemental benefit in § 422.2. Thus, we stated in the proposed rule that 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 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 33801 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 proposed to codify (at § 422.102(f)(2)(iii)) 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, We also explained how our proposal addressed the statutory authority to waive uniformity for an MA plan to offer SSBCI. Generally, § 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 proposed to codify the authority for this waiver at § 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: (i) 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; (ii) document these criteria; and (iii) make E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33802 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations this information available to CMS upon request. We also proposed to codify requirements at § 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 to make this information available to CMS upon request. We explained in the proposed rule that objective criteria are necessary to address potential beneficiary appeals, complaints, and/or general oversight activities performed by CMS. We also proposed, at § 422.102(f)(3)(i), to require plans to have written policies for determining enrollee eligibility and to 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. We proposed to require plans to make information and documentation related to determining enrollee eligibility available to CMS upon request at § 422.102(f)(3)(ii). We explained in the proposed rule 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. We also explained how the proposal on SSBCI would codify already existing guidance and practices and therefore was not expected to have additional impact above current operating expenses. We also stated our belief that our proposal would not impose any collection of information requirements. We thank commenters for helping inform CMS’ SSBCI policy. We received approximately 62 comments on this proposal; we summarize these comments and our responses as follows: Comment: A number of commenters supported CMS’ proposal to allow MA plans to consider any chronic condition not identified on chronic condition list if that condition is life threatening or significantly limits the overall health or function of the enrollee. A commenter encouraged CMS to continue requiring MA plans to consider any enrollee with a condition identified on 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. Response: We thank commenters for their feedback. In the April 24, 2019 HPMS memo and 2020 Call Letter, CMS indicated that it would consider any enrollee with a condition identified as a chronic condition in section 20.1.2 of VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 Chapter 16b of the Medicare Managed Care Manual 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. This was done in an effort to maintain a consistent standard in CMS policy for what is a chronic condition (for purposes of eligibility for SSBCI and for special needs plans for individuals with a severe or disabling chronic condition). In this rule, we proposed that MA plans may consider any enrollee with a condition identified on the list of chronic conditions as determined by the panel as described in section 1859(b)(6)(B)(iii) 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 in an effort to also maintain this consistency. However, 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 the chronic condition may not be present on the list of medically complex chronic conditions. Therefore, we also proposed that a plan may identify an enrollee as meeting this first criterion of the definition of chronically ill enrollee—that the enrollee have one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee—using a condition that is not on that list so long as the statutory (and proposed regulatory) standards are met. As stated in the proposed rule, we want to allow plans the flexibility to identify needs within their unique plan population and do not want to inadvertently prevent a plan from addressing a condition or need in their population that may not be on the list. We wish to allow plans the flexibility to continue to innovate around providing care for their specific plan populations. Thus, we are finalizing this aspect of our proposal, which is reflected in how § 422.102(f)(1)(i)(B) provides that the list published by CMS is a non-exhaustive list. We reiterate that, as we proposed, we intend this list to be the list of severe or disabling chronic conditions developed by the panel of technical advisors convened in accordance with section 1859(f)(9)(A)(i) of the Act. In addition to having one or more comorbid and medically complex conditions that is life threatening or PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 significantly limits overall health and function, an enrollee must also have a high risk of hospitalization and require intensive care coordination to be considered chronically ill. Additionally, the covered item or service must have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. Comment: Some commenters requested CMS provide additional guidance concerning the definition of the phrase ‘‘intensive care coordination’’ as it is used in the regulation. Response: We expect MA plans to develop objective criteria (for example, health risk assessments, review of claims data, etc.) in determining SSBCI eligibility. We are not adopting a specific definition or standard for the statutory requirement that the chronically ill enrollee require intensive care coordination as the phrase is sufficiently clear for MA organizations to develop reasonable approaches in determining when it is met. We believe that objective criteria for determining what constitutes intensive care coordination are present in the medical community and readily accessible to the plan, such as the expertise of the plan medical director and plan physicians. We believe MA plans should have flexibility to determine what objective criteria to use when determining what meets the intensive care coordination criterion in their plan populations. However, we will keep this recommendation under advisement as we gain experience with SSBCI offerings. Comment: A few commenters requested CMS allow plans to use functional status, rather than medical diagnoses, to determine whether an enrollee is eligible for SSBCI. A commenter stated that individuals with the same diagnosis may have different functional limitations and therefore different needs. Response: We thank commenters for their feedback. We note that for the purposes of SSBCI, the statute requires the enrollee to have a chronic condition(s) that is life threatening or limits the overall health and function of an enrollee; this is in addition to the requirements that the enrollee have a high risk of hospitalization or other adverse health outcomes and require intensive care coordination to be eligible for SSBCI. Two of the required criteria refer to the function of the enrollee, so we believe it is sufficiently clear that this is something that can be considered when determining if an enrollee is a chronically ill enrollee. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Once meeting the criteria to be a chronically ill enrollee, and therefore eligible for SSBCI, the statute and our implementing regulation permit SSBCI that are designed to address the functional status of the enrollee. As discussed in the proposed rule, SSBCI must have a reasonable expectation of improving or maintaining the health or overall function of the enrollee. Thus, a plan may choose to provide an SSBCI that improves or maintains overall function of an enrollee who is eligible for SSBCI per the three-pronged definition. Comment: Some commenters expressed concern that the new SSBCI policies could potentially undermine the role of SNPs in the Medicare Advantage program. Response: SNPs are specifically designed to provide targeted care to special needs individuals. SNPs offer a wider array of specific interventions regarding their targeted population. Additionally, SNPs are required to develop and implement an evidence based model of care that provides structure for care management processes and systems that enables the plan to provide coordinated care for special needs individuals. We do not believe that the availability of SSBCI as permissible supplemental benefits undermines the specialized care model that SNPs provide. We believe that the MA program and the diverse needs of Medicare population have room for MA plans that are designed, as a whole, to address special needs populations and for specific benefits designed to improve or maintain the health or overall function of a specific chronically ill enrollee. Comment: Some commenters expressed concern that the new benefit flexibilities, including the different eligibility requirements, could confuse enrollees. Response: MA plans are required to provide enrollees with information on covered benefits, including SSBCI if the MA plan offers them, each year through the Annual Notice of Change (ANOC) and Evidence of Coverage (EOC) documents. In addition, MA organizations must comply with the marketing and communications regulations in part 422, subpart V, when issuing any information regarding SSBCI to enrollees; these include prohibitions on MA organizations misleading beneficiaries, providing information that inaccurate, or engaging in activities that confuse beneficiaries. Consistent with MCMG requirements, it is our expectation that plans communicate information on SSBCI to enrollees in a clear manner about the VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 scope of SSBCI that the MA plan covers and who is eligible for those benefits. Comment: Several commenters requested that CMS ensure that these new benefit flexibilities for the chronically ill do not lead to discrimination against high-need beneficiaries. Response: We thank commenters for sharing their concerns. We note that section 1852(b)(1)(A) of the Act prohibits an MA plan from denying, limiting, or conditioning the coverage or provision of a service or benefit based on health-status related factors. MA regulations (for example, §§ 422.100(f)(2) and 422.110(a)) reiterate and implement this non-discrimination requirement. In interpreting these obligations to protect against discrimination, we have historically indicated that the purpose of the requirements is to protect high-acuity enrollees from adverse treatment on the basis of their higher cost health conditions (79 FR 29843; 76 FR 21432; and 74 FR 54634). As MA plans implement these benefit flexibilities for SSBCI, they must be mindful of ensuring compliance with nondiscrimination responsibilities and obligations.5 Additionally, CMS reviews 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. Additionally, we believe it is important to note that in order to be eligible for SSBCI an enrollee must as stated above (1) have one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee; (2) have a high risk of hospitalization or other adverse health outcomes; and (3) require intensive care coordination. It is only enrollees with chronic conditions, as described by the three pronged definition above, that are eligible for these benefits. Thus, it is these individuals who are intended to receive these special benefits. Comment: Commenters also requested CMS provide additional subregulatory guidance on SSBCI and supplemental benefits in general, including updating Managed Care Manuals. Although characterized as being in response to the proposal to change the costs that may be included in the definition of ‘‘incurred costs’’ for MLR purposes (addressed in section V.I. of the proposed rule and 5 Among these responsibilities and obligations are compliance with Title VI of the Civil Rights Act, section 504 of the Rehabilitation Act, the Age Discrimination Act, section 1557 of the Affordable Care Act, and conscience and religious freedom laws. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 33803 section IV.D of this final rule), other commenters noted how SSBCI are not always delivered by medical providers. Response: We believe that our discussion in the proposed rule explaining the proposal we are finalizing provides extensive guidance for MA organizations on this topic. The April 2019 HPMS Memo and CY 2020 Call Letter address SSBCI and that guidance is still applicable as § 422.102(f), as proposed and as finalized, codifies significant portions of that guidance. CMS will consider additional subregulatory guidance, including manual updates, as the program develops. Additionally, as discussed in the 2020 Call Letter, we note that MA plans may contract with community-based organizations such as those providing other home and community-based services (HCBS) to provide supplemental benefits, including SSBCI, that are compliant with the statutory and regulatory requirements. For example, an MA plan could elect to offer, as a SSBCI, the provision of meals or food/produce and pay a community-based organization for furnishing the covered benefit. Community-based organizations can also help determine whether an individual meets the eligibility requirements for SSBCI. These organizations may already be providing services in the community and, in some cases, have contractual arrangements with Medicaid managed care or MA plans. We note that some community services programs are funded by the HHS Administration for Community Living (ACL) and utilizing ACL programs would also be permissible in delivering these supplemental benefits. This is consistent with the amendment to § 422.2420, discussed in section III.D.1 of this final rule, to include amounts paid for SSBCI to providers that are not necessarily healthcare professionals as incurred claims in the calculation of the MLR. Comment: Some commenters requested CMS provide greater detail on allowable SSBCI including meals, transportation, and durable medical equipment (DME). Response: A non-exhaustive list of examples of non-primarily health related, which includes meals (beyond a limited basis) and non-medical transportation SSBCI can be found in the April 2019 HPMS Memo and this preamble. However, we note the requirements around the SSBCI, which include the statutory authority for the Secretary to waive uniformity requirements and the statutory requirement that SSBCI have a reasonable expectation of improving or E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33804 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations maintaining the health or overall function of the chronically ill enrollee, allow significant of flexibility for MA plans to consider the needs of enrollees who meet the high standards in the definition of chronically ill enrollee and to design benefits to assist enrollees at an individualized level. We encourage MA plans to continue to consider the unique needs of their plan populations when proposing items or services that meet SSBCI conditions in their bid and submitted plan benefit package. As explained in the referenced April 2019 HPMS memo, MA plans have broad discretion in developing items and services they may offer as SSBCI provided that the item or service has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. Under our current guidance and this final rule, MA plans also have broad discretion in determining what may be considered ‘a reasonable expectation’ when choosing to offer specific items and services as SSBCI so long as the statutory standard is met. Concerning DME, MA plans are required to ‘‘provide coverage of, by furnishing, arranging for, or making payment for, all services that are covered by Medicare Part A and Part B’’ (see 42 CFR 422.101(a)), which includes coverage of durable medical equipment, prosthetics and supplies. As discussed in the referenced HPMS memo, nonMedicare-covered safety devices to prevent injuries in the home or bathroom are considered primarily health related and may be offered as a supplemental benefit to all enrollees for whom the item is medically necessary. We remind MA organizations of our long-standing guidance in Chapter 4 of the Medicare Managed Care Manual about medical necessity in the context of supplemental benefits and how MA plans may develop their own medical necessity policies and procedures, so long as access to and coverage of Part A and Part B benefits is not more restrictive than Original Medicare. Other equipment that is not primarily health related may be considered as an SSBCI if it has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. Comment: A few commenters suggested CMS allow plans to target some services to address social risk factors. A commenter suggested CMS test ways to provide more flexibility in targeting supplemental benefits to address social risk factors like homelessness. Response: The statute does not authorize MA plans to offer and cover VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 supplemental benefits, even SSBCI, based solely on social risk factors; the statute explicitly provides that eligibility for SSBCI is based on whether an enrollee meets the definition to be a chronically ill enrollee, which does not include a reference to social risk factors. As discussed in this preamble, MA plans can provide non-primarily health related supplemental benefits that address chronically ill enrollees’ social determinants of health so long as the benefits have a reasonable expectation of maintaining or improving the health or function of that chronically ill enrollee. MA plans may consider social determinants of health as a factor to help identify chronically ill enrollees whose health could be improved or maintained with SSBCI. However, they may not use social risk factors as the sole basis for determining eligibility for SSBCI. Please note that the current CMS Innovation Center Medicare Advantage Value-Based Insurance Design (VBID) model allows participants to vary supplemental benefits based on chronic condition or socioeconomic status or a combination of the two. MA organizations have the option of participating in this model if they choose. Comment: Some commenters suggested that information and documentation concerning SSBCI eligibility determinations should be reported more broadly, rather than only made available upon request. A commenter stated that this information would be necessary to better understand the efficacy of offered benefits. Response: We thank commenters for their suggestions. At this time, we do not wish to place additional reporting burden on plans. However, we will take this comment under advisement as we continue to develop and refine SSBCI policy. Concerning the written policy requirements at § 422.102(f)(3)(i) and (iii), we clarify that these requirements concern the existence of such policies and that we do not intend to regularly review the content for compliance with the substantive standards of the regulation. We are implementing the statutory authority for SSBCI in a way to provide discretion and flexibility for MA plans, consistent with our approach to supplemental benefits design, within the statutory and regulatory limits. Per § 422.102(f)(3)(i), plans are required to have written policies for determining enrollee eligibility. As we explained in the CY 2020 Call Letter, maintaining detailed internal documentation is, at a minimum, necessary to address potential beneficiary appeals and complaints. However, MA organizations will have discretion in developing these PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 policies. Additionally, per § 422.102(f)(3)(iii), plans are required have written policies based on objective criteria for determining a chronically ill enrollee’s eligibility to receive a particular SSBCI and must document the criteria. We do not intend to closely monitor or regularly request these documentation and reiterate that MA plans will have discretion in designing which items and services to offer as SSBCI and for which chronically ill enrollees to cover them, so long as the statutory and regulatory standards are met. Comment: Some commenters expressed concern that SSBCI are not available to individuals enrolled in Original Medicare. Other commenters suggested CMS test a model that includes original Medicare enrollees. Response: The Balanced Budget Act of 1997 (BBA) authorized CMS to contract with public or private organizations to offer a variety of health plan options for beneficiaries. Under section 1852(a)(3)(D), MA plans are authorized to offer supplemental benefits, including SSBCI. The MA program has historically authorized MA plans to offer some form of additional or supplemental benefits to MA enrollees. Medicare beneficiaries choose to elect either original Medicare or an MA health plan that may have supplemental benefits. Concerning additional models, CMS appreciates this suggestion and will take it under consideration as we consider new Innovation Center models. Comment: Several commenters suggested CMS study how many beneficiaries actually receive these benefits and not just how many are eligible for them in order to understand the actual impact of these new benefits. Response: We appreciate this comment and will take this comment under consideration as we monitor how MA plans offer these benefits and continue to develop these policies. We thank commenters for their feedback. As discussed in this preamble, because SSBCI are supplemental benefits, they must also comply with our longstanding interpretation of the criteria for supplemental benefits; we also proposed to codify those criteria at § 422.100(c)(2)(ii), which was discussed in detail in section VI.F. of the proposed rule. We considered whether the regulation for SSBCI should explicitly reference the requirements in § 422.100(c)(2)(ii) to make this clear and solicited comment on this point. We received no comments on this specific subject. After consideration of the comments received and for the reasons outlined in E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 the proposed rule and our responses to comments, we are finalizing § 422.102(f) largely as proposed. We are finalizing slight revisions to the regulation text, to eliminate a reference to § 422.100(c)(2)(i) in paragraph (f)(1)(ii) which was tied to the proposal regarding § 422.100(c)(2) that is not being addressed in this final rule. We are also correcting a typographical error in paragraph (f)(2)(iii). B. Contracting Standards for Dual Eligible Special Needs Plan (D–SNP) Look-Alikes (§ 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 individuals with special needs. Under section 1859 of the Act, SNPs are able to restrict enrollment to: (1) Institutionalized individuals, who are currently defined in § 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).6 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 6 Centers for Medicare & Medicaid Services. SNP Comprehensive Report. (July 2019) Retrieved from https://www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/MCRAdv PartDEnrolData/Special-Needs-Plan-SNPData.html. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 administrative burden. Some studies have shown that highly integrated managed care programs perform well on quality of care indicators and enrollee satisfaction.7 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. As summarized in our proposed rule, federal statute and implementing regulations have established several requirements for D–SNPs in addition to those that apply to all MA plans to promote coordination of care, including health risk assessment (HRA) requirements as described in section 1859(f)(5)(A)(ii)(I) of the Act and at § 422.101(f)(1)(i), evidence-based models of care (MOCs) as described in section 1859(f)(5)(A)(i) of the Act and at § 422.101(f), and state Medicaid agency contracts as described in section 1859(f)(3)(D) of the Act and at § 422.107. The state Medicaid agency contracting requirement allows states to require greater integration of Medicare and Medicaid benefits from the D–SNPs in their markets. 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, including minimum integration standards, coordination of the delivery of Medicare and Medicaid benefits, and unified appeals and grievance procedures for integrated D–SNPs, the last of which we implemented through regulation to 7 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/minnesotamanaged-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/SCOWhite-Paper-HMA-2015_07_20-Final.pdf; and Medicare Payment Advisory Committee. ‘‘Chapter 2, Care coordination programs for dualeligible 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. PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 33805 apply to D–SNPs with exclusively aligned enrollment, termed ‘‘applicable integrated plans.’’ These requirements, along with clarifications to existing regulations, were codified in the April 2019 final rule (84 FR 15680 through 15844). We discussed in the proposed rule and reiterate here 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 2019.8 Participation of MA organizations is robust, and most markets are stable and competitive. In this final rule, we address the emergence of ‘‘D–SNP look-alike’’ plans that are a hindrance to meaningful implementation of statutory requirements for D–SNPs, particularly those connected with the BBA of 2018. As the Medicare Payment Advisory Commission (MedPAC) described in its June 2018 and 2019 reports to Congress and as summarized in the proposed rule, 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. As discussed in the proposed rule, we believe the low enrollment of nondually 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 lookalikes allocate a lower percentage of MA rebate dollars received under the bidding process at § 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 for Parts A and B services than most MA plans require, which we believe dissuades most non-dually eligible 8 Centers for Medicare & Medicaid Services. SNP Comprehensive Report (July 2010 & July 2019). Retrieved from https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/MCRAdvPartDEnrolData/Special-NeedsPlan-SNP-Data.html. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33806 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Medicare beneficiaries from enrolling. However, because most dually eligible individuals are Qualified Medicare Beneficiaries (QMBs) who are not required to pay Medicare cost sharing under sections 1848(g)(3) and 1866(a)(1)(A) of the Act, 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. As summarized in the proposed rule, the proliferation and growth of D–SNP look-alikes raises concerns related to effective implementation of the BBA of 2018 requirements; meaningful integration of Medicare-and Medicaid programs via state Medicaid agency contracting; care coordination through HRAs; evidence-based MOCs; and beneficiary confusion stemming from misleading marketing practices by brokers and agents that misrepresent to dually eligible individuals the characteristics of D–SNP look-alikes. We direct readers to the proposed rule, 85 FR 9018 through 9021, for a more detailed discussion of D–SNP lookalikes and their impact on implementation of D–SNP Medicare and Medicaid integration. 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 proposed establishing contracting standards at § 422.514 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 MA plan. As discussed in the proposed rule, a high rate of enrollment by dually eligible individuals in a nonD–SNP would allow us to identify nonSNP MA plans that are intended to predominantly enroll dually eligible individuals (that is, D–SNP look-alikes). To prevent the undermining of the statutory and regulatory framework for D–SNPs, we proposed a new regulation precluding CMS from entering into or renewing a contract for an MA plan that an MA organization offers, or proposes VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 to offer, with enrollment of dually eligible individuals that exceeds specific enrollment thresholds (85 FR 9021–9025). We also proposed that the regulation apply in any state where there is a D–SNP or any other plan authorized by CMS to exclusively enroll dually eligible individuals. As described in our proposal, we would not enter into or renew MA contracts for an MA plan for an upcoming plan year if that MA plan exceeds specific enrollment thresholds for dually eligible individuals. However, MA organizations with plans 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 proposed this transition process to minimize disruptions to beneficiary coverage and allow enrollees in these D–SNP lookalikes to benefit from the statutory and regulatory care coordination and Medicaid integration requirements. We describe the specific proposed changes to § 422.514 as follows. We proposed changing the title of § 422.514 by removing the word ‘‘minimum’’ because the changes we proposed to § 422.514 reflect an additional type of enrollment requirement beyond the minimum enrollment requirements currently articulated in § 422.514. We also proposed changing the title of paragraph (a) from ‘‘Basic rule’’ to ‘‘Minimum enrollment rules’’ for clarity due to the proposed change to the scope of § 422.514. We proposed adding 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 § 422.2. We explained our rationale in depth for this approach in the proposed rule. We proposed to limit the requirement at paragraph (d) to states where there is a D–SNP or any other plan authorized by CMS to exclusively enroll dually eligible individuals, such as MedicareMedicaid Plans (MMPs). We proposed 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, as there are no plans contracted with the state to implement the D–SNP requirements or otherwise integrate PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 Medicare and Medicaid services. 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 lookalikes 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. We also noted the limited number of states—eight, as of July 2019—with no D–SNPs. Therefore, we expressed our belief that it is not critical for our proposed requirements in paragraph (d) to apply in such states. We solicited 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 final 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 proposed 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 § 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 explained that using each 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. We proposed 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. As detailed in the proposed rule, MedPAC data show that our proposed threshold would have minimal impact on total dually eligible enrollment in non-SNP MA plans. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations As discussed in the proposed rule, 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 80 percent threshold. However, as explained in the proposed rule, we proposed 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 operationally easier for CMS to implement. We solicited comment on these alternative enrollment thresholds. Under our proposal for paragraph (d)(2), we proposed making the annual 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 in order to make such evaluations and issue the necessary information to affected MA organizations sufficiently early in the year for MA organizations to have time to take the necessary steps to adjust other plan offerings before the point at which CMS would decline to renew the contract for an MA plan— which effectively (and as described later in this section) would result in the nonrenewal (that is, termination) of the D– SNP look-alike plan benefit package. Proposed paragraph (d)(2) would also limit the prohibition to MA plans that have been active for one or more years and with enrollment greater than 200 individuals at the time of CMS’ determination under proposed paragraph (d)(2). In paragraph (e), we proposed processes 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. 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 proposed criteria. 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. In proposed paragraph (e)(1), we specified 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 §§ 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 transition 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 proposed at paragraphs (e)(1)(i) through (iii) specific criteria for any MA plan to receive enrollment through this transition process 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 proposed paragraph (e)(1)(i), we would allow a non-renewing 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 this proposed limit on dual eligible enrollment. As described in the proposed rule, 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. Under 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- PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 33807 SNP plan to the April enrollment of the receiving plan and calculating the resulting percent of dually eligible enrollment. As discussed in the proposed rule, we would make this calculation for each non-SNP plan into which the MA organization proposes to transition enrollment in order to ensure that the enrollment transitions do not result in another non-SNP MA plan being treated as a D–SNP look-alike. • Under proposed paragraph (e)(1)(ii), we would require that any plan receiving transitioned enrollment be an MA–PD plan as defined in § 422.2. • Under proposed paragraph (e)(1)(iii), any MA plan receiving transitioned enrollment from a D–SNP look-alike would be required to have a combined Part C and D beneficiary premium of $0 after application of the premium subsidy for full subsidy eligible individuals described at § 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 (ANOC) that the MA organization must send, consistent with § 422.111(a), (d), and (e) and proposed § 422.2267(e)(3). Consistent with § 422.111(d)(2), enrollees would receive this 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 (AEP). 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 § 422.506(a)(2). As discussed in more detail in the proposed rule preamble, this proposed transition process is conceptually similar to ‘‘crosswalk exception’’ procedures historically allowed by CMS and proposed at § 422.530 in the notice of proposed rulemaking. 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 between nonSNP plans and SNPs. Because this transition process is not the same as the crosswalk process, we proposed to codify it as part of § 422.514. In the proposed rule, we explained how we also considered an alternative E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33808 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 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. In addition, we solicited 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 § 422.514(d). We described in the proposed rule our intent 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 contracting limitations under this proposal. Overall, our proposed rule focused on dually eligible individuals as a percentage of an MA 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 overthe-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. We explained in the proposed rule why we did not propose those alternatives but solicited comment on whether these alternative criteria should be used instead of, or in addition to, the criteria for identifying D–SNP look-alikes and applying contracting prohibition. We received the following comments on these proposed contract requirements and respond to them below: Comment: Many commenters expressed strong support for our proposal to preclude CMS from entering VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 a specific threshold. Several commenters agreed with CMS that D– SNP look-alikes are an impediment to Medicare-Medicaid integration and meaningful implementation of federal and state requirements, including the new statutory requirements for D–SNPs under the BBA of 2018. A commenter appreciated that the proposal would, in most states, ensure that any entity whose enrollment consists mainly of dually eligible individuals follows the standards Congress established for MA plans serving dually eligible individuals. Several commenters agreed with MedPAC’s 2018 and 2019 analyses, cited by CMS in the proposed rule preamble, that the proliferation of D– SNP look-alikes negatively impacts integrated care programs for dually eligible individuals. Some commenters believed the proposal would ultimately improve access to integrated care for dually eligible individuals. Several commenters also believed that D–SNPs were in the best position to serve the dually eligible population because of the D–SNP MOC, including care coordination and case management, which is not required of D–SNP lookalikes. Several commenters also supported the proposed regulation because of their concern about how D–SNP look-alikes operate. A number of commenters expressed concern about D–SNP lookalikes marketing to dually eligible individuals in ways that misrepresent the plans’ ability to integrate Medicare and Medicaid services. Several commenters noted that while D–SNP look-alikes advertise that they integrate care, they are not designed to serve the needs of dually eligible individuals nor required to do so. For these reasons, many commenters believed look-alikes confuse dually eligible individuals about their coverage options and lead to beneficiary harm. Response: We appreciate the widespread support we received for our proposal. Many of the commenters’ concerns about D–SNP look-alikes mirror the comments discussed in the 2020 Final Call Letter 9 and summarized in the proposed rule preamble. We believe that the contracting requirement we are finalizing in this rule will address these concerns and ensure the meaningful implementation of the new Medicare-Medicaid integration 9 Available at https://www.cms.gov/Medicare/ Health-Plans/MedicareAdvtgSpecRateStats/ Announcements-and-Documents.html. PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 requirements under the BBA of 2018, along with other state and federal requirements. As discussed in the proposed rule and our responses to other comments, the prohibition will not apply to D–SNP look-alikes in states where there is a D–SNP or plan authorized by CMS to exclusively enroll dually eligible individuals. Comment: A few commenters expressed support for CMS’ efforts to integrate care but had concerns about the proposed contracting standard. Some commenters noted that the proposed rule may disrupt services and benefits for beneficiaries enrolled in D– SNP look-alikes. These commenters cautioned CMS to attend to continuity of care, the nuances of state requirements, and market dynamics as this final rule is implemented. Response: We thank these commenters for their comments. We believe that the requirements we are finalizing in this rule, described in more detail later in this section, strike a balance between allowing for continuity of care for beneficiaries and promoting integrated care. In particular, as discussed later in this section, we are delaying implementation of D–SNP look-alike contract limitations for one additional year to provide sufficient time for MA organizations to develop and seek approval for new plans, coordinate with state integrated care efforts, and facilitate a transparent and smooth transition of beneficiaries. With a technical clarification described later in this section, we are finalizing our proposed transition approach for D–SNP look-alikes to transition enrollees into an MA plan or plans meeting certain criteria within the same parent organization to promote continuity of care. Comment: Several commenters opposed our proposal to limit enrollment of dually eligible individuals in non-SNP MA plans. Some commenters noted that D–SNP lookalikes were created in response to states’ contracting policies like those of California that restricted D–SNPs. A commenter questioned the need to regulate D–SNP look-alikes, citing the June 2019 MedPAC finding that only a small portion of traditional MA plans have dual eligible enrollment that comprises 80 percent or more of total plan membership.10 Some commenters believed that our proposal limited competition between MA plans that could lead to higher 10 See June 2019 MedPAC Report to Congress, Chapter 12 at https://www.medpac.gov/docs/defaultsource/reports/jun19_ch12_medpac_ reporttocongress_sec.pdf?sfvrsn=0. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations quality, innovative care, additional supplemental benefits, and improved provider network access for dually eligible individuals. A commenter stated that competition from D–SNP look-alikes targeted by our proposal has not hurt D–SNPs, noting that total D– SNP enrollment has more than doubled from one million in 2010 to 2.6 million in 2019. A few commenters believed that D– SNP look-alikes fill critical gaps in markets where D–SNPs and MMPs are not available. Some commenters also believed that D–SNP look-alikes provide access to supplemental benefits and increased levels of care management, particularly for partial-benefit dually eligible individuals. These commenters were concerned that if the proposed contracting standard was implemented, D–SNP look-alike enrollees would lose access to these benefits and may return to the original Medicare fee-for-service program, which does not coordinate with Medicaid. A few commenters requested that, prior to finalizing any rule on D–SNP look-alikes, CMS perform a more detailed analysis of available options and impacts of the proposal on enrollees, both full- and partial-benefit dually eligible individuals, such as loss of benefits. Several commenters expressed concern that CMS’ proposed contracting standard would unnecessarily limit beneficiary choice. A few commenters requested that CMS explain how the value of choice was taken into account for this proposal. Other commenters encouraged CMS to continue to promote consumer choice and provide dually eligible beneficiaries with an array of plan options that allow individuals to choose how to best meet their health care needs. A commenter noted that the need for beneficiary choice was supported by the June 2018 MedPAC finding that 64 percent of partial-benefit dually eligible MA enrollees were enrolled in traditional MA plans in 2016,11 and that a large percentage of full-benefit dually eligible individuals passively enrolled in MMPs also have indicated a preference for choice by opting out of MMP enrollment. Response: We thank the commenters for the feedback on our proposal. We maintain that MA plans with enrollment exclusively, or predominantly, consisting of dually eligible individuals—the principal criterion that distinguishes D–SNPs from other MA plans in statute—should be subject to 11 See June 2018 MedPAC Report to Congress, Chapter 9 at https://medpac.gov/docs/defaultsource/reports/jun18_ch9_medpacreport_ sec.pdf?sfvrsn=0. VerDate Sep<11>2014 00:36 Jun 02, 2020 Jkt 250001 the federal regulatory and state contracting requirements that are applicable to D–SNPs. We note that, despite D–SNP regulations promulgated since 2006, MA organization participation in the D–SNP program is robust. Most D–SNP enrollment is in markets that feature numerous other plan choices for beneficiaries, and enrollment in D–SNPs has continued to increase. We also note that while state contracting policies may have been the impetus for some sponsors to create D– SNP look-alikes, states are authorized to play a role in coordinating Medicaid benefits with MA plans that exclusively enroll dually eligible individuals, as described in section 164 of MIPPA, which amended section 1859(f) of the Act. Therefore, if our proposal leads to any change in the degree of beneficiary choice, such impact would be marginal, and we believe the benefits from our proposal—described here and in the proposed rule—outweigh any such impact. We agree with the commenter that D– SNP look-alikes are currently a small number of all MA plans; however, D– SNP look-alikes’ growth—both in terms of the number of plans offered and their total enrollment—is concerning, especially given Congress’ requirements in the BBA of 2018 to further integrate Medicare and Medicaid benefits through D–SNPs. As noted in our proposed rule preamble, MedPAC found that D–SNP look-alike enrollment in California markets grew from around 5,000 in 2013 to over 95,000 in 2017.12 MedPAC also explored enrollment trends more broadly, identifying 31 non-SNP plans 13 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, 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.14 We acknowledge the commenters’ concerns about reducing access to supplemental benefits for D–SNP lookalike members and beneficiary choice, 12 See June 2018 MedPAC Report to Congress, Chapter 9 at https://medpac.gov/docs/defaultsource/reports/jun18_ch9_medpacreport_ sec.pdf?sfvrsn=0. 13 MedPAC also excluded employer group waiver plans (EGWPs) and a select group of medical savings account (MSA) plans. 14 See June 2018 MedPAC Report to Congress, Chapter 9 at https://medpac.gov/docs/defaultsource/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. PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 33809 particularly for partial-benefit dually eligible individuals. However, as we stated in the proposed rule, we chose not to propose regulating benefit design to avoid inadvertently diminishing benefit flexibility that genuinely improves competition and beneficiary choice. We also note that most D–SNP look-alike enrollment is in markets that feature numerous other plan choices for beneficiaries, including D–SNPs that offer similar benefits; therefore, D–SNP look-alikes are not generally filling gaps in most of their markets nor significantly contributing to beneficiary choice. The majority of D–SNP lookalikes will be able to transition enrollees into another MA plan under the process described at § 422.514(e) of this final rule; therefore, we project that few D– SNP look-alike enrollees will be enrolled by default in the original Medicare fee-for-service program when this regulation limits the continued offering of a D–SNP look-alike. We also note the contracting standard that we proposed and are finalizing does not apply to MA plans in states without D–SNPs or other plans authorized by CMS to exclusively enroll dually eligible individuals, further limiting the impact of this provision on access to supplemental benefits or beneficiary choice. Of the seven states that do not contract with D–SNPs or other plans authorized to exclusively enroll dually eligible individuals, only two have D– SNP look-alikes. As discussed in response to other comments on this topic, we will continue to engage with stakeholders to identify issues related to choice and access to supplemental benefits. Comment: A commenter suggested that CMS work with states to provide multiple integrated care options for dually eligible individuals as an alternative to limiting D–SNP lookalikes. Another commenter requested that if CMS decides to implement the proposal, we should also require states to contract with D–SNPs. Response: We note that section 164(c)(4) of MIPPA does not in any way obligate states to contract with a D–SNP; therefore, CMS does not have the authority to mandate states to contract with D–SNPs, and states have significant control over the availability of D–SNPs. We generally agree that increasing the number of integrated care options for dually eligible individuals is desirable, and CMS will continue to work with states to identify ways to integrate Medicare and Medicaid benefits in a way that best serves the states’ dually eligible population. We also provide technical assistance to states on integration issues, including E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33810 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations through the Integrated Care Resource Center (see https://www.integratedcare resourcecenter.com/). Comment: Several commenters supported our proposed approach in paragraph (d) to limit the availability of D–SNP look-alikes only in those states where there is a D–SNP or any other plan authorized by CMS to exclusively enroll dually eligible individuals. These commenters stated that look-alikes provide valuable supplemental benefits to dually eligible individuals that would not be available in a traditional MA benefit design in those states without D– SNP or MMP options. Some commenters further agreed with our rationale in the proposed rule that, in states without D–SNPs or comparable managed care plans (like MMPs), the existence of D–SNP look-alikes is not impeding full implementation of D–SNP integration requirements. A number of commenters recommended that our proposal to limit availability of D–SNP look-alikes apply only in counties where there are no D–SNPs or other plans authorized to exclusively enroll dually eligible individuals. A commenter agreed with CMS’ observation that operating MA plans in rural areas presents a challenge to MA plan operations, including for D–SNPs. This commenter stated that, in those rural areas without D–SNPs or other plans authorized by CMS to exclusively enroll dually eligible individuals, eliminating MA plan options can harm rather than benefit dually eligible individuals, and in the absence of integrated plan options, access to D– SNP look-alikes should be preserved. Response: We appreciate these commenters’ support of the proposed limit on this policy to states where there is a D–SNP or any other plan authorized by CMS to exclusively enroll dually eligible individuals, such as an MMP. In our proposed rule we noted that, as of July 2019, seven states did not have D– SNPs or other plans authorized by CMS to exclusively enroll dually eligible individuals. In these states, 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 immediate material impact on the full implementation of federal D– SNP requirements. In such states, the existence of D–SNP look-alikes is not impeding federal or state 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 comparable managed care plans like MMPs. We disagree with the recommendation to further limit the proposed D–SNP look-alike policy to those counties where a D–SNP or comparable managed care plan like an MMP currently exists. From our work with states on Medicare-Medicaid integration, we recognize that states often proceed incrementally, contracting first for integrated managed care plans in certain counties before incorporating more areas or going statewide. We believe that allowing D–SNP look-alikes to precede D–SNPs or other more integrated plans in these markets would hinder expansion of state efforts to expand integrated managed care. In addition, we believe it would be more complicated for CMS to administer, MA organizations to comply with, and consumers to understand, if there was a county-by-county limitation on D–SNP look-alike availability. With respect to the comments about contracting in rural areas, we understand that operating MA plans, including D–SNPs, can be a challenge in areas where the Medicare population is sparse and establishing networks is difficult. As discussed in section V.A. of this preamble, we are taking steps to improve access to managed care in rural areas through changes in network adequacy assessments. We will continue to monitor the volume of MA plans, including D–SNPs, offered in rural areas. Comment: A commenter requested that CMS exempt from our proposed dual eligible enrollment rules in paragraph (d) D–SNP look-alikes in states that require the parent organization of the D–SNP to have a Medicaid contract with the state. The commenter expressed concern that implementing the rule as proposed would have an anticompetitive effect of locking out new plan entrants in such states. Response: We disagree with the commenter that implementing paragraph (d) as proposed would reduce competition by not allowing new plan entrants in those states that limit D–SNP approval to parent organizations that have existing Medicaid contracts. As discussed in our April 2019 final rule in implementing the BBA of 2018, we sought to maintain existing state flexibility to promote integrated care for dually eligible individuals. As discussed earlier in this section, section 164 of MIPPA, which amended section 1859(f)(3)(D) of the Act, does not mandate that states contract with D– SNPs. The ability of states to determine the entities with which they enter into PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 D–SNP contracts has been a core tenet for coordinating care between Medicare and Medicaid. We support efforts by states to further the integration of care coordination continuum and believe that the benefit from such coordination, in fact, increases competition to develop and win integrated products (that is, Medicaid contracts). Comment: Many commenters stated that the dual eligible enrollment requirement should apply in all states to discourage the proliferation of plans that are not truly integrated and that offer limited or no care coordination. Several commenters noted that D–SNP look-alikes may detract from state efforts to coordinate care for dually eligible individuals, such as managed fee-forservice models. These commenters believed that states that do not contract with D–SNPs or MMPs should be able to exercise oversight and have freedom to set a broader strategy to coordinate care for their dually eligible population without worrying about the proliferation of D–SNP look-alike products. A commenter stated that proliferation of D–SNP look-alikes may discourage states from future contracting with D– SNPs and gives plans no incentive to introduce D–SNPs. This commenter noted that CMS and states need to work together to improve the way they serve dually eligible individuals because such individuals include the highest need, highest cost Medicare and Medicaid beneficiaries, and limiting D–SNP lookalike regulation to only some states impedes progress toward that end. Response: We appreciate the commenters’ perspective on this issue. We believe that our proposal as finalized strikes a balance between prohibiting look-alikes and allowing them to continue in states without D– SNPs or any other plan authorized by CMS to exclusively enroll individuals entitled to medical assistance under a state plan under Title XIX. We do not believe that in such states, the existence of look-alikes is materially impeding state or federal implementation of any requirements for enhanced care coordination and Medicaid integration or 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. We recognize that substantial enrollment in D–SNP lookalikes in these states can alter the landscape if any of these states decides to begin contracting with D–SNPs. However, we believe state policy can accommodate these changes, for example, by contracting with MA organizations offering look-alikes to offer D–SNPs, enabling the transition of E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations look-alike enrollees into more integrated plans. We continue to collaborate and work with all states to strengthen integrated care, and we will monitor the penetration of MA plans as we continue to promote integrated care. As discussed in our proposed rule, we believe the limitation on the states where the dual eligible enrollment requirement applies will continue to protect states’ ability to contract with plans—including for Medicaid behavioral health services and long-term supports and services (LTSS)—in a manner that promotes integration and coordination of benefits and a more seamless experience for dually eligible individuals in such plans. Therefore, in this final rule, we decline to expand our dual eligible enrollment requirements to plans operating in such states. However, we will continue to monitor D–SNP lookalikes in these states and consult with state officials about their impact on dually eligible individuals and state policy objectives. Comment: Many commenters requested that CMS clarify whether the proposed 80 percent threshold for dual eligible enrollment in a non-SNP plan included both individuals entitled to full Medicaid benefits and individuals entitled to partial Medicaid benefits, such as state payment of Medicare Part B premiums or payment of Medicare premiums and cost sharing. Response: Our proposed regulatory language in paragraph (d) regarding ‘‘enrollees who are entitled to medical assistance under a state plan under title XIX’’ is the same language used in section 1859(b)(6)(B)(ii) of the Act and in § 422.2 to define the population of special needs individuals D–SNPs may exclusively enroll. This language includes both full- and partial-benefit dually eligible individuals. Therefore, we clarify here that our proposed threshold for dual eligible enrollment— which we are finalizing in this rule— included both full- and partial-benefit dually eligible individuals. Comment: A commenter recommended that our regulatory language in paragraph (d) be modified to refer to individuals who are ‘‘entitled to and enrolled in medical assistance,’’ since plans only know which enrollees actually receive Medicaid benefits, not those whose income levels might qualify them for such benefits. Response: While we appreciate the commenter’s concern, we believe that the language in § 422.514(d)(1) (individuals ‘‘entitled to medical assistance’’ under a state plan under Title XIX) sufficiently refers to individuals who have been determined to be entitled to medical assistance by VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 virtue of having been enrolled in medical assistance under a state plan under Title XIX. That is our intent and interpretation of this language in § 422.514(d). Comment: Some commenters recommended that the final rule not count any partial-benefit dually eligible individuals toward the threshold, while maintaining the threshold at 80 percent, in order to minimize the potential disruption caused by the non-renewal of D–SNP look-alikes, including D–SNP look-alikes in contracts with high Star Ratings. Other commenters supported setting the threshold at 80 percent if it applied only to full-benefit dually eligible individuals. Some commenters recommended that the threshold consist only of the categories of dually eligible individuals who were allowed to enroll in a D–SNP in any given market, defined at either the state or county level. In contrast, other commenters supported counting enrollment of partial-benefit dually eligible individuals toward the 80 percent threshold. A commenter wrote that exclusion of partial-benefit dually eligible individuals while maintaining the threshold at 80 percent would drastically reduce the number of D–SNP look-alikes captured by the proposed regulation and potentially render the entire proposal ‘‘meaningless.’’ Response: We disagree with the recommendation to exclude partialbenefit dually eligible individuals from the enrollment threshold and agree with those commenters who believed such an exclusion would render the proposal less effective. Such an exclusion would allow 32 of the 64 non-SNP MA plans with more than 80 percent enrollment by both full- and partial-benefit dually eligible individuals to continue to operate. These include nine D–SNP look-alikes in states that have D–SNPs or MMPs that only enroll full-benefit dual eligible individuals. Those nine plans would continue to operate if, as suggested by a commenter, we did not count partial-benefit dually eligible individuals towards the threshold only in states that exclude these individuals from D–SNPs and other integrated plans. While partial-benefit dually eligible individuals are not currently eligible to enroll in D–SNPs or MMPs in those states, they have access to other MA plans that are not D–SNP lookalikes. As discussed in the proposed rule, over 98 percent of dually eligible individuals who are enrolled in nonSNP MA plans are in plans that are not D–SNP look-alikes. The data show that the exclusion of partial-benefit dually eligible PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 33811 individuals would render the proposed regulation ineffective in achieving its primary goal: Preserving the ability of CMS and states to meaningfully implement the BBA of 2018 requirements and to use D–SNPs and other integrated care plans to integrate Medicare and Medicaid for dually eligible individuals. In addition, exclusion of partialbenefit dually eligible individuals from the threshold would allow any MA organization to design a benefit package and target enrollment for an MA plan that exclusively enrolled partial-benefit dually eligible individuals. Section 1859(b)(6)(B)(ii) of the Act, however, only allows D–SNPs to exclusively enroll dually eligible individuals. Comment: Some commenters recommended excluding partial-benefit dually eligible individuals from the threshold and put forward a number of rationales for their recommendation. Some commenters stated that partialbenefit dually eligible individuals did not benefit from the coordination of Medicaid benefits provided by D–SNPs or other integrated plans because they were not entitled to receive such benefits. A few commenters also noted that many states exclude partial-benefit dually eligible individuals from D–SNPs or other integrated plans, and therefore excluding partial-benefit dually eligible individuals from the enrollment threshold would ensure the availability of another meaningful plan option to such individuals. A few commenters noted that partial-benefit dually eligible individuals have greater social, functional, and health needs than the broader Medicare population and could benefit from the enhanced care coordination provided by MA plans, including the D–SNP look-alike in which they enrolled. Another commenter requested that CMS provide an analysis of how the proposed regulation would impact areas where partial-benefit dually eligible individuals are not allowed to enroll in D–SNPs or other integrated care options. A commenter that supported inclusion of partial-benefit dually eligible individuals in the 80 percent threshold stated that any CMS decision to exclude such individuals should be accompanied by a reduction in the threshold to capture roughly the same number of D–SNP look-alikes. Response: We do not find these commenters’ arguments persuasive. First, partial-benefit dually eligible individuals benefit from the requirements that SNPs, including D– SNPs, have a MOC that addresses enrollees’ needs and perform periodic HRAs precisely because these E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33812 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations individuals have greater social, functional, and health needs. States, through their contracts with D–SNPs, can enhance these care coordination requirements, including for partialbenefit dually eligible individuals. Second, QMBs without full Medicaid benefits, who constitute roughly half of partial-benefit dually eligible individuals nationally, can benefit when D–SNPs, or the Medicaid managed care plans offered under the same parent company in which these individuals are enrolled, pay providers for Medicare cost sharing under a capitation agreement with the state. Such direct and seamless payment of cost sharing can result in an improved experience for providers serving these individuals, which itself may improve access to care for beneficiaries. Of course, partial-benefit dually eligible individuals cannot benefit from these features of the D–SNP program if the state D–SNP contract excludes these individuals from enrollment, and we recognize that some states using managed care as a platform for integration exclude partial-benefit dually eligible individuals from D–SNPs and other managed care plans. While some states that are using the D–SNP platform for integration only allow fullbenefit dually eligible individuals to enroll in D–SNPs, others allow partialbenefit dually eligible individuals to enroll in separate D–SNP plan benefit packages, facilitating integrated care and seamless provision of benefits for both categories of dually eligible individuals. We think that allowing D–SNP lookalikes to continue to enroll partialbenefit dually eligible individuals with no limit would discourage states from taking this approach. Comment: A number of commenters recommended that we set a lower threshold for the percentage of dually eligible enrollees a non-SNP MA plan could have, either in actual or projected enrollment. These commenters expressed concern that a threshold of 80 percent could be ‘‘gamed’’ by MA organizations to keep their dual eligible enrollment just under the ceiling. Some commenters recommended that CMS set the ceiling for dual eligible enrollment at 50 percent, with a commenter citing MACPAC analysis showing faster growth in projected enrollment among MA plans with dual eligible enrollment greater than 50 percent than among those greater than 80 percent. Another commenter recommended a threshold of 60 percent. Response: We appreciate the concern that CMS establish a threshold that is effective at curtailing D–SNP lookalikes, which we believe threaten to VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 undermine our ability and that of our state partners to implement the higher integration standards under the BBA of 2018. However, as described in the proposed rule, we believe our proposed 80 percent threshold is reasonable because it far exceeds the share of dually eligible individuals in any given market—no market has more than 50 percent dually eligible beneficiaries 15— and, therefore, would not be the result for any plan that had not intended to achieve high dually eligible enrollment. The 80 percent threshold also captures almost three-quarters of enrollment in non-SNP plans with more than 50 percent dually eligible enrollees. We will monitor for potential gaming after implementation of this final rule by reviewing plan enrollment data, including the Monthly Membership Report, and consider future rulemaking as needed. Comment: A range of commenters, including MACPAC and MedPAC, supported the proposed 80 percent threshold for projected and actual enrollment. Along with several other commenters, MACPAC and MedPAC urged CMS to monitor levels of MA dual eligible enrollment after implementation to verify that the final rule’s requirements remain effective against the proliferation of D–SNP look-alikes. Response: We thank the commenters for their support and agree that postimplementation monitoring will be important to determine the effectiveness of the rule. We are finalizing the proposed regulatory language regarding the dual eligible enrollment threshold at paragraphs (d)(1)(ii) and (d)(2)(ii) of this final rule and reiterating here that the threshold includes enrollment of all categories of dually eligible individuals, including partial-benefit and full-benefit dually eligible individuals who are actually enrolled in medical assistance under a state plan under Title XIX. Comment: A commenter requested that we clarify that the 80 percent threshold applies at the plan level (that is, the PBP level) and not at the contract, or ‘‘H number,’’ level. Response: We reiterate here that the 80 percent threshold in paragraphs (d)(1)(ii) and (d)(2)(ii) applies at the plan level and not at the contract, or ‘‘H number,’’ level. Comment: A commenter requested that we specify the data source used to determine the percentage of dually eligible enrollees in a plan subject to the proposed regulation. 15 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. PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 Response: We intend to use data and reports on January enrollment and dual eligible status, such as the January Monthly Membership Report, generated by the MARx system (or a similar or successor report) to determine the percentage of dually eligible enrollees. Comment: Several commenters stated that our proposed regulatory language at § 422.514(d), ‘‘CMS does not enter into or renew a contract under this subpart for an MA plan,’’ was confusing since the language references both contracts and plans. These commenters suggested that CMS clarify that it will not approve or renew a specific plan benefit package (PBP), rather than the entire contract, when D–SNP look-alike MA plans meet the 80 percent threshold. Response: We appreciate the commenters’ request for clarification. When an MA organization enters into a contract with CMS to offer MA products, the MA organization can establish multiple PBPs within that one contract, so long as those products are the same type (for example, all HMO or all PPO). We proposed the language at paragraph (d) to accommodate this reality. When an MA organization has multiple plans under one contract, § 422.514(d), read in combination with contract severability rules at § 422.503(e), allows CMS to sever the D– SNP look-alike from the rest of the contract, in effect allowing CMS to renew only the portion of the contract that does not include the D–SNP lookalike. We believe the language at paragraph (d) accurately describes our intent. Therefore, we are finalizing this regulatory language as proposed. In addition, for those circumstances where the D–SNP look-alike is the only PBP offered in the contract, we are finalizing a new paragraph (f) to clarify that we would consider actions taken consistent with paragraph (d) to warrant special consideration to exempt affected MA organizations from the denial of an application for a new contract or service area expansion pursuant to §§ 422.502(b)(3) and (4), 422.503(b)(6) and (7), 422.506(a)(3) and (4), 422.508(c) and (d), and 422.512(e)(1) and (2). In other words, when CMS declines to enter into or renew a contract consistent with paragraph (d), that action does not preclude the impacted MA organizations from applying for a new MA contract or a service area expansion or its board members or trustees from serving another MA organization. Comment: A commenter recommended that CMS consider defining D–SNP look-alikes as MA organizations that offer a D–SNP and an MA–PD plan under the same contract, with the majority (that is, 50 percent or E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations more) of dually eligible beneficiaries enrolled in the MA–PD plan rather than the D–SNP. Response: While we appreciate the comment, we do not understand the rationale for defining D–SNP look-alikes as MA organizations that have a majority of dually eligible individuals enrolled in an MA–PD plan as compared to a D–SNP offered by the same MA organization. We would be concerned that any such policy would undermine our proposal in two ways. First, it would permit certain organizations to maintain D–SNP lookalikes whenever such plans were coupled with D–SNPs with a larger number of dually eligible individuals, even if the D–SNP is in a different geographic area. Second, it would allow D–SNP look-alikes to continue operating as long as the MA organization did not also offer a D–SNP under the same contract. Therefore, we decline to accept this recommendation. Comment: A commenter supported CMS’ proposal at § 422.514(d)(2) to exempt from the prohibition on D–SNP look-alikes those MA plans that are active for less than one year and with enrollment less than or equal to 200 enrollees at the time of CMS’ determination. A few commenters suggested that CMS consider alternative criteria for which new MA plans are exempted from our proposed requirements. A commenter recommended that CMS expand the exemption to plans that had been active three or more years. The commenter believed this change would allow plans to appropriately respond to any unexpected enrollment patterns. Another commenter encouraged CMS to raise the enrollment minimum from 200 enrollees to 500 enrollees to better align with enrollment levels already required for plan viability for Medicare Part D Prescription Drug Plans (PDPs) and reduce administrative burden. Response: We appreciate the comments, but we do not find the recommended changes to be persuasive. While the minimum enrollment threshold for low enrollment PDPs is higher at 1,000 beneficiaries, we do not believe PDPs are an apt comparison. We believe a better comparison for D–SNP look-alikes is the minimum enrollment threshold for low enrollment SNPs, which is 100 enrollees for plans in existence for three or more years, as outlined in the 2020 Final Call Letter.16 We proposed a minimum enrollment standard of 200 to allow some 16 https://www.cms.gov/Medicare/Health-Plans/ MedicareAdvtgSpecRateStats/Downloads/ Announcement2020.pdf. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 additional flexibility for initial enrollment patterns that may not be representative of the longer term enrollment pattern for the plan. Once the initial enrollment period has passed or the number of enrollees during that first year of operation exceeds 200 enrollees, we believe the enrollment profile accurately reflects whether or not the plan was designed to exclusively enroll dually eligible individuals. Therefore, we are finalizing the D–SNP look-alike exemption criteria in this final rule at paragraph (d)(2)(ii) to exempt those D–SNP look-alikes active for less than one year and with enrollment less than or equal to 200 enrollees at the time of CMS’ determination using January enrollment of the current year. Comment: A commenter noted that certain C–SNPs, including ESRD C– SNPs, may enroll a large number of dually eligible individuals and appreciated that we were clear in the proposed preamble that the proposed enrollment threshold for D–SNP lookalikes only applies to non-SNP MA plans. Response: We welcome the comment’s perspective. As we stated in the proposed rule preamble, we proposed 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. We are finalizing as proposed at paragraph (d) that the prohibition on D– SNP look-alike contracting does not apply to any specialized MA plan for special needs individuals as defined in § 422.2. Comment: A commenter supported our proposed implementation timing at paragraphs (d)(1) and (2) to allow D– SNP look-alikes operating in 2020 to transition enrollees to other MA plans offered by the D–SNP look-alikes’ parent organizations for an effective date of January 1, 2021, and to no longer enter into or renew contracts with D–SNP look-alikes for plan year 2022 and subsequent years. A few commenters suggested that CMS finalize any policy on D–SNP look-alikes in time for plan year 2021 bid preparation, preferably by April 2020, and to ensure a smooth transition for enrollees. Some commenters requested that CMS delay implementation of the proposed changes by requesting a one-year delay, a two-year delay, or by specifically requesting that D–SNP look-alikes be permitted to operate until 2023 or later. A commenter recommended CMS employ an incremental phased-in PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 33813 approach so that plans above the 80 percent enrollment threshold are permitted to continue operating for a longer period of time. Another commenter suggested that, if CMS will not allow at least an additional year for implementation, CMS allow for continuation of certain plans for the 2022 plan year where the MA organization can demonstrate a good faith effort to apply for and implement a compliant D–SNP product. Commenters cited various reasons for delaying implementation, including allowing MA organizations additional time to file applications, gain approval of compliant D–SNP products, facilitate a smooth transition of enrollees, and consider continuity of care, nuances of state requirements, and market dynamics that might conflict with the proposed rule. A commenter noted that the need for a delay is particularly important in states where plans’ ability to create D– SNPs is limited, and several commenters emphasized the need for sufficient time to develop new products, especially to meet state requirements for integrated plans. A few commenters indicated that CMS’ proposed timeline did not align with the California Advancing and Innovating Medi-Cal (CalAIM) initiative to integrate Medicare and Medicaid through D–SNPs and Medicaid MLTSS plans. These commenters expressed concern that, under the proposed timeline, D–SNP look-alike enrollees in California could face multiple Medicare plan transitions in a short period of time, which would potentially disrupt care and confuse beneficiaries. These commenters believed that a later implementation timeframe would allow D–SNP lookalikes extra time to implement a transparent process by which beneficiaries can select plans and transition with minimal disruption. A commenter noted the additional time necessary for approval of new D– SNPs and a coordinated transition process is especially important given the COVID–19 pandemic. Another commenter requested that CMS allow at least two years for dually eligible individuals, MA plans, states, and other stakeholders to review policy options and devise and implement viable alternatives to CMS’ proposal to achieve compliance. Response: We appreciate the comments supporting the proposed implementation timeline, and we agree with many of the comments recommending that we consider delaying the contract limitation for existing D–SNP look-alikes by one year. While we believe the proposed E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33814 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations implementation timeframe remains feasible, we understand that providing an additional year before CMS declines to renew existing D–SNP look-alike plans would give all states and MA organizations more time to consider and collaborate on a more integrated approach and an appropriate transition for enrollees. However, we disagree with the request to delay the proposed dual eligible enrollment thresholds for at least two years. We believe that delaying our implementation of D–SNP non-renewals for one additional year prior will provide sufficient time for MA organizations to develop and seek approval for new plans, coordinate with state integrated care efforts, and facilitate a transparent and smooth transition of beneficiaries. Therefore, we are finalizing paragraph (d)(2) to provide that CMS will not renew a contract for a D–SNP look-alike starting for plan year 2023 (rather than plan year 2022 as proposed). For plan year 2023, our determination that plans meet the criteria in paragraph (d)(2) would be based on our assessment of the plan’s enrollment in January 2022. This will extend by one year the timeline for CMS to non-renew a contract for any non-SNP plan with actual enrollment consisting of 80 percent or more dually eligible enrollees (with the exception of an MA plan active less than one year and with enrollment of 200 or fewer individuals at the time of the determination). Additionally, we are finalizing paragraph (d)(2) with a slight restructuring of using new paragraphs (d)(2)(i) and (ii) for better organization and clarity. Comments recommending a delay in implementation were based on MA organizations seeking more time to establish new D–SNPs, ensure smooth beneficiary transitions for existing D– SNP look-alike enrollees, and coordinate transitions with state integrated care approaches. Since these expressed reasons for an implementation delay apply to existing D–SNP look-alikes but not to potential new D–SNP look-alikes that are either in contract application or annual bidding stages, we do not believe there is a need to delay the effective date for the prohibition on CMS not entering into contracts for new D–SNP look-alikes. Implementing the timeline for the prohibition on new D–SNP look-alikes as proposed also avoids the need for additional beneficiary transitions. We are therefore finalizing our proposal in paragraph (d)(1) that CMS does not enter into a contract— beginning with plan year 2022—for a new MA plan that projects in its bid VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 submitted under § 422.254 that 80 percent or more of its total enrollment are enrollees entitled to medical assistance under a state plan under Title XIX. We are finalizing paragraph (d)(1) with a slight restructuring of using new paragraphs (d)(1)(i) and (ii) for better organization and clarity. We are retaining the proposed date in paragraph (d)(1), despite changing the date in paragraph (d)(2), to prevent the creation of new D–SNP look-alikes in 2022 that CMS would subsequently non-renew one year later. We are also finalizing as proposed the timeline on which MA organizations will be authorized to transition enrollees from a D–SNP look-alike to another plan, proposed at paragraph (e). The changes to our proposed policy give MA organizations with existing D– SNP look-alikes more time to coordinate with state integrated care approaches and transition enrollees in a thoughtful, transparent manner that minimizes the number of beneficiary transitions. This finalized approach also allows D–SNP look-alikes that are ready to transition their enrollees the ability to do so as soon as 2021 and eliminates the proliferation of new D–SNP look-alikes, beginning in 2022. We are available to provide guidance to any MA organization regarding transition to a new or existing D–SNP and encourage MA organizations to monitor their Monthly Membership Reports to determine if they are approaching or above the allowable threshold for dually eligible enrollees in a non-SNP plan in any state where the contracting limitations under this regulation will apply. Comment: A commenter noted that if an MA organization has not submitted an application for a D–SNP for contract year 2021, it would not be able to transition D–SNP look-alike enrollees in 2021, as the commenter believed was required under CMS’ proposal. This commenter added that some states have not yet clarified which plans will be allowed to offer D–SNPs in specific markets for 2021. Response: We agree with the commenter that the D–SNPs that will operate in specific markets in plan year 2021 are not yet known and will not be public information until fall 2020. However, we believe this commenter may have misunderstood the timing of our proposal. We proposed to allow, but not require, D–SNP look-alikes operating in 2020 to transition enrollees for an effective date of January 1, 2021, and we proposed that CMS not enter into or renew contracts with D–SNP look-alikes beginning January 1, 2022. As explained earlier in this section, we PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 are finalizing paragraph (d)(2) to allow an additional year—until plan year 2023—before CMS will decline to renew a contract for an existing MA plan that meets our dual eligible enrollment threshold. Under our original proposal, existing D–SNP look-alikes could, but were not required to, transition their enrollees for a January 1, 2021, or a January 1, 2022 effective date before the contract limitation in paragraph (d)(2) requires action by CMS. With our revisions for the final rule, we are also permitting an option for existing D–SNP look-alikes to transition enrollees for a January 1, 2023 effective date. Under the final provisions of § 422.514(d), CMS will permit any new D–SNP look-alike that begins to operate on January 1, 2021 to continue operating until December 31, 2022. However, an MA organization offering such a new D–SNP look-alike could choose to transition its enrollees as early as January 1, 2022. Further, the transition is not required to be only to a D–SNP, so the MA organization operating an existing D–SNP look-alike does not need to apply to offer a D–SNP. Comment: A number of commenters preferred an alternative discussed in the proposed rule that would require an MA organization to transition any dually eligible individuals enrolled in a nonrenewing D–SNP look-alike into a D– SNP for which they were eligible if such a plan is offered by the MA organization. Some of these commenters believed D–SNP look-alikes should not be able to transition dually eligible individuals into other MA plans when a more integrated option exists. A commenter supported this alternative since it viewed a requirement to transition dually eligible individuals into D–SNPs as continuing federal efforts to strengthen integration of care for dually eligible individuals. A commenter specifically suggested that CMS prioritize transition of full-benefit dually eligible individuals to D–SNP products and other integrated plans. Response: We appreciate the commenters’ support for the proposed alternative, and we share the commenters’ preference for integrated care. Although we considered an alternative in the proposed rule 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. We believe that transitioning D–SNP look-alike enrollees to D–SNPs or other plans authorized by CMS to exclusively enroll dually eligible individuals, when one is offered by the E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations same MA organization or another MA organization that shares the same parent organization as the MA organization, furthers federal goals to integrate care for dually eligible individuals. However, we also expect that some MA organizations may be unable to transition all D–SNP look-alike enrollees into the same MA plan, since the D–SNP look-alike enrollees may not all meet the eligibility criteria for a particular special needs plan offered by the MA organization or another MA organization that shares the same parent organization as the MA organization. Our proposal included language at paragraph (e)(1) to allow MA organizations to transition D–SNP lookalike enrollees into one or more MA plans that meet the criteria proposed at paragraphs (e)(1)(i)–(iii). While we expect and encourage dually eligible enrollee transitions to D–SNPs or other integrated plans to occur in many cases, even in the absence of a specific federal requirement, we believe that the complexities associated with a regulation that prioritizes or restricts transitions to D–SNPs or other integrated plans that way would outweigh the potential benefits. Thus, we are finalizing paragraph (e) that an MA organization with a non-SNP MA plan determined to meet the enrollment threshold finalized at paragraph (d)(2)(ii) may transition enrollees into another MA–PD plan (or plans), including a D–SNP, if offered by the same MA organization, as long as any such MA–PD plan meets certain proposed criteria finalized at paragraph (e) and, if such transition is to a D–SNP, enrollees meet the D–SNP eligibility criteria. Paragraph (e) allows MA organizations multiple options. First, an MA organization can choose not to participate in any transition process under paragraph (e), in which case the enrollees in a D–SNP look-alike would be enrolled by default in the original Medicare fee-for-service program, unless the enrollee made an active choice otherwise. Second, an MA organization can choose to transition all enrollees from a D–SNP look-alike to a different plan that meets the criteria in paragraph (e)(1). Third, recognizing that D–SNP look-alike enrollees may not all qualify for the same new plan, paragraph (e) allows an MA organization to transition look-alike enrollees to multiple plans. For example, an MA organization could transition from its D–SNP look-alike: (1) Dually eligible enrollees into a D–SNP for which they were eligible and (2) non-dually eligible enrollees into a nonSNP plan, provided both plans meet the criteria in paragraph (e)(1). VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 MA organizations must abide by the anti-discrimination provision (based on health status) in section 1852 of the Act and § 422.110 and other applicable law (for example, civil rights law) when exercising the transition authority. These provisions are applicable to the enrollment transitions authorized under § 422.514(e) and would be especially important to consider where an MA organization chooses to transition enrollees into more than one MA plan. With the exception of transitioning an individual into a C–SNP, an MA organization must not choose a particular plan for an enrollee to transition into based on health status, if the enrollee were eligible for more than one plan offered by the MA organization or its parent organization to receive transitioned enrollees. For example, it would be a violation of the antidiscrimination provision if an MA organization transitioned most dually eligible members from a D–SNP lookalike to a D–SNP but transitioned dually eligible members with diabetes to a different qualifying non-SNP MA plan. As necessary, we will monitor use of the transition authority under this rule to ensure compliance with the applicable anti-discrimination provisions and may take other action as warranted to protect beneficiaries. Finally, we note that we intend to inform state Medicaid agencies of transitions of enrollees from D–SNP look-alikes into D–SNPs in their state so the states are aware for purposes of their own integrated care efforts and communications with stakeholders. Comment: A commenter requested that CMS add language that specifically includes MMPs as a plan type eligible to receive beneficiaries who transition from D–SNP look-alikes. Another commenter requested that states be given the flexibility to transition dually eligible look-alike enrollees into a D– SNP or other plan authorized by CMS to exclusively enroll dually eligible individuals, such as an MMP. Response: We appreciate these comments. The proposed language did not explicitly name MMPs as a type of MA plan into which D–SNP look-alike enrollees could transition because MMPs are not defined in regulation, and CMS can facilitate enrollments from D– SNP look-alikes into MMPs under separate authority. We clarify that MMPs are a type of plan authorized to exclusively enroll individuals entitled to medical assistance under a state plan under Title XIX. CMS is testing the Financial Alignment Initiative under section 1115A of the Act. Some of the demonstration states in the Financial Alignment Initiative are transitioning PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 33815 individuals from an MA plan, including a D–SNP look-alike, to an MMP through passive enrollment. If an MA organization also sponsors an MMP and desires to transition D–SNP look-alike enrollees to the MMP, we would partner with the state Medicaid agency and use our existing authority and processes to execute the transition. Outside of the context of a demonstration or model test under section 1115A of the Act, however, we do not agree with the commenter’s request that states be given the flexibility to transition D–SNP lookalike enrollees. CMS will work directly with D–SNP look-alikes to operationalize the transitions, consistent with other Medicare plan transitions, and ensure states are aware of them. Comment: A commenter requested that CMS ensure dually eligible individuals who previously received care through a managed care plan do not default into the original Medicare feefor-service program. The commenter stated that these individuals should have the opportunity and support necessary to choose a plan that meets their needs and does not disrupt their care. Response: We appreciate the commenter’s request and agree with the concern. However, we expect the number of D–SNP look-alike enrollees who enroll in the original Medicare feefor-service program as a result of this rulemaking to be very small. In our proposed Collection of Information (COI) burden estimates, we estimated that only one percent, or 1,808, D–SNP look-alike enrollees would make a Medicare choice other than the MA plan into which they are transitioned by the MA organization. Our estimate was based on our experience with the rate of dually eligible enrollees opting-out of passive enrollment from an MA plan to an MMP offered by the same parent organization as part of the MedicareMedicaid Financial Alignment Initiative. Comment: A commenter requested that CMS clarify whether the proposed transition approach allows transition of D–SNP look-alike enrollees to MA plans of a different plan type, such as from an HMO to a PPO. Response: We appreciate the commenter’s request for clarification. In the proposed rule, we stated that our proposed transition process was conceptually similar to ‘‘crosswalk exception’’ procedures historically allowed by CMS and proposed at § 422.530 in the proposed rule. We also clarified that, in contrast to the proposed crosswalk exceptions, our proposal would allow the transition process to apply across legal entities E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33816 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations offered by MA organizations under the same parent organization, as well as between SNPs and non-SNP plans. However, it was not our intent to allow for the transition process to apply across product types—for example, HMO to PPO, and vice versa. We are therefore modifying the regulation text to add a new paragraph (e)(1)(iv) to stipulate that an MA plan or plans receiving enrollees under the transition process we are finalizing in paragraph (e) must be of the same plan type (for example, HMO or PPO) as the D–SNP look-alike. An MA organization will not be permitted to transition an individual from a D– SNP look-alike PPO to an MA–PD plan that is an HMO, or vice versa. Comment: A commenter appreciated that our proposed transition gives D– SNP look-alikes the ability to transition non-D–SNP members into a D–SNP across legal entities. This commenter requested that CMS allow transitions across legal entities in other situations where it would be in the beneficiary’s best interest, such as transitioning a beneficiary with a chronic condition into a C–SNP under a different legal entity. Response: The commenter’s understanding of our proposed transition approach in § 422.514 in connection with transitioning enrollees out of a D–SNP look-alike is accurate. Our approach, which we are finalizing as proposed at paragraph (e), allows MA organizations to transition D–SNP lookalike enrollees into an MA plan or plans which meet the criteria in paragraph (e)(1) and are offered by the same MA organization or another MA organization that shares the same parent organization as the MA organization. Under our approach, D–SNP look-alike enrollees who are eligible for a C–SNP could be transitioned into a C–SNP that meets the criteria in paragraph (e)(1). With regard to crosswalks or enrollment changes in other contexts, the recommendation is outside of the scope of our proposal for § 422.514; we will take the comment under consideration in connection with the crosswalk proposal (proposed to be codified at § 422.530) in section VI.C. of the proposed rule, which we intend to address in a future final rule. Comment: Some commenters encouraged CMS to finalize the proposed policy on D–SNP look-alikes with sufficient advance timing, preferably in advance of the 2021 bid deadline, to allow for enrollee transitions. Response: We agree it is important, where possible, to finalize the policy in advance of bid deadlines so that MA organizations can have sufficient time to VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 make decisions for 2021 plan offerings. At paragraph (d), we are finalizing the timing of when we would implement the prohibition on contracting for D– SNP look-alikes with the modifications discussed earlier. D–SNP look-alikes operating in 2020 may choose to transition their enrollees effective January 1, 2021, January 1, 2022, or January 1, 2023, and D–SNP look-alikes operating in 2021 may choose to transition their enrollees effective January 1, 2022 or January 1, 2023. For plan year 2022 and subsequent years, CMS will not enter into a contract with a new MA plan that meets criteria outlined in paragraph (d)(1), and for plan year 2023 and subsequent years, CMS will not renew a contract with a MA plan that meets criteria outlined in paragraph (d)(2). We note that MA organizations will be able, under § 422.514(e) as finalized here, to transition enrollees in D–SNP lookalikes to other plans in advance of CMS non-renewing the D–SNP look-alike PBPs effective January 1, 2023 and January 1 of subsequent plan years. Comment: A commenter noted that D–SNPs currently must have executed state Medicaid agency contracts with applicable states and requested that CMS also allow plans to meet this requirement with subcontracts through a directly contracted entity in order to ease transitions for beneficiaries into the most integrated plan possible. Response: Consistent with the revised SMAC requirements and the new definition of a D–SNP codified in the April 2019 final rule, a plan must have a direct contract with the state Medicaid agency to meet the definition of a D– SNP at § 422.2. CMS does not consider subcontracting arrangements with Medicaid managed care plans in lieu of SMACs to approve a plan as a D–SNP. Comment: A commenter recommended that CMS allow an optout process for D–SNP look-alike enrollees being transitioned to a new plan. The commenter indicated that such an opt-out process would preserve beneficiary choice. Response: We appreciate the comment and agree that the ability of an enrollee to opt out is important to ensure beneficiary choice. As we discussed in the preamble of the proposed rule, 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 criteria described in the proposed rule and finalized here. Under the transition authority we are PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 finalizing, an MA enrollee could be transitioned from one MA plan offered by an MA organization to another MA– PD plan (or plans) without the enrollee having completed an election form or otherwise indicate their enrollment choice as typically required. However, the timing of these transitions permits the enrollee to make an affirmative choice for another MA plan of his or her choosing during the annual election period (AEP) from October 15 through December 7. Section 422.514(e) ensures this right because the description of the MA plan to which the enrollee would be transitioned must be provided in the ANOC that must be sent consistent with requirements in § 422.111(a), (d), and (e). The ANOC must be sent at least 15 days before the beginning of the AEP. 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. If a transitioned enrollee elects to enroll in a different plan during the AEP, enrollment in the plan the enrollee selected would take precedence over the plan into which the MA organization transitioned the enrollee. Transitioned enrollees would also have additional opportunities to select another plan through the Medicare Advantage Open Enrollment Period described in § 422.62(a)(3) from January 1 through March 31. Affected individuals may also qualify for a Special Election Period (SEP), such as the SEP for plan nonrenewals at § 422.62(b) or the SEP for dually eligible individuals or Part D low-income subsidy eligible beneficiaries at § 423.38(c)(4). For D– SNP look-alike enrollees who are not transitioned by an MA organization per proposed paragraph (e)(1), the MA organization must send a written notice consistent with § 422.506(a)(2). This requirement will ensure that the content of that notice includes the content sent when a plan is non-renewing (including information about other enrollment options) and that the notice is sent by October 2 (90 days before the end of the year). We believe that the transition process we proposed and are finalizing provides sufficient opportunity for affected enrollees to opt out of their new plan and make a different election. Therefore, as described earlier in this section, we are finalizing the transition process at paragraph (e) largely as proposed with some minor modifications and technical changes described elsewhere in this section. Comment: A few commenters expressed concern about the disruption E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations of aligned Medicare and Medicaid coverage at the point of transition, especially when an individual is enrolled in a Medicaid plan under the same parent organization as the D–SNP look-alike. These commenters recommended that affected beneficiaries be permitted to stay with the MA plan or MA organization to ensure continued integration of Medicare and Medicaid benefits. The commenters believed that such a disruption in ongoing care plans and care teams at the individual level would likely outweigh any additional benefit from the D–SNP integration requirements at the plan level. Response: We appreciate the commenters’ concerns about potential disruption of aligned coverage. The transition approach proposed and finalized at paragraph (e) permits MA organizations to transition D–SNP lookalike enrollees into another MA plan or plans (including into a D–SNP for enrollees who are eligible for such a plan) offered by that MA organization or by another MA organization that shares the same parent organization. We expect the vast majority of D–SNP look-alike enrollees to be transitioned into a plan offered by the same parent organization as the D–SNP look-alike, which would facilitate the sharing of any enrollee care plans and, in some cases, continued access to the same care teams. Also, as explained earlier in this section, we estimate that only one percent of D–SNP look-alike enrollees will move to the original Medicare fee-for-service program or to another MA plan outside of the same parent organization. To the extent that any enrollees in a D–SNP look-alike are enrolled in a Medicaid managed care plan under the same parent organization as the D–SNP lookalike, the transition authority finalized in paragraph (e) allows similar enrollment in plans offered by the same entity or parent organization. Comment: Some commenters requested that CMS consider statespecific integrated care initiatives as it finalizes its transition policy. In particular, a few commenters encouraged CMS to coordinate transition of D–SNP look-alikes with states where integrated care plan initiatives are proposed or underway to avoid unintended confusion or enrollment barriers for dually eligible individuals. A commenter suggested that CMS issue guidance to states about enrollee transitions initiated by D–SNP look-alikes so that transitions of dually eligible individuals are coordinated with any changes that states are proposing in Medicaid enrollment, which would help minimize the number of transitions an individual experiences VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 over a short period of time. A few commenters requested that CMS consider the impacts of any stateimposed moratorium on contracting with D–SNPs in counties where MMPs are offered, citing such a policy in California. A commenter stated that any such moratorium could affect the ability of individuals who have opted out of MMPs or do not meet MMP eligibility criteria to enroll in other integrated plan options. Another commenter noted that D–SNPs are best positioned to meet the unique needs of dually eligible individuals, and the California restrictions on D–SNP enrollment are harmful when dually eligible individuals do not have the flexibility to enroll in a D–SNP. This commenter expressed concern that if CMS moved forward with the proposed policy and D–SNPs remained closed to enrollment, beneficiaries in areas like those in certain California counties would likely enroll in non-SNP MA plans that not only would not offer the care coordination required by D–SNPs, but may impose higher premiums and outof-pocket expenses. Response: We thank the commenters for sharing these concerns. As we stated in our proposed rule preamble, section 164(c)(4) of MIPPA does not obligate states to contract with D–SNPs, which therefore provides states with significant control over the availability of D–SNPs. As discussed earlier, we are finalizing language to delay CMS nonrenewal of D–SNP look-alikes to January 1, 2023 and subsequent years, to allow more time for MA organizations and states to coordinate transitions. This delay will also better align the timing of any enrollee transitions from D–SNP look-alikes in California with the current CalAIM implementation timing of January 1, 2023. We do not expect D– SNP look-alike enrollees to experience higher premiums since the transition approach proposed and finalized at paragraph (e) only permits MA organizations to transition D–SNP lookalike enrollees into MA plans that meet certain criteria, including having a combined Part C and Part D premium of $0 for individuals eligible for the premium subsidy for full subsidy eligible individuals described in § 423.780(a). Comment: A commenter appreciated CMS giving MA plans the ability to transition enrollees in non-D–SNP lookalikes into D–SNPs across legal entities but expressed concern that there could be disproportionate and unintended impacts to the Members Choosing to Leave the Plan Star Rating measure for contracts with the D–SNP look-alikes where the transition authority is used. PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 33817 This commenter requested that CMS ensure that all proposed D–SNP lookalike transitions are excluded from the Members Choosing to Leave the Plan Star Rating measure because the commenter did not believe this measure, which is representative of enrollee satisfaction, would accurately reflect performance if transitioned members were included in the measure. Response: We thank the commenter for raising this issue. The specifications for the Members Choosing to Leave the Plan Star Rating measure allow beneficiaries transitioned as a result of a PBP termination to be excluded from the calculation of this Star Rating measure. The vast majority of D–SNP look-alike enrollees transitioned into another MA plan or plans will be identified in MARx as disenrollment reason code 09, termination of a contract (CMS-initiated), or disenrollment reason code 72, disenrollment due to a plan-submitted rollover. Neither disenrollment reason code 72 nor 09 will be counted toward the calculation of the Members Choosing to Leave the Plan Star Rating measure. As discussed earlier, we estimated one percent of, or 1,808, D– SNP look-alike enrollees would make a Medicare choice other than the MA plan into which they are transitioned. MARx will identify these transitions as disenrollment code 13, disenrollment because of enrollment in another plan, and these transactions will be counted toward calculation of the Members Choosing to Leave the Plan Star Rating measure. Since such a small number of transitioning D–SNP look-alike enrollees would be counted, we do not believe a change to the Star Rating measure specifications is needed. Comment: Some commenters requested that CMS only permit D–SNP look-alikes to transition members into other MA plans for which provider networks have at least a 90 percent overlap with the provider network of the D–SNP look-alike. These commenters requested that, if this standard is not met, enrollees should not be transitioned to another plan and instead default to coverage under the original Medicare fee-for-service program. One of these commenters noted that because any plan receiving D–SNP look-alike enrollees would be part of the same parent organization as the D–SNP look-alike, that parent organization could adjust the MA plan networks to meet this 90 percent standard. Response: We appreciate the commenters’ concern that dually eligible individuals maintain their providers from the network of the D– E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33818 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations SNP look-alike. As we discussed in response to other comments, MA organizations may transition enrollees from a D–SNP look-alike into another MA plan offered by the same parent organization, including a D–SNP. Many provider participation agreements used by MA organizations include provisions that the providers contract for all product types the MA organization offers. In fact, CMS assesses network adequacy at the contract level rather than at the plan level (see section V.A. of this preamble). In similar instances where CMS transitioned enrollees from MMPs to D–SNPs under the same parent organization, there was a high degree of overlap in the provider network, as assessed at the contract level. Based on our understanding of common contracting processes and past experience with MMPs and MA organizations that offer D–SNPs, we believe a high degree of overlap will exist between the contracted provider networks in a D–SNP look-alike and a MA plan offered by the same parent organization, making it unnecessary for CMS to impose a standard that requires a specific percentage of provider overlap. Additionally, and as we noted earlier in this section, in those instances where a dually eligible individual receives notice that they are being transitioned to a MA plan that does not include their providers, they retain the ability to choose a different MA plan or the original Medicare fee-for-service program. Finally, in any instances in which there would be meaningful network differences between the D–SNP look-alike and the MA plan to which a member is transitioned, we strongly encourage plans to communicate with members about the potential impacts of such changes. Comment: A commenter explained that there were many lessons learned during the implementation of Cal MediConnect, a capitated model demonstration under the Financial Alignment Initiative, that highlighted the importance of consumer protections such as continuity of care and network parity. The commenter noted that during the transition to Cal MediConnect, the Department of Health Care Services, California’s state Medicaid agency, implemented continuity of care standards and provided guidance allowing the receiving Cal MediConnect plan, which was an MMP, to use the HRA completed by a D–SNP. To minimize disruptions in care, the commenter requested that CMS consider beneficiary protections similar to those included in the state’s proposed CalAIM D–SNP transition plan and VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 establish requirements for transferring a D–SNP look-alike enrollee’s HRA and care plan, as well as requirements for continuity of care and network parity, and a prohibition on receiving plans’ imposition of additional cost-sharing requirements. Response: We appreciate the commenter’s perspective and support a smooth transition between D–SNP lookalikes and another MA plan, but we do not believe establishing additional requirements as suggested is necessary. As discussed in the preamble of our proposed rule, D–SNP look-alikes are not subject to federal D–SNP requirements, including the requirements to develop HRAs and individualized care plans. Thus, we do not expect D–SNP look-alikes necessarily will have any HRAs or care plans to transfer to another MA plan in connection with the transition of a beneficiary’s enrollment. As discussed earlier in this section, to the extent that a D–SNP look-alike has developed HRAs or individualized care plans, we expect the vast majority of D–SNP lookalike enrollees to be transitioned into a plan offered by the same parent organization as the D–SNP look-alike. We believe that transitions under paragraph (e) will facilitate the sharing of any HRAs and care plans and promote continuity of care because the new plan will be operated by an entity with the same parent organization, if not the same MA organization, which likely means overlapping or the same personnel and policies. Additionally, all transitioning beneficiaries will have Medicare’s standard Part D continuity of care protections for prescription drugs (including temporary fills of nonformulary drugs during a transition period as provided under § 423.120(b)(3)). Plans receiving transitioned enrollees must also provide other continuity of care requirements for MA plans, including those outlined in § 422.112(b). As we describe earlier in this section, we believe that there will be a high degree of provider network overlap across plans that are offered by the same MA organization or share a parent organization, making it unnecessary for CMS to impose a standard that requires a specific percentage of provider overlap. Finally, we do not expect D–SNP look-alike enrollees to experience higher premiums since the transition approach proposed and finalized at paragraph (e) only permits MA organizations to transition enrollees in a D–SNP lookalike into MA plans that meet certain criteria, including having a combined Part C and Part D premium of $0 for PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 individuals eligible for the premium subsidy for full subsidy eligible individuals described in § 423.780(a). We also note that, pursuant to § 422.504(g)(1), MA organizations cannot impose cost sharing requirements for Medicare Parts A and B services on full-benefit dually eligible individuals that would exceed the amounts permitted under the state Medicaid plan if the individual were not enrolled in the MA plan. Comment: Several commenters encouraged CMS to require that the ANOC notifying a beneficiary being transitioned to a new plan identify D– SNP look-alike providers known to not be in the receiving plan’s network, focusing specifically on primary care providers and specialists who the beneficiary has seen twice or more in the past year. One of these commenters explained that this information would help beneficiaries make informed choice about whether to participate in the transition and prevent surprise accessto-care issues in the early months of enrollment. A commenter expressed a similar view but suggested the ANOC identify any providers seen in last year. Another commenter noted the importance of a plan’s provider network to beneficiaries with disabilities. We also received one comment recommending that the ANOC contain information about other plan options. Response: We appreciate the commenters’ perspectives and support transparency on MA provider networks, but we do not agree that the ANOC is an appropriate means of communicating beneficiary-specific provider information since it is not a beneficiaryspecific notice. Standardized language in the ANOC model already provides general information about changes to an MA plan’s network and directs enrollees to the plan’s updated provider network directory to help with decision-making during the AEP. As we discussed earlier in this section, we believe the vast majority of D–SNP look-alike enrollees will be transitioned into an MA plan within the same parent organization as the D–SNP look-alike and there will be a high degree of provider network overlap across plans that are offered by the same MA organization or share a parent organization, lessening the need to provide beneficiary-specific provider information. Additionally, and as we noted earlier in this section, in those instances where a dually eligible individual is transitioned to a MA plan that does not include their providers, they retain the ability to choose a different MA plan or the original Medicare fee-for-service program. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations While we support beneficiary education and choice about plan options, we also do not believe the ANOC is the appropriate vehicle for communicating information about other plan options. As described earlier, the transition process of D–SNP look-alike enrollees into another MA plan or plans will overlap with the AEP. Enrollees who are subject to being transitioned under § 422.514(d) have multiple ways of identifying other plan choices, such as through reviewing the Medicare & You Handbook, consulting Medicare Plan Finder, and contacting 1–800Medicare and the State Health Insurance Assistance Program in their state. Comment: A commenter requested that CMS provide guidance for providers and beneficiaries explaining why the transition from D–SNP lookalikes to another MA plan or plans is occurring. Response: We appreciate the comment and the desire for providers and beneficiaries to be informed about the transition. However, we believe it is the responsibility of MA organizations that are transitioning enrollees to other MA plans to educate providers and enrollees about the transition and the benefits of the new (receiving) plans. As discussed earlier in this section, the MA organization receiving D–SNP look-alike enrollees is required to send these enrollees an ANOC consistent with § 422.111(a), (d), and (e) that includes information on benefits and provider network changes. We are, however, finalizing paragraph (e)(2)(ii) with minor modifications to clarify that the responsibility of providing information to transitioned enrollees in the ANOC rests with the MA–PD plan into which individuals are transitioned, and that the ANOC describes changes to the MA– PD plan’s benefits and provides information about the MA–PD plan. Comment: A commenter expressed support for the proposed D–SNP lookalike contracting standards, while noting potential negative impacts, including reduced plan competition and consumer choice. The commenter recommended that states be required to contract with all MA–PD plans that have an approved MOC and suggested three different contracting options: (1) States enter into a care coordination contract with plans; (2) states pay plans to coordinate Medicare and Medicaid services, assuring alignment with the state’s strategy to deliver LTSS or managed LTSS (MLTSS); and (3) states pay plans to coordinate Medicare and Medicaid services and deliver LTSS. Another commenter suggested that plans meeting certain CMS criteria for integrated care could earn a ‘‘Standard VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 of Excellence for Dually-Eligible Individuals’’ seal of approval that could be used for marketing purposes and posting on Medicare Plan Finder. Response: We appreciate the commenters’ input on strategies that could improve plan competition and support consumer choice. We note that some of the commenters’ recommendations, such as requiring states to contract with all MA–PD plans that have an approved MOC, are beyond CMS’s existing authority. As we gain experience with implementing the requirements in this final rule, we will take into consideration those recommendations that are within CMS’s authority. Comment: A commenter recommended CMS consider requiring that any entity that meets the 80 percent dual enrollment threshold meet minimum standards of integrated care coordination and data sharing for its full-benefit dually eligible members, including in the eight states that do not currently have any D–SNPs (as of July 2019). This commenter supported requiring that MA organizations in these eight states transition members to an MMP if one exists or, if one does not, submit a MOC, complete HRAs, and provide integrated care coordination and information sharing for all of its full-benefit dually eligible members. Response: We appreciate the commenter’s alternative approach. We clarify that proposed paragraphs (d)(1) and (2) would, in fact, limit new and existing D–SNP look-alikes from operating in states where a D–SNP or any other plan authorized by CMS to exclusively enroll individuals entitled to medical assistance under a state plan under Title XIX, including MMPs, exists. The limit on new D–SNP lookalikes precludes CMS from entering into a new contract for a D–SNP look-alike for 2022 and subsequent years. The limit on existing D–SNP look-alikes precludes CMS from renewing a contract for an existing D–SNP lookalike for 2023 and subsequent years. However, under current law, CMS does not have the authority to require D–SNP look-alikes in the eight states without D–SNPs to submit MOCs, conduct HRAs, or provide integrated care coordination and information for all of its full-benefit dually eligible members. Section 1859(f) of the Act requires that each D–SNP have a contract with the state Medicaid agency; this requirement is in addition to other D–SNP requirements this commenter references. Allowing D–SNP look-alikes to operate without such state contracts would allow such plans to circumvent an important D–SNP requirement. PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 33819 Comment: A few commenters proposed the application of new federal measures nationwide that would require D–SNP look-alikes to make progress on a pathway toward greater care integration. Rather than not approving or renewing contracts for certain D–SNP look-alikes, a commenter suggested that this alternative approach would assure continued beneficiary choice, as certain integrated care plans receive lower Star Ratings than other plans that do not provide integrated care. Another commenter suggested that D–SNP lookalikes could provide more integrated care if CMS required them to notify the state Medicaid agency or appropriate Medicaid managed care plan when fullbenefit dually eligible individuals are admitted to a hospital or skilled nursing facility (that is, the requirement recently codified at § 422.107(d) as one of three integration options available to D–SNPs beginning in 2021). Response: We appreciate the support for increased opportunities to integrate care for individuals who are dually eligible and the importance of beneficiary choice. Though we intend, through this final rule, to discourage the rapid proliferation of D–SNP look-alikes that undermine the statutory and regulatory framework for D–SNPs, we will continue to consider other ways to further promote integrated care for individuals who are dually eligible. Comment: A few commenters proposed that CMS conduct additional research on the market dynamics of D– SNP look-alikes, noting factors such as incentives for brokers who steer enrollees toward or away from certain service delivery models. These commenters suggested that, rather than implementing broad restrictions on D– SNP look-alikes, CMS could address those market distortions directly. For example, if D–SNP look-alikes result from inappropriate steering of beneficiaries, these commenters noted that CMS could institute measures reinforcing referrals to products best suited to the beneficiary’s needs. A few commenters noted that if misleading marketing practices were found to be a root cause, CMS has regulations and program rules to stop them. Another commenter supported the strong enforcement of existing marketing and broker requirements to prevent the targeting of dually eligible individuals for marketing MA plans that do not offer integrated care. The commenter noted that if CMS believes it lacks the authority required to discontinue this behavior, Congress should grant the agency the authority it needs. Response: We appreciate the commenters’ perspectives on the need E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 to avoid beneficiary confusion and take steps against misleading marketing practices. Our proposed rule included various proposed provisions codifying previous subregulatory guidance from the Medicare Communications and Marketing Guidelines prohibiting nonD–SNP plans from marketing their plan as if it were a D–SNP; those proposals will be addressed in a future final rule. We note, however, that MA organizations remain responsible for ensuring that their agents and brokers comply with part 422, subpart V. Current requirements (such as § 422.2268(a)(1) and (2)) include prohibitions on misleading or confusing marketing and communications; MA organizations must ensure downstream entities—such as their agents and brokers—that perform marketing or enrollment on behalf of the MA organization also comply with these requirements. We will also continue to monitor plans’ compliance with CMS marketing rules prohibiting misleading marketing practices, including activities of agents and brokers, to ensure that dually eligible individuals can make informed choices. This includes review of complaints about inappropriate marketing practices CMS receives through the Complaint Tracking Module described in § 422.504(a)(15). As we gain experience with implementing the requirements in this final rule, we will evaluate whether additional rulemaking on marketing practices is necessary. Comment: A few commenters suggested improving and increasing education for dually eligible individuals and providers about the benefits of integrated care and the availability of plans that offer such care. A few VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 commenters suggested that brokers should be required to educate dually eligible individuals on the integrated care options within their service area to assure that they can make informed choices. A commenter recommended that CMS require any low-premium MA plan that attracts dually eligible individuals to educate them about the availability of D–SNP options within their service area. Response: We appreciate recommendations for improved provider and beneficiary education on the availability and benefits of integrated products, and we will take into consideration ways to strengthen agent and broker training requirements and marketing rules within our current authority. After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing our proposed provisions at § 422.514(d) and (e) with the following modifications: • We are reorganizing the regulation text by adding new paragraphs (d)(1)(i) and (ii) and (d)(2)(i) and (ii) for better organization and clarity of the final requirements, as well as to establish different effective dates for the provisions of paragraphs (d)(1) and (2). Accordingly, we are also updating the reference in paragraph (e)(1)(i) from paragraph (d)(2) to paragraph (d)(2)(ii). • We are finalizing the provision at paragraph (d)(2) with the date 2023 instead of 2022 to extend by one year the timeline on which the contract limitation will apply to an existing nonSNP plan with actual enrollment consisting of 80 percent or more dually eligible enrollees (with the exception of PO 00000 Frm 00026 Fmt 4701 Sfmt 4725 an MA plan active less than one year and with enrollment of 200 or fewer individuals at the time of the determination). • We are modifying paragraph (e)(1)(iv) to stipulate that an MA plan (or plans) receiving enrollees under the transition process in paragraph (e) must be of the same plan type (for example, HMO or PPO) as the D–SNP look-alike. • We are making a minor modification to paragraph (e)(2)(ii) to eliminate the reference to § 422.2267(e)(3), as that proposed provision is not being finalized in this rule. We are also modifying paragraph (e)(2)(ii) to clarify that the responsibility of providing information to transitioned enrollees in the ANOC rests with the MA–PD plan into which individuals are transitioned, and that the ANOC describes changes to the MA–PD plan’s benefits and provides information about the MA–PD plan. • We are finalizing paragraph (e)(4) with a technical change to clarify that the content as well as the mechanism and timing requirements in § 422.506(a)(2) apply to the notice an MA organization must provide to any enrollees in a D–SNP look-alike that the MA organization is not transitioning to a new plan. • We are adding a new paragraph (f) to clarify that we would consider actions taken consistent with paragraph (d) to warrant special consideration to exempt affected MA organizations from the denial of an application for a new contract or service area expansion pursuant to §§ 422.502(b)(3) and (4), 422.503(b)(6) and (7), 422.506(a)(3) and (4), 422.508(c) and (d), and 422.512(e)(1) and (2). E:\FR\FM\02JNR2.SGM 02JNR2 ER02JN20.000</GPH> 33820 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 III. Implementation of Certain Provisions of the 21st Century Cures Act A. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 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 § 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. • 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. 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 III.B. and III.C. of this final 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 proposed the following amendments: VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 • 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. • Section 422.52(c) would be revised to specify that CMS authority to waive the enrollment prohibition in § 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. • 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. As noted earlier, 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. We received a large number of comments related to this proposal. The discussion below pertains specifically to comments related to eligibility and the removal of the prohibition on beneficiaries with ESRD enrolling in an MA plan as proposed in §§ 422.50(a)(2), 422.52(c), and 422.110(b). Comment: Generally, all commenters supported the statutory change removing the prohibition for ESRD beneficiaries to enroll in an MA plan. Many commenters noted that allowing these beneficiaries to enroll in MA plans will provide care coordination and, thus, improved clinical outcomes for this vulnerable population. A commenter also noted that MA beneficiaries have a relatively low rate of switching among plans and tend to stay with the selected plan long term, and this could contribute to better outcomes through longer coordination of care. Many commenters stated that this change will provide options for obtaining supplemental benefits and access to health and wellness programs not available in Original Medicare. Several commenters stated that MA plans provide a maximum out-of-pocket (MOOP) cost sharing for all enrollees, which makes MA an attractive option for these beneficiaries with high annual medical costs. Commenters noted that this MOOP may significantly decrease patients’ out-of-pocket costs. A commenter noted that the MOOP is especially important for those ESRD PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 33821 beneficiaries who are under age 65, and may not be eligible to purchase a Medigap policy to supplement their Original Medicare expenses. Several commenters noted that this provision will help improve the lives of, and empower, ESRD beneficiaries consistent with the President’s Executive Order on Advancing American Kidney Health. Response: We agree with the commenters and appreciate their support of the proposal. Comment: Several commenters requested that CMS clarify if the current optional employer/union group waiver for enrollment of ESRD members will be eliminated and, if so, questioned when guidance would be updated to reflect the change. Response: Under Section 1857(i) of the Act, CMS has the statutory authority to waive or modify requirements that hinder the design of, the offering of, or the enrollment in, employer/unionsponsored MA plans. As noted in the Medicare Managed Care Manual Chapter 9, section 30.3, CMS used this authority to grant a waiver to allow MA plans offered by MA organizations under contract with an employer or union, or offered directly by an employer or union, to choose to accept enrollees with ESRD under certain circumstances, provided that all otherwise eligible individuals with ESRD are permitted to enroll. With the enactment of the Cures Act, effective plan years on or after January 1, 2021, the prohibition on MA enrollment for ESRD beneficiaries is removed. Therefore, the waiver will no longer be effective and MA plans, including MA EGWPs, must accept enrollments of ESRD beneficiaries. We plan to update guidance as soon as possible. Comment: A commenter questioned if the 30-month coordination of benefits period for those entitled to Medicare based on ESRD status will be eliminated based on the removal of the prohibition. Response: The regulation codifies that those individuals with ESRD cannot be restricted from enrolling in an MA plan. However, nothing in the language of the regulation eliminates or is to be construed as eliminating the 30-month coordination of benefits period that section 1862(b)(1) of the Act imposes with regard to Medicare coverage of beneficiaries whose entitlement is based on ESRD. In other words, any Group Health Plan coverage effective at the time a beneficiary with ESRD enrolls in an MA plan will remain the primary payer during the 30-month coordination of benefits period. Comment: A commenter questioned how removing the prohibition on individuals with ESRD from enrolling in E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33822 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations MA plans will impact the way ESRD information must be obtained and reconciled in order to ensure appropriate payment. The commenter also questioned if CMS is considering increasing resources for the QualityNet helpdesk, as ESRD enrollments in MA plans are likely to increase, which may prompt higher volumes of cases where ESRD statuses and payments need to be reconciled and corrected in the future. Response: Completion of the CMS– 2728–U3 form (End Stage Renal Disease Medical Disease Evidence Report— Medicare Entitlement and/or Patient Registration, OMB control number 0938–0046) by a dialysis center, (including physician attestation and patient signature) is required for an individual to be medically determined to have ESRD for purposes of filing for Medicare benefits. However, collection of these data on the CMS–2728–U3 are also used to establish and maintain a nationwide kidney disease registry for dialysis, transplant, and prospective transplant patients, and will store pertinent medical facts on each registrant, regardless of Medicare status. CMS enrollment systems ultimately receive this information resulting in MA plans receiving payment based on ESRD capitation rates and risk adjustment. Further information on this process can be found in section 6.2.2 of the Plan Communication User Guide for Medicare Advantage Prescription Drug Plans. At this time, we have no plans to add additional resources to the QualityNet Help Desk but we will monitor call volumes to see if we need to increase the number of agents fielding ESRD Quality Reporting System calls. Comment: A commenter requested clarification on whether MA plans will be allowed to include the question regarding ESRD status on the MA enrollment form. The commenter also questioned if this change will impact the required Data Elements to consider an enrollment request complete. Response: CMS has proposed changes to the standard (‘‘long’’) model form used for MA and Prescription Drug Plan (PDP) enrollment (currently approved under OMB control number 0938–0753 CMS–R–267), to reduce data collection and simplify the enrollment process. When adopted, the new, ‘‘shortened’’ enrollment form will 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. The new ‘‘shortened’’ form used for enrollment into MA and PDP plans will not contain the ESRD status question. We expect MA plans to use VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 the new shortened form, (once OMB has approved its use) for the 2020 AEP, which begins on October 15, 2020, for January 1, 2021 effective dates. This timeframe aligns with the effective date of the removal of the prohibition of MA enrollment for ESRD beneficiaries. As the ESRD status question will not be on the form, it is not a data element which will be required to consider the enrollment complete. MA plans do not need to know the ESRD status of an enrollee to process an enrollment in light of the changes made by the Cures Act, and are prohibited from discriminating against potential enrollees on the basis of a health status factor. Data element requirements will be updated in future guidance. Comment: A commenter questioned how CMS plans to work with state Medicaid agencies regarding implementation of ESRD enrollment in D–SNPs. Specifically, the commenter stated that some states do not permit enrollment into a D–SNP plan when a beneficiary has been diagnosed with ESRD and questioned how CMS plans to address the discrepancy between current state enrollment restrictions prohibiting patients with ESRD from enrolling in a state’s D–SNP plans and the removal of the prohibition. The commenter also questioned if CMS will require states to adopt policies or align with CMS’ enrollment changes. Response: States already have the ability in their state Medicaid agency contract with each D–SNP to restrict which dually-eligible individuals may enroll in the D–SNP. If the state’s contract with a D–SNP excludes those with ESRD, the D–SNP may retain that exclusion in order to comply with the state contract required under § 422.107. Comment: A commenter questioned how the enrollment change will affect MMPs. They specifically questioned if CMS and state Medicaid agencies will revise the three-way-contracts and if MMP plan rates would be affected. Response: We note that currently, most states that are testing a capitated model of integrated care in demonstrations under the Financial Alignment Initiative (FAI) authorized under section 1115A of the Act permit those beneficiaries with ESRD to enroll in MMPs. Only South Carolina and six counties in California exclude those with ESRD from enrolling in an MMP. We are consulting with those two states to determine if, starting CY2021, they want to continue that exclusion under the model of integrated care being tested under the FAI demonstration authority. If they decide they do want to include the ESRD population, CMS would work with those states to update the PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 applicable Medicaid MMP rates, as needed. The MMP Medicare rate structure already includes rates specific for individuals with ESRD and these rates would apply for any MMP enrollees with ESRD; specifically, the ESRD dialysis state rate applies for individuals in the dialysis and transplant status phases, and the Medicare Advantage 3.5 percent bonus county rate applies for individuals in the functioning graft status phase, with all of these rates risk adjusted using the Hierarchical Condition Category -ESRD risk adjustment model for the applicable year. Comment: A commenter stated that a disproportionate share of beneficiaries with ESRD could be enrolling in D– SNPs and requested that CMS monitor enrollment of beneficiaries with ESRD into D–SNPs and ensure that payments are adequate. Response: We appreciate the feedback provided by the commenter. We will continue to analyze these issues as additional data emerges. We will consider whether, consistent with the statutory requirements for setting ESRD rates in section 1853(a)(1)(H) of the Act, any refinements to the ESRD rate setting methodology may be warranted in future years. Comment: A commenter stated that there should be oversight and penalties for companies who use aggressive marketing campaigns to recruit ESRD patients and ‘‘bait and switch’’ with services the beneficiary was promised and not delivered. Response: We appreciate the commenters’ concerns. MA plans must comply with the marketing and communications requirements in 42 CFR part 422, subpart V, and specifically, § 422.2268(a)(1) and (2), which include prohibitions on providing information that is inaccurate or misleading, and engaging in activities that could mislead or confuse Medicare beneficiaries. As part of ensuring their compliance with these requirements, MA organizations must monitor and oversee the activities of their subcontractors, downstream entities, and/or delegated entities as well. If CMS finds that MA plans have failed to comply with applicable rules and guidance, CMS may take compliance or enforcement actions, including, but not limited to, intermediate sanctions or civil money penalties. Comment: Some commenters raised concerns with implementing new rules given the ongoing COVID–19 pandemic and the strain it is putting on the entire United States health care system. A few commenters urged CMS to consider delaying implementation of this change E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations and continue to prohibit beneficiaries with ESRD from enrolling in MA plans until at least 2022. A commenter requested that CMS consider making all new 2021 requirements voluntary rather than mandatory. Response: The statutory change provides beneficiaries with the right to make an election for an MA plan if they meet the otherwise applicable requirements beginning January 1, 2021. CMS lacks authority to delay implementation of this statutory change. We are sympathetic to the commenters’ concerns that additional changes during the on-going pandemic may increase burdens and make compliance more difficult. However, the pandemic has further indicated that it is important to break down the barrier that has prohibited beneficiaries with ESRD from the enrolling in MA and having access to benefits such as care coordination and limitations to out-of-pocket costs. We also note that these changes are required by law (the Cures Act), effective for plans years on or after 2021. We appreciate that the COVID–19 pandemic has interrupted timing for implementing new requirements, but we are also mindful of the fact that the Cures Act was enacted in 2016 and, as a result, plans have been aware of the change and are likely planning for these enrollments. Comment: Several commenters suggested that CMS develop educational materials that will provide accurate and objective information about MA plan availability and options, services provided, and potential out-of-pocket costs. A commenter requested that CMS provide clear and easy to understand rules that prohibit discriminatory behavior so that patients that are entitled to Medicare Part A and enrolled in Part B know how they can exercise their right to select an MA plan. Response: Thank you for the comments. We agree, and as we implement this new and important policy, we will continue to provide educational and outreach materials and other clear guidance to those beneficiaries that are entitled to Medicare Part A and enrolled in Part B. CMS has reviewed, and will continue to review beneficiary publications to identify potential areas for improvement, and update public facing documents as needed so that Medicare beneficiaries are able make an informed coverage choice. Comment: A commenter stated that it is important for individuals with ESRD to have access to MA plan options through special election periods (SEPs) for exceptional conditions. A commenter stated that an ESRD VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 beneficiary should understand his or her option to change back to Original Medicare. Another commenter noted that if people sign up for MA and they realize it is not the option for them, they should have the ability to modify their enrollment, switch plans, or to cancel and return to Original Medicare. Response: We agree that beneficiary choice is important and beneficiaries with ESRD—like all other beneficiaries—should carefully consider their enrollment options when they become eligible for Medicare and during subsequent AEPs. All beneficiaries who join an MA plan have opportunities to change plans or return to the original Medicare fee-for-service program during the AEP (October 15 through December 7) or the Medicare Advantage Open Enrollment Period (January 1 through March 31, and during the first three months of Medicare Part A entitlement and Part B enrollment). In some cases, such as when a beneficiary moves out of the service area or is in a plan that does not renew its contract, a SEP is available. Of particular note is the ‘‘SEP65,’’ wherein an MA eligible individual who elects an MA plan during his or her initial enrollment period for Part B surrounding his or her 65th birthday may disenroll from this MA plan and elect coverage through the original Medicare fee-for-service program any time during the 12-month period that begins on the effective date of coverage in the MA plan. Beneficiaries may also use SEPs for exceptional conditions newly codified in § 422.62(b)(4) through (25) and described in section 30.4.4 of Chapter 2, Medicare Managed Care Manual, as appropriate, including the SEP for Individuals with ESRD Whose Entitlement Determination Made Retroactively to enroll in an MA plan. Further, to the extent that there is an exceptional situation for an individual that is not addressed by our existing SEPs, codified in this final rule, we will have the ability to respond to the exceptional situation pursuant to § 422.62(b)(26). Finally, there are SEPs available, under § 422.62(b)(3), in situations where the MA plan fails to provide medically necessary services or the plan (or its agents) materially misrepresented the plan’s provisions in marketing materials. Comment: A commenter suggests the establishment of an ESRD ombudsman to address any issues with implementation of this expansion of MA eligibility that may arise for beneficiaries, MA organizations, or their contracted providers. Response: The Medicare Beneficiary Ombudsman is dedicated to resolving PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 33823 complaints, grievances and requests for information submitted by Medicareeligible individuals and their advocates concerning any aspect of the Medicare program. Other entities and resources, including the CMS Regional Offices, State Health Insurance Assistance Programs, and 1–800–MEDICARE are also available to assist beneficiaries with issues or questions. Comment: A commenter proposed that CMS update the enrollment guidance to remove ESRD enrollment restrictions and to release the updated guidance in April. The commenter further states that the technology and process updates necessary for plans to implement the changes and the increase in MA membership has led to an increase in the number of materials that plans need to produce, straining production timelines. Response: Thank you for the comment. We understand the commenter’s concern and plan to issue guidance as soon as possible. We are also mindful of the fact that the Cures Act was enacted in 2016 and, as a result, MA organizations have been aware of this change for some time. Comment: A commenter suggested that dialysis cost sharing be included in the standard services/items reflected on individual plan searches in the Medicare Plan Finder (MPF) tool, and added that this information is not currently reflected. Response: We appreciate and agree that this additional data will help Medicare beneficiaries with ESRD find and choose an MA plan. We plan to add this information for plans offering coverage in 2021. Comment: A couple of commenters agreed with our decision not to amend § 422.66(d)(1) (requiring MA organizations to accept newly eligible Medicare beneficiaries who are seamlessly converting from health plan coverage offered by the MA organization) because the provision already applied to all beneficiaries regardless of their ESRD status. A commenter suggested that CMS slightly modify § 422.66(d)(1) to remove the language, ‘‘(regardless of whether the individual has end-stage renal disease)’’ to eliminate any confusion about the prohibition no longer being in effect. Response: We thank the commenters for their feedback. We believe that the regulation does not require further amendment. Comment: Commenters also provided a wide range of feedback regarding other downstream issues related to this change in enrollment criteria for the MA program including assurance of adequate payment for plans, quality of E:\FR\FM\02JNR2.SGM 02JNR2 33824 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 care, HEDIS measure changes, beneficiary MOOP and cost-sharing policies, and network adequacy. A commenter suggested that beneficiaries are likely to have improved outcomes if enrolled in a plan that uses an established care delivery model, and several other commenters requested that CMS allow MA plans to participate in the Center for Medicare & Medicaid Innovation kidney models to improve the dissemination of best practices in kidney care. Another commenter requested that CMS develop and submit SSBCI benefits for these beneficiaries. Response: We appreciate commenters for their feedback. Since those comments are outside the scope of the changes proposed in §§ 422.50(a)(2), 422.52(c), and 422.110(b), they will not be addressed in this section. To the extent that the comment is about other proposals in the notice of proposed rulemaking, it is, or will be, addressed in connection with that proposal elsewhere in this final rule or a future final rule. After review and consideration of all comments on the proposal to remove the prohibition on ESRD beneficiaries enrolling in an MA plan and for the reasons in the proposed rule and these comments and responses, we are finalizing the revisions to §§ 422.50(a)(2), 422.52(c), and 422.110(b) as proposed. B. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 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, VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 proposed conforming regulatory changes to reflect the revision to the statute. Specifically, we proposed to revise § 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 § 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 proposed to amend § 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 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. The following is a summary of the comments we received and our responses: Comment: Several commenters expressed support for the implementation of this Cures Act requirement. Response: We appreciate the commenters’ support of our approach to implementing this change. Comment: A commenter encouraged CMS to monitor the effects of the proposal’s approach to organ acquisition costs. Response: While we will continue to monitor and analyze the impact of this PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 change, we must comply with the statutory requirement for FFS Medicare to cover kidney acquisition costs for MA beneficiaries. Comment: A commenter noted that neither the proposed rule nor the calendar year 2021 Advance Notice, which was published on February 5, 2020, provided clear guidance on billing and reimbursement for organ acquisition costs. This commenter urged CMS to clarify whether these services are to be billed directly to Medicare Administrative Contractors (MACs) and paid directly to the providers involved, rather than being paid to MA plans for pass-through to providers. The commenter also requested that CMS clarify which organ acquisition costs will be payable by FFS Medicare. Response: We appreciate the commenter’s request for further clarification. We want to emphasize that the payment changes for organ acquisition costs apply only to kidneys. Effective January 1, 2021, FFS Medicare will cover kidney acquisition costs for MA beneficiaries in accordance with the processes and guidance outlined in the Claims Processing Manual,17 CMS Pub. 100–04, chapter 3 and the Provider Reimbursement Manual,18 CMS Pub. 15–1, chapter 31. Hospitals currently bill MA claims to their respective MACs for processing as no-pay bills so that the MA inpatient days can be accumulated on the Provider Statistics & Reimbursement Report (PS&R) (report type 118). These no-pay bills must identify kidney acquisition costs using revenue code 081X and the hospital must track each MA kidney transplant. For instructions on billing for kidney acquisition costs, please refer to chapter 3, sections 90.1 through 90.1.3, of the Claims Processing Manual. For details on services included as kidney acquisition costs, please refer to chapter 31, section 3101, of the Provider Reimbursement Manual. The MA kidney transplants will be used in the numerator and denominator on the Medicare cost report to determine Medicare’s share of kidney acquisition costs. Final payment will be made to the hospital through the Medicare cost report. Comment: A commenter questioned how CMS addresses the difference between cadaveric organ acquisition and living donor organ donation in assessing kidney acquisition. 17 https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/internet-OnlyManuals-IOMs-Items/CMS018912. 18 https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Paper-BasedManuals-Items/CMS021929. E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 Response: We appreciate the commenter’s question. Please refer to the Provider Reimbursement Manual, CMS Pub. 15–1, chapter 31,18 for more information on provider reimbursement for the costs related to acquiring living donor organs and cadaveric donor organs. After careful consideration of all comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the regulatory changes to § 422.322 to conform with the statutory amendments requiring FFS Medicare coverage of kidney acquisition costs for MA beneficiaries, effective January 1, 2021. C. Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) Benchmarks (§§ 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 2012,19 the applicable amount and the specified amount are used in the calculation of the MA benchmarks and capitation rates. We proposed to revise the relevant regulations to reflect these amendments. Specifically, we proposed to revise § 422.258, which describes the calculation of MA benchmarks. Under section 1853(n)(1)(B) of the Act and § 422.258(d) of the regulations, for 2012 and subsequent years, the MA benchmark for a payment area for a year 19 The Advance Notice and Rate Announcement for each year are available online at: https:// www.cms.gov/Medicare/Health-Plans/Medicare AdvtgSpecRateStats/Announcements-andDocuments.html. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 is equal to the amount specified in section 1853(n)(2) of the Act (that is, the ‘‘specified amount’’), but, as described in section 1853(n)(4) of the Act and § 422.258(d)(2)(iii), cannot exceed the applicable amount specified in section 1853(k)(1) of the Act and § 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 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 § 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 proposed to make conforming amendments to paragraphs (d)(3), (5), and (6) of § 422.258. As amended, paragraph (d)(3) would 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) would 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 proposed to insert references to the adjustment made under § 422.306(d) to modify the various references to the base payment amount in paragraphs (d)(3), (d)(5), (d)(5)(i) and (ii), and (d)(6). We proposed to amend § 422.306 by revising the introductory text and adding a new paragraph (d). Proposed paragraph (d) described 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 § 422.258(d)(2), the applicable amount is established by reference to § 422.306 and the rules there for calculation of MA annual capitation rates. By adding § 422.306(d), we would implement the PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 33825 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 requested comment on whether these proposed revisions to §§ 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 proposed to apply the exclusion of kidney acquisition costs to the ESRD payment rates. As § 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 addressed 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, we 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, we 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. We did not propose any regulatory amendments to address this. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33826 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations We appreciate commenters’ feedback on our approach to implementing this Cures Act requirement. We received the following comments on our proposed regulatory changes, to which we provide responses below: Comment: Numerous commenters expressed concerns about the methodologies for excluding kidney acquisition costs from MA benchmarks and for developing MA ESRD state rates. Several commenters requested additional transparency and data regarding the carve-out methodology, voiced concerns about the magnitude of the carve-out, and provided suggestions for alternative ways to calculate and apply the kidney acquisition adjustment. A commenter specifically noted that if the kidney acquisition carve-out amounts were to be artificially high, excluding these costs from MA benchmarks would exacerbate the perceived issues of underpayment in MA for ESRD beneficiaries. Response: Section 1853(b) provides for CMS to use the annual Advance Notice to provide notice of proposed changes to be made in the methodology for the MA capitation rates and risk adjustment factors from the methodology and assumptions used in the previous announcement. As discussed, the kidney acquisition carveout is part of the methodology for developing the MA capitation rates. Pursuant to the statute, CMS proposed the methodology for calculating the kidney acquisition costs to be excluded from the MA benchmarks in the 2021 Advance Notice by providing a step-bystep description of the calculations to be used to adjust the rates. CMS also detailed in the calendar year 2021 Advance Notice the methodology used to develop ESRD state rates. After considering all public comments received and consistent with the statutory requirement to exclude the cost of kidney acquisitions for organ transplants from the primary components of the MA capitation rates, CMS finalized the kidney acquisition carve-out methodology, as well as the ESRD rate methodology, in the calendar year 2021 Rate Announcement. Similar comments regarding the need for transparency and accuracy in calculating the kidney acquisition cost, the methodology used by CMS, and the amount of payment to MA plans were raised in that context and addressed by CMS in the calendar year 2021 Rate Announcement. We direct readers to that document for a more detailed discussion of these issues. Comment: A commenter requested that CMS explain whether the exclusion of kidney acquisition costs from MA VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 benchmarks has an impact on MedicareMedicaid Plans (MMPs). Response: CMS develops annual Medicare capitation rates used for MMP payment. The MMP capitation rates are based on an estimate of what would have been spent in the payment year had the demonstration not existed. Beneficiaries enroll in the MMP demonstrations from both MA and Medicare FFS, and therefore the MMP Medicare capitation rates are developed with a weighted average of these populations’ spending assumptions, proportional to the combination of enrolled dually eligible beneficiaries. Therefore, the MMP Medicare capitation rates are developed using both the published Medicare standardized FFS county rates (which are part of the MA ratebook calculation files that are released with the annual Rate Announcement) and an MA component that is based on MA plans’ bids and rebates. As discussed in the calendar year 2021 Rate Announcement, kidney acquisition costs will be carved out of the contract year 2021 Medicare standardized FFS county rates. MA plans will bid against benchmarks that exclude kidney acquisition costs, in accordance with the statutory amendments to sections 1853(k) and (n); this is also consistent with how MA plans are no longer responsible for the costs of kidney acquisitions. Therefore, both components of the MMP Medicare capitation rate (the Medicare standardized FFS county rates and the MA component of the MMP rate) will exclude kidney acquisition costs. MMPs (like MA plans) will no longer be responsible for organ acquisition costs for kidney transplants; such costs will be excluded from the MMP rates and instead covered under Medicare FFS. Comment: A commenter noted that plans will need to re-contract for transplant services to remove the cost of kidney acquisitions. This commenter explained that it is unlikely that the new contracts will carve out costs that are comparable to (or lower than) the costs being removed from the MA benchmarks. This commenter also requested the precise amounts CMS has paid on behalf on MA enrollees to each provider. Response: We appreciate the commenter’s concerns regarding this issue but must comply with the statutory requirement to exclude kidney acquisition costs from MA benchmarks. To date, CMS has paid for kidney acquisition costs for MA beneficiaries through the county and ESRD state rates in the MA ratebooks. PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 Comment: Numerous commenters noted concerns about the adequacy and accuracy of the ESRD rates as well as the perceived underfunding of the underlying ESRD PPS. A few commenters also requested that CMS consider various options related to payment for dialysis services, including the establishment of a fee schedule cap for dialysis centers, implementation of zero cost sharing for dialysis services, and provision of an incentive payment for MA plans to offer home dialysis. Response: As these comments did not address the impact, implementation, or consequences of the kidney acquisition carve-out required by the Cures Act, they are out of the scope of this rulemaking. After careful consideration of all comments received and for the reasons outlined in the proposed rule and out responses to the comments, we are finalizing the proposed changes to § 422.258(d)(3), (d)(5) introductory text, (d)(5)(i) introductory text, (d)(5)(ii), and (d)(6)(i) and the introductory text of § 422.306 and paragraph (d). IV. Enhancements to the Part C and D Programs A. Reinsurance Exceptions (§ 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 explained in the proposed rule that our proposal did not use those terms 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. In the proposed rule, we proposed to adopt a new § 422.3 to implement the exception at section 1855(b)(1) of the Act and establish in regulation options for MA organizations to use insurance for costs beyond a specified threshold. We E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations proposed 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 value of the insurance for costs that exceed $10,000 in a contract year. We also proposed that if the MA organization chooses to purchase pro rata coverage that provides first dollar coverage, the value of that coverage cannot exceed the value of the option of purchasing stop loss insurance for enrollee health care costs that exceed a threshold of $10,000 in a contract year. We noted in the proposed rule that the statutory exceptions at section 1855(b)(2) through (b)(4) of the Act still apply and that our proposal would serve 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 proposed that the limits in § 422.3 apply for purposes of insuring (or making other arrangements) for costs of providing basic benefits in excess of the established threshold and that those limits would not apply to supplemental benefits offered by MA organizations. We proposed to implement the exception at section 1855(b)(1) of the Act because of concerns raised to CMS that absent the implementation of specific standards by CMS under section 1855(b)(1) of the Act, there was ambiguity about the legal basis of MA organizations sharing risk through reinsurance. We noted in our proposed rule that a number of MA organizations expressed concern to CMS about this legal uncertainty as they have utilized reinsurance within the MA program. To resolve this uncertainty, we proposed to formally establish reinsurance standards implementing section 1855(b)(1) of the Act. Our proposal was generally not about subsections (b)(2) through (b)(4) of section 1855 of the Act. Under our proposed implementation of the exception at section 1855(b)(1) of the Act, MA organizations that voluntarily choose to purchase insurance to limit their exposure to losses in furnishing basic benefits to individual enrollees would have two options. In the first option, an MA organization could purchase insurance (or make other arrangements) that VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 value of the stop loss insurance for medical expenses exceeding $10,000 per member per year. Specifically, the value of first dollar pro rata insurance could not exceed the value of $10,000 per member per year stop loss insurance. In the proposed rule, we noted that in discussions with the National Association of Insurance Commissioners (NAIC) and in 2018 Call Letter comments we previously received, CMS was advised 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 has the purpose of reducing financial exposure to changes in health care costs, helps manage capital requirements, and allows health care insurers to grow enrollment. As we explained in our proposed rule, discussions with the NAIC and earlier information we received from the industry indicated that MA organizations located in areas with fewer beneficiary choices (for example, rural, underserved areas) particularly benefit from access to 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 midsized 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 also noted that excessive reinsurance can be viewed as a hazard to the extent that the direct health insurer (here, the MA organization) might pass such a large share of their risk and premium through insurance and that the MA organization could then be viewed as no longer possessing the primary responsibility for furnishing the health care services. We further explained in our proposed rule that while the statute identifies the category PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 33827 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 benefits to enrollees. We stated that 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 also stated that we seek to balance these different interests in setting the threshold for the individual stop loss insurance coverage authorized by the statute. We also explained that the $10,000 threshold we proposed 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 E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33828 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations August 2019 report: An Update to the Economic Outlook: 2019 to 2029. In our discussion, we stated that based on a scan of the market and current practices of commercial health insurers, we believed that the $10,000 threshold for stop loss insurance that we proposed reflected a level of risk transfer that was reasonable and consistent with supporting robust competition in Medicare Advantage. We also explained our positon that the proposed level of risk transfer would be acceptable given that CMS closely monitors MA organizations in terms of their administration of their MA plans, specifically their timely provision of medically necessary health care services to enrollees and their overall financial solvency. We further clarified that CMS has a direct contract with each MA organization and despite any insurance arrangements, the MA organization remains responsible and liable to each individual enrollee for furnishing the covered benefits. In addition, we explained that 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. We also noted that 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 solvency laws or provide that CMS regulation supersedes them. We noted 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 the wide adoption of the NAIC reinsurance model laws by states ensures reasonable consistency for MA organizations subject to reinsurance review as part of the state’s financial solvency determination. Finally, we stated that CMS oversight along with the states’ oversight of financial solvency substantially would ensure that CMS would 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 enrollees with benefits covered under the MA plan. We also acknowledged that the reinsurance marketplace is complex and evolving. Therefore, we asked for comments regarding our proposed reinsurance regulation generally and the specific threshold proposed. We stated that we were particularly interested in VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 comments whether the $10,000 threshold is a reasonable level and if the flexibility we proposed for MA organizations in permitting insurance or other arrangements that are actuarially equivalent to the $10,000 threshold for individual medical costs is sufficient to remove the uncertainty about the use of reinsurance by MA organizations. We also solicited comments that would provide additional information about insurance or other arrangements for addressing the risk of costs that exceed specific thresholds on an individual enrollee basis. In our proposed rule, we also explained that we would consider an MA organization to include its parent organization when evaluating compliance with the proposed standard for reinsurance and compliance with the statute. The result of that would be to evaluate compliance with section 1855(b) of the Act (not just subsection (b)(1)) and proposed § 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. We requested comments on this approach and 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 organization to be a separate entity from an MA organization. We thank commenters. We received 13 comments on this proposal; we summarize these comments and our responses follow: Comment: Several commenters were generally supportive of § 422.3(a)(1) affirming the ability of MA organizations to purchase stop loss insurance for basic Medicare covered medical expenses for an individual enrollee that exceed with an aggregate value of $10,000 or more per member per year in any year. However, several commenters expressed concerns about the proposed pro rata insurance requirement at § 422.3(a)(2), requiring that this option not exceed the actuarial cost of purchasing stop loss insurance for enrollee health care costs that exceed a threshold of $10,000 in a contract year. A commenter stated that they read the proposed regulation as requiring that the value of the insured risk does not exceed a value which is actuarially equivalent to the aggregate value of the costs of providing basic benefits to an individual enrollee which exceeds an aggregate level that is greater than or equal to $10,000 during a contract year. The commenter said that they found this language difficult to follow. This commenter also said that, further PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 complicating the matter, excess of loss insurance (that is, stop loss) and first dollar proportional (that is, pro rata) insurance are very different forms of reinsurance. Other commenters were also concerned that because of the differences in these types of insurance it would be difficult calculating an actuarial value for the cost of purchasing annual pro rata insurance, which shares costs with an insurer on a first dollar proportional basis. The commenters also said that their uncertainly about how to calculate this actuarial equivalency would make it difficult for them to ensure they would be in compliance with the proposed regulatory requirement. Several commenters recommended that instead of an actuarial equivalence that we set a limit on the amount of risk that an MA organization would be allowed to transfer to a reinsurer. Several commenters specifically proposed that CMS adopt a 10 percent standard under which an MA organization would be required to maintain a minimum of 10 percent of the financial risk in any reinsurance arrangement involving the sharing of costs proportionately with an insurer on a pro rata first dollar basis. Response: We agree that the reinsurance options under proposed § 422.3(a)(1) and (2) are different and acknowledge this potentially creates uncertainty and difficulties in determining actuarial equivalency, as pointed out by the commenters. As we noted above the statute permits an MA organization to use insurance or make other arrangements for the cost of providing basic benefits to an individual enrollee that exceed a certain threshold. In order to provide an option for using insurance or other arrangements for some of the cost of providing basic benefits to an individual enrollee before the threshold is exceeded, we sought to establish a way to equate the $10,000 stop loss threshold to sharing the risk proportionally on a first dollar basis (that is, pro rata insurance) to provide additional flexibility to MA organizations while ensuring compliance with the statute. In considering these comments we appreciate that there could be difficulty for some organizations in determining whether and when the two reinsurance options were actuarially equivalent or in determining an actuarially equivalent dollar amount for the two reinsurance options. We also recognize that it would be administratively simpler if we were to adopt a single standard for the amount of risk an MA organization can transfer to an insurer under this regulation. As we discuss below we are finalizing regulation text to clarify how E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations MA organizations can make an actuarial equivalency determination between the $10,000 stop loss insurance option and the option to purchase first dollar proportional (that is, pro rata) insurance. In addition, we have determined that the ability to purchase pro rata insurance affords the MA organizations the necessary flexibility to purchase different types of reinsurance. We are specifically finalizing this regulation to allow an MA organization to have insurance or make another arrangement for the cost of providing basic benefit to an enrollee, the aggregate value of which exceed an aggregate value that is equal to or greater than $10,000. In effect, an MA organization can have stop-loss insurance per enrollee with a $10,000 attachment point. In addition, the MA organization may use insurance to share costs proportionately on a per member per year first dollar basis as long as the amount of risk retained by the MA organization is actuarially equivalent to the risk retained in purchasing $10,000 per member per year first dollar stop loss insurance. To specifically address the concerns about actuarial equivalence valuations we have determined that actuarial equivalence may be calculated as the expected percentage of the MA organization’s claim cost of providing basic benefits to an individual enrollee that is greater than or equal to $10,000 during a contract year. The MA organization may share its costs proportionately on a first dollar basis up to the expected percentage. For example, assume that the actuarially supported expected percentage is 66 percent. In this example, the MA organization may reinsure (cede) up to 66 percent of such costs proportionately on a first dollar basis. However, we recognize that there are other reasonable actuarial approaches that could be used to determine the actuarial equivalence cost when purchasing pro rata insurance. We will accept approaches that are based on a reasonable actuarial methodology. An MA organization may also value its pro rata insurance by establishing a specific percentage level of risk that it can reinsure that is not more than the actuarial value of $10,000 individual stop loss insurance. Appreciating that some commenters indicated that the proposed regulation text describing the permissible stop-loss arrangement was confusing, we are clarifying this in the final regulation text. The regulation now states the permissible insurance or other arrangement by describing the permissible reinsurance or other arrangement in terms of how much and VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 which financial risk the MA organization must retain: The MA organization must retain the risk for at least the first $10,000 in costs of providing basic benefits per individual enrollee during the contract year. To specifically address the concerns about actuarial equivalence valuations, we are finalizing regulation text to clarify that MA organization may make a determination of actuarial equivalence based on reasonable actuarial methods. We are finalizing that an MA organization may share the costs of providing basic benefits on a per member per year first dollar basis when: (i) The actuarial value of the risk retained by the MA organization is actuarially equivalent to the value of the risk that must be retained using the permissible stop-loss arrangement that is described in paragraph (a)(1) and (ii) the determination of actuarial equivalence is based on reasonable actuarial methods. For example, actuarial equivalence may be reasonably calculated using the expected percentage of the MA organization’s claim cost of providing basic benefits to an individual enrollee that is greater than or equal to $10,000 during a contract year. The MA organization may share its costs proportionately on a first dollar basis up to that expected percentage. For example, assume that the actuarially supported expected percentage is 66 percent. In this example, the MA organization may reinsure (cede) up to 66 percent of such costs proportionately on a first dollar basis. However, we recognize that there are other reasonable actuarial approaches that could be used to determine the actuarial equivalence cost when purchasing pro rata insurance. We will accept approaches that are based on a reasonable actuarial methodology. An MA organization may also value its pro rata insurance by establishing a specific percentage level of risk that it can reinsure that is not more than the actuarial value of $10,000 individual stop loss insurance. Comment: Several commenters asked for clarification about the applicability of the proposed reinsurance rule, asking if it would apply to quota share reinsurance arrangements under section 1855(b)(1) of the Act alone, or will it also apply to quota share reinsurance arrangements under subsections (b)(2), (b)(3) and (b)(4) of section 1855 of the Act as well. The commenters wanted to know if quota share arrangements would be permissible only in the specific circumstances described in our proposed rule to implement section 1855(b)(1) of the Act. PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 33829 Response: Our proposal and this final rule at § 422.3(a) are specifically about implementing section 1855(b)(1) of the Act. Section 1855(b)(1) permits MA organizations to insure or make other arrangements for the cost of providing to any enrolled member basic benefits the aggregate value of which exceed a threshold set by the agency. We proposed that threshold ($10,000) and a way that MA organizations could share that particular risk proportionately by tying the parameters for the proportionate-risk arrangement to the actuarial value of the financial risk where the stop loss threshold is over $10,000. MA organizations are only permitted to share risk proportionally so long as the risk (the type and amount) is in the statutory exceptions at section 1855(b) of the Act. Section 1855(b) of the Act describes types of risk for which an MA organization may use insurance or make other arrangements. For example, section 1855(b)(2) permits an MA organization to obtain insurance or make other arrangements for the cost of basic benefits provided to its enrollees other than through the organization because medical necessity required the provision of those basic benefits before that organization could furnish them; an MA organization could use insurance to cover all of the costs described in subsection (b)(2), use a quota share arrangement for those costs, or use some other reinsurance arrangement for those costs. However, section 1855(b)(2) only permits the use of reinsurance or risk sharing arrangements for those specifically described costs. Our proposal and this final rule at § 422.3(a) do not address the other statutory exceptions at section 1855(b) of the Act. Comment: Several comments asked that CMS acknowledge that CMS policy has, in the past, permitted MA organizations to utilize quota share reinsurance arrangements with captive insurance companies and risk bearing entities including provider-affiliated captive insurance companies, or other risk-bearing entities under the authority of section 1855(b)(4) of the Act, and that CMS will continue to allow this. Commenters also asked that CMS further clarify whether the provideraffiliated entity must be wholly-owned by the provider, or whether a lower percentage of ownership is required. Response: Section 1855(b)(4) of the Act permits an MA organization to make arrangements with physicians or other health care professionals, health care institutions, or any combination of such individuals or institutions to assume all or part of the financial risk on a prospective basis for basic benefits E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33830 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations furnished by such physicians, by such other health professionals or through such institutions. The type of payment arrangement used between the MA organization and contracting physicians, other health professionals or institutions for this specified financial risk is not limited by § 422.3(a). To be clear on this point, we are finalizing § 422.3(c) to state that the type of payment arrangement between an MA organization and contracting physicians, other health professionals or institutions for the financial risk on a prospective basis for the provision of basic benefit by those physicians or other health professionals or through those institutions) is not limited by § 422.3(a). Comment: Two commenters asked if reinsurance options under § 422.3(a)(1) and (2) can also include MA supplemental benefits. A commenter stated that it is operationally very challenging to separate the revenues and expenses associated with supplemental benefits from the revenues and expenses associated with basic benefits. Response: As we stated in the proposed rule, 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). The limits in proposed § 422.3(a) and finalized in this rule 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. MA organizations are not prohibited from obtaining reinsurance for supplemental benefits and this final rule does not limit either the form or amount of reinsurance for supplemental benefits. Comment: Commenters were supportive of our proposal with respect to section 1855(b) to broaden our interpretation of MA organization to include the parent organization. This would mean that CMS would evaluate compliance with 1855(b) of the Act and proposed § 422.3 at the parent organization level, such that risk sharing or allocations MAO of losses and costs among wholly-owned subsidiaries would not be evaluated. Commenters also asked if CMS will accommodate situations where an MA organization obtains reinsurance from captive insurance companies, an affiliate and/or a joint venture or alliance partner. A commenter noted that reinsurance is a useful means by which to share profits/ losses in joint ventures and alliances, an entity may choose to allocate its risk to a reinsurer that is an affiliate of the MA organization and to another joint venture or alliance partner. The VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 comment states that these arrangements serve as a mechanism to facilitate the allocation of profits/losses under a joint venture or alliance. Response: In this final rule we are affirming that for purposes of 1855(b) of the Act and for § 422.3, we will evaluate compliance at the parent organization level, such that risk sharing or allocations of losses and costs among wholly-owned subsidiaries will not be evaluated. These internal arrangements would be treated as the MA organization retaining full financial risk for the losses or risks that are covered through the internal arrangement. We are adding language to the final regulation at § 422.3(b) confirming this position. Reinsurance arrangements facilitated for purposes of joint venture and alliance partner must comply with 1855(b) of the Act, CMS regulations and requirements, other federal laws and regulations, and state laws and requirements. We thank the commenters for sharing their concerns and recommendations regarding our proposed implementation of Section 1855(b)(1) in the MA regulations at § 422.3. After careful examination of all comments received and for the reasons set forth in the proposed rule and our responses to comments, we are finalizing § 422.3 with modifications from the proposal. As finalized, paragraph (a) provides that an MAO may obtain insurance or make other arrangements for the cost of providing basic benefits to an individual enrollee during the contract year in one of two ways. We are finalizing § 422.3(a)(1) to permit an MA organization to use insurance or make other arrangements for the cost of providing basic benefits to an individual enrollee during the contract year so long as the MA organization retains risk for at least the first $10,000 of that cost. We are finalizing § 422.3(a)(2)(i) permitting reinsurance on a per member per year first dollar basis so long as the MA organization retains at least an amount of risk that is actuarially equivalent to the value of risk retained in paragraph (a)(1). We also clarify in the final regulation at § 422.3(a)(2)(ii) that MA organizations obtaining such reinsurance under the option described at § 422.3(a)(2)(i) may utilize any reasonable actuarial methodology to determine actuarial equivalence. We are also adding § 422.3(b) clarifying that CMS will consider a parent organization to be part of an MA organization for purposes of section 1855(b) of the Act. Finally, we are adding regulation text at § 422.3(c) to clarify the type of payment arrangement used between an MA organization and contracting physicians, other health PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 professionals or institutions for the financial risk specified in section 1855(b)(4) of the Act is not limited by paragraph (a). B. Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186) 1. Introduction In the April 2018 final rule, CMS codified at §§ 422.160, 422.162, 422.164, and 422.166 (83 FR 16725 through 83 FR 16731) and §§ 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. 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). In the April 2019 final rule, CMS amended §§ 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, codified a policy to adjust Star Ratings for disasters, and finalized some measure updates. In the Medicare and Medicaid Programs; Policy and Regulatory Revisions in Response to the COVID–19 Public Health Emergency Interim Final Rule (85 FR 19230; CMS– 1744–IFC) published in the Federal Register website on April 6, 2020, CMS adopted a series of changes to the 2021 and 2022 Star Ratings to accommodate the disruption to data collection posed by the COVID–19 pandemic. Specifically, the IFC: • Eliminates the requirement to collect and submit Healthcare Effectiveness Data and Information Set (HEDIS) and Medicare Consumer Assessment of Healthcare Providers and Systems (CAHPS) data otherwise collected in 2020 and replaces the 2021 Star Ratings measures calculated based on those HEDIS and CAHPS data collections with earlier values from the 2020 Star Ratings (which are not E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations affected by the public health threats posed by COVID–19); • Establishes how we will calculate or assign Star Ratings for 2021 in the event that CMS’s functions become focused on only continued performance of essential agency functions and the agency and/or its contractors do not have the ability to calculate the 2021 Star Ratings; • Modifies the current rules for the 2021 Star Ratings to replace any measure that has a systemic data quality issue for all plans due to the COVID–19 outbreak with the measure-level Star Ratings and scores from the 2020 Star Ratings; • In the event that we are unable to complete Health Outcomes Survey (HOS) data collection in 2020 (for the 2022 Star Ratings), replaces the measures calculated based on HOS data collections with earlier values that are not affected by the public health threats posed by COVID–19 for the 2022 Star Ratings; • Removes guardrails for the 2022 Star Ratings by delaying their application to the 2023 Star Ratings; • Expands the existing hold harmless provision for the Part C and D Improvement measures to include all contracts for the 2022 Star Ratings; and • Revises the definition of ‘‘new MA plan’’ so that for purposes of 2022 quality bonus payments based on 2021 Star Ratings only, new MA plan means an MA contract offered by a parent organization that has not had another MA contract in the previous 4 years, in order to address how the 2021 Star Ratings will be based in part on data for the 2018 performance period. Please see the IFC for further information on these changes for the 2021 and 2022 Star Ratings. In the February 2020 proposed rule, we proposed enhancements to further increase the stability of cut points by modifying the cut point methodology for non-CAHPS measures through direct removal of outliers. We also proposed to increase the weight of patient experience/complaints measures and access measures and 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. We proposed to modify the classification of the Statin Use in Persons with Diabetes (SUPD) measure from an intermediate outcome measure to a process measure, starting with the 2023 Star Ratings, due to feedback in response to the Draft 2020 Call Letter and to align with the measure steward’s clarification VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 regarding the measure’s classification. In addition, we proposed other policies to amend the Part C and Part D Star Ratings but are not addressing those proposals in this final rule; those other proposals will be addressed in a future final rule. Our proposal was for the changes we address here—the removal of outliers, increasing the weight of certain classes of measures, removing the Rheumatoid Arthritis Management measure, and reclassifying the SUPD measure—to be effective for the 2021 performance period and the 2023 Star Ratings. As discussed in this section, we are finalizing the proposed changes with some modifications. As finalized, the change to the weight of the patient experience/complaints measures and access measures, the removal of the Rheumatoid Arthritis Management measure, and the reclassification of the SUPD measure are applicable (that is, data would be collected and performance measured) for the 2021 measurement period and the 2023 Star Ratings. Under this final rule the direct removal of outliers will apply for the 2022 measurement period and the 2024 Star Ratings. CMS appreciates the feedback we received on our proposals. In the sections that follow, which are arranged by topic area, we summarize the comments we received on each proposal and provide our responses. Below we summarize some general comments we received about the potential impact of the COVID–19 public health emergency on our Star Ratings proposals. Comment: Numerous commenters requested that CMS refrain from making any changes to the Star Ratings system until the COVID–19 pandemic’s impact on the healthcare system is better understood. They suggested we delay any changes to the quality rating system until after the public health emergency resulting from COVID–19 subsides due to the significant uncertainties around the duration and impact of COVID–19 on the healthcare system. Response: CMS agrees that there is a lot of uncertainty about how COVID–19 will impact the healthcare system. However, we still believe that it is important to move forward with some limited Star Ratings changes to further emphasize the importance of patient experience/complaints measures and access measures and to help stabilize the movement in the cut points from year to year. The changes to the weighting of patient experience/ complaints measures and access measures apply to the 2021 measurement year, not the 2020 measurement year when the pandemic PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 33831 first started. The implementation of Tukey outlier deletion has been delayed an additional year. Although there is some uncertainty how COVID–19 will impact the healthcare system and quality measurement, plans will have until the 2021 measurement year to adjust their processes to account for the impact of COVID–19 on Star Ratings measures. Comment: Commenters raised concerns that additional Star Ratings changes may be needed to account for COVID–19 in future years. For example, several commenters noted data collection challenges could impact 2021, 2022, 2023, and 2024 Star Ratings for some measures. A commenter noted COVID–19 may overwhelm our healthcare systems leading to significant impacts on many measures. A few commenters specifically noted concerns about supply chain disruptions and prescription drug shortages. A commenter noted that plan activities in response to emergency situations can create unintended consequences in the years following, including for Star Ratings. Another commenter suggested CMS revisit the capacity and capability expectations defined in specific measures and meet with provider and plan stakeholders when the crisis has abated; they suggest some measures may need to be re-tooled so that scarce resources are devoted to building capacity and functionality of the health and social delivery systems. Response: CMS is continuing to monitor the situation to see if additional Star Ratings changes are necessary and appropriate. As noted above, the IFC includes a series of changes for the 2021 and 2022 Star Ratings to accommodate challenges arising from the COVID–19 pandemic. Please see the IFC for further information on these changes for the 2021 and 2022 Star Ratings. CMS recognizes that there may be impacts from COVID–19 on measure scores and is delaying the implementation of Tukey outlier deletion for an additional year to allow these impacts to play out before adding an additional methodological change for the cut point calculations. Comment: A commenter asked that CMS remain cautious on pursuing changes that could weaken the ability of plans to make quality improvements in the aftermath of COVID–19. Response: CMS recognizes the challenges that COVID–19 has placed on the healthcare system and Part C and Part D plans that are subject to the Quality Star Rating System. CMS continues to monitor whether additional Star Ratings adjustments are necessary and appropriate. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33832 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Comment: A commenter requested that CMS ensure that policy changes that allow pharmacies to meet prescription drug therapy needs during the COVID–19 outbreak are not used to penalize pharmacies in their performance ratings. Response: CMS will continue to monitor the impact of COVID–19 on the healthcare system. The Part C and D Star Ratings are for rating the Medicare health and drug plans not pharmacies. Comment: Several commenters noted that different areas of the country may experience the pandemic differently, and there may also be differences by health plan populations, such as those with high dual eligible or low-income populations. A commenter noted that CDC’s recommendation for social distancing, especially for more vulnerable populations, may result in Medicare beneficiaries not pursuing preventive screenings, and that this may be more impactful for beneficiaries in geographies more heavily impacted by COVID–19 and for beneficiaries in rural areas with less access to care. Response: CMS will continue to monitor the impact of COVID–19 on the healthcare system and Part C and D plans. The IFC addressed the immediate impact of the pandemic on the Part C and D Star Ratings program and made additional modifications for the 2022 Star Ratings, in recognition that the COVID–19 pandemic may impact performance on the Star Ratings measures during the 2020 measurement period. CMS delayed the implementation of guardrails to allow cut points to adjust to changes in industry performance for the 2020 measurement period. Additionally, CMS expanded the hold harmless provisions for the Part C and D improvement measures that are based on the 2020 measurement period so that those measures where there is a significant decrease in performance will not bring down a contract’s overall or summary ratings for the 2022 Star Ratings. CMS continues to monitor to what extent our current policy for extreme and uncontrollable circumstances codified at §§ 422.166(i) and 423.186(i) will help address the issue of some geographic areas being more impacted than others and whether additional Star Ratings adjustments are necessary and appropriate. Comment: A commenter asked that CMS consider the longer-term economic ramifications that COVID–19 is causing to highly impacted areas when considering Star Ratings policies. Response: CMS will continue to monitor the impact of COVID–19 on the healthcare system and Part C and Part VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 D plans that are subject to the Quality Star Rating System. CMS continues to monitor whether additional Star Ratings adjustments are necessary and appropriate. Comment: A commenter suggested that given the strain COVID–19 is placing on the healthcare system, CMS should suspend Effectiveness of Care measures based on 2020 data. Another asked whether the Part D appeals measures would still be removed for 2021. Response: Generally, these comments are out of the scope of the proposed rule and the policies we are addressing in this final rule. The IFC addressed the immediate implications of the pandemic on the Part C and D Star Ratings program. Specifically, for the 2020 measurement year, it delays the implementation of guardrails so cut points will adjust downward if industry performance broadly declines as a result of the pandemic. CMS is proceeding to remove the Part D appeals measures for the 2020 measurement year and the associated 2022 Star Ratings, as outlined in the 2020 final Call Letter, under § 423.184(e)(1) and based on our determination that the measure is no longer reliable. Comment: Several commenters gave specific feedback related to the IFC and the 2021 and 2022 Star Ratings. Response: We thank commenters for this feedback, but these comments are out of scope for this rule. We will discuss comments to the IFC policies in a future final rule. 2. Measure-Level Star Ratings (§§ 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 §§ 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. PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 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 measurespecific scores to measure-level Star Ratings so as to categorize the most similar scores within the same measurelevel 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 Programs, and the PACE Program Proposed Rule (hereinafter referred to as the November 2017 proposed rule) regarding the approach to convert nonCAHPS 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 Allinclusive 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 one year to the next and recommended that CMS either pre-announce cut points before the plan preview period or predetermine 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 E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 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 §§ 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 measurethreshold-specific cut points do not increase or decrease more than the cap from one year to the next. The IFC (CMS–1744–IFC) delays the implementation of guardrails for an additional year; thus, it will be implemented for the 2021 measurement year and the 2023 Star Ratings. 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 in order to provide the public prior notice of a proposal for incorporating removal of outliers and an opportunity to comment on a specific approach and so that we could continue to evaluate the methodologies for outlier removal (84 FR 15761). 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 such 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. In the February 2020 proposed rule, we proposed to use Tukey outer fence outlier deletion as the method to identify and delete outliers before applying the already-applicable mean resampling and hierarchical clustering processes. With mean resampling, measure-specific scores for the current year’s Star Ratings are randomly separated into 10 equal-sized groups. The hierarchical clustering algorithm is VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 done 10 times, each time leaving one of the 10 groups out. The method results in 10 sets of measure-specific cut points. The mean cut point for each threshold per measure is calculated using the 10 values. 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 or above a certain point. We proposed that the lower point or the ‘‘lower outer fence’’ would be identified with this formula: (first quartile¥3.0 × (third quartile¥first quartile)); and the higher point or the ‘‘upper outer fence’’ would be identified with this formula: (third quartile + 3.0 × (third quartile¥first quartile)). The Tukey outer fence outlier deletion will remove all outliers based on the previous definition for the two points (that is, the lower and upper outer fences) and does not remove any cases that are not identified as outliers. Values identified as outside the Tukey outer fences would then be removed immediately prior to clustering. We explained in the proposed rule that 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 AutoForward and Appeals Upheld) and the Part C measure Adult BMI Assessment, because these measures will be removed starting with the 2022 Star Ratings. In general, there tends 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. We requested comments on our proposal to use Tukey outer fence outlier deletion as an additional step prior to hierarchal clustering. We explained that under our proposal in the first year of implementing this process, 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 proposed to amend §§ 422.162 and 423.182 to add a definition of the outlier PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 33833 methodology (‘‘Tukey outer fence outliers’’) and to amend §§ 422.166(a)(2)(i) and 423.186(a)(2)(i) to apply the outlier deletion using that methodology prior to applying mean resampling with hierarchal clustering. We received the following comments related to our proposal, and our responses follow: Comment: Most commenters opposed moving forward with the Tukey outlier deletion at this time, citing a variety of different reasons. A handful of commenters raised general concerns about the Tukey outlier deletion method, mentioning criticism in academic communities about applying Tukey fences to skewed data, given what the commenters characterized as the Tukey approach’s assumption of a normal distribution. Other commenters suggested additional research is needed on alternatives for removing outliers. Some commenters did not support the use of Tukey outlier deletion without more information about how the Tukey outlier fence models will be applied and more detail on CMS analyses. A couple of commenters did not support adding Tukey outlier deletion given the fluctuation it may cause in the ratings. Response: CMS is concerned about extreme outliers influencing cut point determinations and has selected an approach to identify and remove outliers prior to clustering contract scores to determine cut points for assigning measure stars. The main objective of removing outliers is to stabilize cut points and prevent large year-to-year fluctuations in cut points caused by the scores of a few contracts. CMS selected the conservative outerfence form of the Tukey outlier deletion method because it is transparent (easily understood and can be implemented by stakeholders with widely-available software) and robust to distributional shape (it performs as intended for this purpose across the range of score distributions seen in Star Ratings data). CMS disagrees that the Tukey outer fence outlier approach is inappropriate for identifying the outliers to be removed from the performance score data. Even when the data are not normally distributed (for example, in a skewed distribution), the Tukey approach performs as intended. The Tukey outer fence outlier deletion approach is a standard statistical method that is non-parametric, that is, it is not dependent on distributional assumptions. We plan to adopt a more conservative definition, based on Tukey outer fences, that only removes scores that are extreme outliers. This approach removes fewer outliers at both extremes of the score distribution than the inner E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33834 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations fence approach. We plan to identify and remove extreme outliers immediately prior to applying the clustering algorithm to set cut points. The Tukey outer fences would be calculated from the set of measure scores after removing contracts that are to be excluded from clustering (such as because the measure is voluntary for that contract). The first step in applying the Tukey outlier deletion method is calculating the first quartile (Q1) and third quartile (Q3) of the score distribution: 25 percent of scores fall below Q1, another 25 percent of scores fall above Q3, and the remaining 50 percent of scores fall between Q1 and Q3. Next, we calculate the interquartile range (IQR), the difference between the third and first quartiles (IQR = Q3 – Q1), which refers to the range of the middle 50 percent of all scores. The Tukey outer fence method identifies extreme outlier as those that are below (Q1 ¥3 × IQR) or above (Q3 + 3 × IQR). We examined the use of trimming as an alternative outlier removal approach and found very similar results as those described in the proposed rule from using the Tukey approach. We performed simulations that trimmed any scores that were above the 99th percentile or below the 1st percentile, trimming values at the tail ends of the distribution prior to clustering. The method had effects on Star Ratings similar to those of the Tukey method. An important strength of the Tukey outer fence outlier deletion method over the trimming method is that trimming removes a fixed proportion of plan scores for each measure, regardless of whether those scores are distant from the center of the score distribution. In contrast, the Tukey outer fence method removes only true outliers that are the most distant from the center of scores. Comment: Some commenters suggested alternatives to outlier deletion to help improve the stability of cut points. A commenter suggested that CMS might consider cut points using plans in similar geographic areas with similar characteristics. Another suggested CMS explore other classification methods such as Isolation Forest, DBSCAN, or k-means clustering. A couple of commenters recommended a guardrail cap less than 5 percent. Response: CMS agrees that stability is a goal for the cut points, but we disagree with the recommendations of the commenters to achieve that stability. Setting regional or geographic benchmarks (cut points) would lead to a 5-star contract in one area differing in terms of performance from a 5-star contract in another area. The Medicare program does not set regional standards, VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 but rather applies a single national standard to evaluate plan performance. As required under section 1851(d), CMS disseminates information to Medicare beneficiaries (and prospective Medicare beneficiaries) on the different coverage options to promote an active, informed selection among such options. This includes plan quality and performance indicators to compare plan options. In order to compare in a consistent way, CMS uses a single national standard since different regional cut points could hide deficiencies in different areas. Additionally, many measures are based on compliance with Medicare rules and requirements (for example, call center measures and appeals measures) and reflect compliance with Medicare program requirements, not comparative compliance. Using regional cut points would warp the results and complicate our use of Star Ratings under §§ 422.504(a)(17), 422.510(a)(4)(ix), 423.505(a)(26), and 423.509(a)(4)(x). Regarding the choice of clustering method, hierarchical clustering is one of the most commonly used methods for clustering observations into groups. There are pros and cons of all methods for clustering, including those identified by the commenters. We have considered other methods and believe hierarchical clustering is the best option for the Part C and D Star Ratings program because it is well understood, easily implemented, and performs well for a variety of different data distributions. The other very commonly used clustering algorithm is k-means, however one key weakness of that approach is that the final set of clusters depends on the initial random assignment of points to clusters and it is highly sensitive to the initial placement of cluster centers. Specifically, when the algorithm is repeated on the same dataset it may result in different cluster assignments. Additionally, the k-means method is sensitive to outliers (for example, Gan and Ng (2017),20 Govender and Sivakumar (2020) 21), and therefore it would not resolve the issue that outliers can influence estimated thresholds. The commenter also noted other clustering algorithms that are less commonly used. For example, weaknesses of DBSCAN include sensitivity to parameters and inability to handle clusters of points of varying densities, which makes 20 Gan, G., & Ng, M.K. (2017). K-means Clustering with Outlier Removal. Pattern Recognit. Lett., 90, 8– 14. 21 Govender, P. & Sivakumar, V. (2020). Application of k-means and hierarchical clustering techniques for analysis of air pollution: A review (1980–2019). Atmospheric Pollution Research. 11(1), 40–56. PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 DBSCAN less attractive for clustering measure scores. Isolation Forest is an outlier or anomaly detection technique on the basis of decision trees that is not directly related to clustering measure scores into 5 groups. Comment: A couple of commenters opposed Tukey outlier deletion since they were concerned it would make it harder for plans with more complex populations to perform well, including SNP plans. A commenter noted the current national emergency emphasizes the need for the cut point methodology to separate out plans with high proportions of dually-eligible, disabled, and low-income individuals. Response: The issues of whether it is harder for plans with complex populations to perform well in Star Ratings and the method by which we stabilize thresholds for cut points are unrelated. The strategy of removing outliers for stability of cut points does not affect how performance is compared across plans with and without complex populations. In simulations of Star Ratings calculated using the Tukey outer fence outlier approach, we found that the effect of outlier removal on SNP versus non-SNP contracts was not very different. When outlier measure scores were removed as a part of our simulation using the data for the 2018 Star Ratings, overall summary ratings shifted from 4 to 3.5 stars for approximately 4 percent of contracts without a SNP, and for about 5 percent of contracts with a SNP for the contracts with overall ratings. The removal of outliers will not necessarily have consistent year-to-year impacts, and is dependent on where contracts fall in the measure score distributions, with contracts near the bottom of a score range being the most likely affected. CMS adopted the categorical adjustment index (CAI) to address the concern that plans with more complex populations have lower ratings based on the population served under the contract. The CAI advances more equitable plan comparisons because it generates Star Ratings that contracts would have received if they had all served the same patient population. That is, the CAI adjusts for withincontract disparities based on measures that are not otherwise adjusted for patient characteristics. CAI coefficients are estimated each year so if there is a differential impact of COVID–19 on the measures of performance for contracts with a higher percentage of dual eligible and disabled beneficiaries versus contracts with a lower percentage of enrollees with those social risk factors, the CAI values would reflect these E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations differences. The CAI will continue to adjust for the percentage of LIS/DE and disabled beneficiaries within the contract in accordance with §§ 422.166(f)(2) and 423.186(f)(2), and therefore will adjust for these differences for contracts with and without a SNP. Comment: A commenter suggested that CMS retire measures from the program when there are one percentage point differences in the same direction between cut points year over year. Response: CMS does not consider the size of changes in performance from year-to-year to be a criterion for retirement of a measure, particularly when there is still room for improvement on the measure. CMS retires or removes measures from Star Ratings when there is a change in clinical guidelines that mean that the measure specification is no longer believed to align with or promote positive health outcomes and when measures show low statistical reliability. These standards are in §§ 422.164(e)(1) and 423.184(e)(1), and we explained how we interpret and apply the standards in the April 2018 final rule. When measure scores are ‘‘topped out’’ (that is, show high performance across all contracts), this decreases the variability across contracts and makes the measure unreliable. On average, measures improve year-to-year in the 1 to 3 percentage point range, with the exception of new measures where the performance generally has more substantial room for improvement or in situations where a structural change occurs (for example, implementation of EHR tools) that significantly alter performance on the measure. Comment: A couple of commenters suggested convening a Technical Expert Panel (TEP) to provide input into the Tukey outlier deletion. Response: A TEP comprised of representatives across various stakeholder groups convened on May 31, 2018 to provide feedback to the RAND Corporation, the current CMS contractor for the Part C and D Star Ratings program to obtain input on a number of issues, including increasing the stability of cut points (https:// www.rand.org/pubs/conf_proceedings/ CF391.html). This TEP focused on different ways to increase stability of cut points, including outlier deletion, but did not focus on the different methods for deleting outliers. We do not believe another TEP is necessary to specifically address this topic given the RAND TEP already expressed strong support for directly addressing outliers and this methodology for removing outliers is a VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 widely accepted methodology for removing outliers. Comment: A handful of commenters wanted to see the impact on their individual plans to be able to fully understand the effect of Tukey outlier deletion. Response: CMS plans to display simulations of Tukey outlier deletion with mean resampling and guardrails for contracts to view in HPMS for the 2021, 2022, and 2023 Star Ratings prior to implementing the Tukey outlier change effective with the 2024 Star Ratings. These simulations will use the actual data that will be populating the 2021, 2022 and 2023 Star Ratings and will include all of the changes finalized related to cut point calculations. As noted in the NPRM, for the first year (2024 Star Ratings), we will rerun the prior year’s thresholds, using mean resampling and Tukey outer fence deletion so that the guardrails would be applied such that there is consistency between the years. This, therefore, will be done for the simulations using the 2021 Star Ratings. This will provide information for multiple years for plans to see how the cumulative impact of the changes will impact the cut points going forward. Please note that currently mean resampling will be implemented with the 2022 Star Ratings, guardrails will be added with the 2023 Star Ratings, and Tukey outlier deletion will be implemented with the 2024 Star Ratings. Our planned simulations will illustrate the cumulative effect of all of these policies. Comment: A commenter said CMS could further address outliers by removing contracts that are not eligible for Quality Bonus Payments such as 1876 cost plans and Medicare-Medicaid Plans. Response: CMS does not include Medicare-Medicaid Plans in the calculation of cut points for the Part C and D Star Ratings since they currently do not receive Star Ratings on Medicare Plan Finder; however, although not eligible for bonuses, 1876 cost plans are part of the Part C and D Star Ratings program (see § 417.472(k)) and have historically received Star Ratings on Medicare Plan Finder so these contracts are included in the cut point calculations. Otherwise, the ratings for public reporting would not be comparable for beneficiaries to use in evaluating their coverage choices. Comment: A commenter asked for clarification about whether measures in the program for three or fewer years would be included in the Tukey outlier deletion. Response: We are finalizing the proposed amendment to apply Tukey PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 33835 outlier deletion to all non-CAHPS measures, beginning with the 2024 Star Ratings. This application will be for all such measures regardless of the number of years the specific measure has been used in the Star Ratings program. Comment: A number of commenters suggested publishing cut points in advance of the measurement year by relying on the data from earlier time periods, reinstituting pre-determined 4star thresholds, or designing cut points that establish clear national standards of care. Some of the commenters noted that announcing cut points prior to the measurement period would help plans and providers engage in value-based contracts that incentivize higher quality. Response: CMS understands the interest in setting pre-determined cut points prior to the measurement year, but as stated previously in the April 2019 final rule (84 FR 15752–15754) there are numerous challenges in setting pre-determined cut points, including older data not being reflective of current performance, average performance not always increasing in a linear manner, external factors resulting in significant changes in performance from year to year, larger gains in performance generally seen for newer measures, and the rate of change differing for low performing contracts compared to higher performing ones. Additionally, the measures included in the Star Ratings program do not have national standards of care that plans or providers should meet; thus, it would be challenging to come to consensus on national standards to rate plans in the Star Ratings program. If using older data to predict or establish cut points, we risk causing unintended consequences such as disincentivizing quality improvement or setting cut points that are not aligned to significant changes in industry performance. For example, no one could have predicted the significant impacts the COVID–19 pandemic would have on industry performance for various Star Ratings measures. The current methodology of hierarchal clustering using the current year’s data will adjust cut points for the unforeseen impact on plan performance across the program. Since the clustering methodology compares relative performance, it protects plans from unanticipated impacts on industry performance. If there were predetermined thresholds based on historical data or an independent standard, plans could end up all with uniformly low ratings when unanticipated situations such as the COVID–19 pandemic occur. Comment: A number of commenters recommended including outliers in the E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33836 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations cut point calculations since they represent the true performance of contracts on the measures. Commenters stated that without including these outliers, CMS would not fully be representing industry performance. Other commenters noted that with the current data integrity polices in place for the Star Ratings program, these outliers are legitimate measure-level contract scores. Response: CMS agrees that an outlier may be a legitimate score for a particular contract, but we also know that extreme outliers for a measure in a given year can impact statistical analyses such as clustering. In the April 2019 final rule (84 FR 15755–15758) we received stakeholder feedback that in addition to guardrails and mean resampling we should directly address the impact of outliers. Although mean resampling does not directly address outliers, it helps mitigate the effect of outliers because when establishing the thresholds each data point (including outliers) is omitted from 10 percent of the cut points that are estimated (cut points are repeatedly estimated on ten subsets each containing 90 percent of the measure scores) and then averaged across the ten 90 percent samples following resampling. However, based on feedback from the industry to further increase the stability of the cut points and to prevent large fluctuations in cut points from one year to the next caused by the scores of a few contracts, we proposed in the February 2020 proposed rule to more directly remove extreme outliers and are finalizing that policy. Comment: A handful of commenters supported the addition of Tukey outlier deletion to the cut point methodology, while some suggested delaying implementation or viewing Tukey outlier deletion as an interim solution to improving the stability of the cut points. A commenter suggested phasing in outlier deletion over a multi-year period by putting the cut points with Tukey outlier deletion on display for two years. Response: We appreciate the support for the addition of Tukey outlier deletion to the cut point methodology and have decided to delay the implementation for an additional year recognizing that there may be fluctuations in measure-level scores as a result of the COVID–19 pandemic. We will also display simulations for the 2021, 2022, and 2023 Star Ratings in HPMS for contracts to see the impact of removing outliers on their stars. Summary of Regulatory Changes After consideration of the comments and for the reasons indicated in the VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 proposed rule and our responses to the related comments, we are finalizing as proposed the definition ‘‘Tukey outer fence outliers’’ and the specific formulae used. We are finalizing revisions to §§ 422.166(a)(2)(i) and 423.186(a)(2)(i) to apply the Tukey outlier deletion methodology prior to applying mean resampling with hierarchal clustering as proposed with one modification. To allow for potential fluctuations in measure-level scores as a result of the COVID–19 pandemic during the 2021 measurement year, we are delaying the addition of Tukey outer fence outlier deletion to the clustering methodology for non-CAHPS measures until the 2022 measurement year and the corresponding 2024 Star Ratings. Moving the effective date will provide an opportunity for MA and Part D contracts to view simulated results using Tukey outlier deletion for the 2021, 2022, and 2023 Star Ratings in HPMS. We note that the regulation text in this final rule incorporates the changes made by the IFC to §§ 422.166(a)(2)(i) and 423.186(a)(2)(i) during the period between the proposed rule and this final rule. The effect of Tukey outlier deletion would create a savings of $935 million for 2025, increasing to $1,449.2 million by 2030. 3. Removing Measures (§§ 422.164, 423.184) The regulations at §§ 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 through rulemaking 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 the February 2020 proposed rule, CMS proposed the removal of the Rheumatoid Arthritis Management measure from the Star Ratings program for performance periods beginning on or after January 1, 2021. CMS proposed 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 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 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 diseasemodifying 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 proposed to remove it starting with the 2023 Star Ratings. Below we summarize the comments we received and provide our responses and final decisions. Comment: Most commenters supported the retirement of the Rheumatoid Arthritis Management measure and offered a number of reasons for their support. Approximately half of the commenters who supported removal believed current measure specifications erroneously include certain patients in the measure denominator: Those receiving medication through clinical trials, patient assistance programs, or other ways of paying; patients in remission or managing their illness with other drugs; and patients who have side effects or cannot tolerate diseasemodifying anti-rheumatics drugs (DMARDS). A couple of commenters noted that the rate of medication adherence would be a better measure of patient outcomes than the current focus on DMARD dispensing. Individual commenters raised a number of additional issues with the measure: The role of the rheumatologist is not captured by the current measure; the measure has low reliability; there is no clinical consensus on whether patients in remission should remain on DMARD medications or should stop taking them at some point; removal of the measure will streamline ratings systems since NCQA has retired the measure from HEDIS; and continued use of the measure would promote unnecessary use of DMARDS. Response: CMS will pass along to the measure developer suggestions made by commenters for additional research and new directions. NCQA has retired this measure and therefore there will be no data for CMS to use in the Star Ratings program for the 2023 Star Ratings and beyond, so CMS will remove the measure from the Parts C and D Star Ratings. Comment: A couple of commenters disagreed with CMS’s proposal and offered similar explanations and recommended actions for CMS to take E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations instead of removing the measure. The commenters note that there is room for improvement in the measure in some populations and in some regions. They also note that research is only beginning into the long-term outcomes of patients recovering without use of DMARDS. For these reasons, they suggest it is premature to update the specifications of the measure or to retire the measure. Instead, they suggest additional research into the long-term outcomes and functional status of patients recovering without use of DMARDS. Response: CMS will pass along the suggestions for future research to the measure developer, NCQA. NCQA has retired this measure starting with the 2021 measurement year, so starting in 2021 this measure will no longer be submitted by plans and audited as part of the HEDIS measurement set. Thus, there will be no data for CMS to use in the Star Ratings program for the 2023 Star Ratings and beyond. Additionally, CMS agrees with NCQA’s assessment of the need to retire this measure at this time. Summary of Regulatory Changes After consideration of the comments and for the reasons set forth in the proposed rule and our responses to the related comments summarized earlier, we are finalizing the removal of the Rheumatoid Arthritis Management measure. khammond on DSKJM1Z7X2PROD with RULES2 4. Measure Weights (§§ 422.166(e), 423.186(e)) As finalized in the April 2018 final rule, beginning with the 2021 Star Ratings, §§ 422.166(e)(1)(iii) and (iv) and 423.186(e)(1)(iii) and (iv) provide that the weight for patient experience/ complaints measures and access measures will increase to 2. 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 measures 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. We stated 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 are the best or only source of information. We explained the proposed increase in the weight would not impact the assignment of stars at the measure level, just the calculation of the overall and summary ratings, and would 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 22). 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. 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 proposed to modify §§ 422.166(e) and 423.186(e) at paragraphs (e)(1)(iii) and (iv) to increase the weight of patient experience/ complaints measures and access measures to 4 to further emphasize the importance of patient experience/ complaints and access issues. We received the following comments related to our proposal, and our responses follow: Comment: The majority of commenters opposed the weight increase of patient experience/ complaints and access measures from 2 to 4. Most of these commenters argued that CMS should not value patient experience over clinical outcomes (currently weighted as 3) as they believe clinical outcome measures are the most important. Because some plans may not have enough enrollees to report all of the outcome measures included in the Star Ratings program, some commenters argue the proposed weighting changes would create an even greater imbalance between the total weight given to patient experience measures versus clinical outcome measures for these plans. A commenter stated that since 22 https://www.rand.org/content/dam/rand/pubs/ technical_reports/2009/RAND_TR653.pdf. PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 33837 the intended purpose of the Star Ratings program is to compare plan performance on measures related to beneficiary health outcomes and experience, the increase has the potential to erode the integrity of the Star Ratings program by basing the majority of the Star Rating score on patient experience and complaints measures instead of clinical outcomes. Response: CMS appreciates the value commenters place on outcome measures and will continue to advance work in the area of developing new outcome measures. That being said, it is important to make sure the voice of patients is heard and that patient experience is a key component of the overall and summary Star Ratings. Part of putting patients first and promoting patient-centered care is focusing on patients’ perspectives. Additionally, for those plans that may not have enough enrollees to report all of the outcome measures included in the Star Ratings program, we believe that this increased weighting of experience measures would provide such plans an opportunity to focus on improving patient experience and differentiate themselves in the market as a plan that anticipates members’ needs and works with enrollees in a customized way. Consequently, we are emphasizing CMS’s goal of listening to the voice of the patient to identify opportunities to improve care delivery. Under 1851(d) of the Act, CMS must provide information to promote an active, informed selection among plans, and hearing the perspective of beneficiaries is critical to understanding the differences among options. Weighting these measures higher will accomplish this goal. Comment: A number of commenters argued that by increasing the patient experience/complaints measures and access measures from a weight of 2 to 4, CMS will be downplaying the importance of the provision of high quality clinical care. Some commenters also noted that this would not align with other CMS quality measurement programs, such as the Health Insurance Exchanges Quality Rating System (QRS), the underlying goals of the Part C and D Star Ratings program and nonMedicare quality improvement efforts, or with CMS’s guiding principles for the Star Ratings program. A commenter noted that this contradicts the U.S. Department of Health and Human Services’ (HHS’) efforts as part of the Quality Summit to align federal healthcare quality rating programs. A commenter noted that the proposal also runs counter to the quality measurement principles of MedPAC, which establish the importance of outcome measures. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33838 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Response: The proposed increase in weight for patient experience/ complaints measures and access measures is a new direction for the Part C and D Star Ratings program to advance the agency’s goal of putting patients first and listening to their voice. While this direction differs from current policies in other quality programs, it is part of the agency’s effort to strive to ensure we are meeting the needs of our beneficiaries by listening to their feedback through the CAHPS survey measures, disenrollment rates, and complaints measures. A primary function of Medicare health and drug plans is the provision of health care and drug services to beneficiaries. Measuring, and highly weighting, the importance of access to these services greatly encourage the industry to focus on their fundamental functions. Without access to care and needed prescription medications, optimal clinical outcomes are not probable. CMS believes access to services, care coordination, and patient engagement are intrinsic to positive clinical outcomes. A beneficiary’s confidence in the health and drug plan helps facilitate continuation of care which could lead to better clinical outcomes. We agree with MedPAC’s recommendation that population-based outcome and patient experience measures are critical in evaluating MA quality. Comment: Commenters also raised concerns that this would take focus away from physician care and the clinical measures collected through HEDIS. Other commenters noted that the overwhelming emphasis on patient experience could have the unintended consequence of MA plans and providers not focusing on preventive screenings, such as colorectal cancer screening, which can save lives. Response: Plans and providers should continue to focus on preventive care, screenings, and physician care. This weight change puts more emphasis on the voice of the beneficiary and access issues. We disagree with the characterization that this emphasis is overwhelming, and it in no way suggests that plans and providers should not be continuing to provide important preventive care and screenings. All MA and Part D sponsors are still required to have quality improvement (QI) programs described at §§ 422.152 and 423.153(c), respectively, in place. The primary goal of the MA organization’s QI program is to effect sustained improvement in patient health outcomes. Additionally, by not continuing to focus on preventive screenings and primary care, this will have a detrimental effect on health VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 outcomes and would have an impact on patient experience measure scores, disenrollment rates, and complaint rates, all measures included in the weight increase. Therefore, the risk of this particular negative outcome from the change in weighting the patient experience/complaints measures and access measures is minimized. Comment: A number of commenters expressed concerns about what they perceive to be a fundamental, unprecedented shift away from the objective data-driven clinical Star Ratings measures to more subjective patient experience measures and encouraged a more thoughtful approach to ensure that the weight increase would not result in unintended consequences. Commenters raised issues regarding CMS creating incentives for plans and providers to provide care that would lead to increased CAHPS scores, and they argued this may not be in the best interest of Medicare beneficiaries and better health outcomes. Response: Plans and providers should always be providing professional, appropriate clinical care to Medicare beneficiaries, thereby focusing broadly on quality, rather than on narrowly targeted metrics represented by individual Star Ratings measures. Patient experience is a fundamentally important aspect of healthcare quality. Most of the evidence shows that better patient experience is associated with better patient adherence to recommended treatment, better clinical processes, better hospital patient safety culture, better clinical outcomes, reduced unnecessary healthcare use, and fewer inpatient complications (Anhang Price et al., 2014; Anhang Price et al., 2015 23). The Anhang Price et al., 2014 article which consisted of a review of relevant literature related to CAHPS surveys and their relationship to health care quality found that all but one out of almost three dozen studies reviewed showed a positive correlation between patient experiences and clinical care quality or were neutral. The empirical evidence in the studies highlights that health care providers and plans can concurrently provide better patient experiences and better clinical quality. As discussed in the article, patient 23 Anhang Price, R., Elliott, M.N., Zaslavsky, A.M., Hays, R.D., Lehrman, W.G., Rybowski, L., Edgman-Levitan, S. & Cleary, P.D. (2014). Examining the role of patient experience surveys in measuring health care quality. Medical Care Research and Review, 71(5), 522–554. Anhang Price, R., Elliott, M.N., Cleary, P.D., Zaslavsky, A.M., & Hays, R.D. (2015). Should health care providers be accountable for patients’ care experiences?. Journal of general internal medicine, 30(2), 253–256. https://doi.org/10.1007/s11606-0143111-7. PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 experience of care surveys such as the CAHPS surveys evaluate a critical component of care and focus on whether the care is patient-centered. This is an important goal as we continue to emphasize the importance of putting patients first. Comment: A few commenters expressed concerns that this change would encourage plans to abandon efforts to drive clinically appropriate care in lieu of catering to popular opinion that may be biased by advertisements and media. Such behavior, it was noted, could result in degraded health outcomes long-term for Medicare beneficiaries. They argue programs that promote member health and safety, such as drug management and utilization programs, could be damaged or abandoned. A number of commenters stated that the improvement of health outcomes is one of the largest drivers of the long-term goal of reducing American health care costs and that shifting emphasis from clinical outcomes to member experience could lead to increased medical and pharmaceutical spending. Response: Plans and providers should continue to focus on improving health outcomes, while also ensuring that Medicare beneficiaries have access to clinically appropriate and needed care, for example as measured through the CAHPS surveys, Appeals, Members Choosing to Leave the Plan, and Complaints measures. Outcome measures are still heavily weighted in the Star Ratings program with a weight of 3. We believe high quality care is meaningless unless the enrollee has access to that care. All MA and Part D sponsors are required to have quality improvement (QI) programs described at §§ 422.152 and 423.153(c), respectively, in place. The primary goal of the MA organization’s QI program is to effect sustained improvement in patient health outcomes and providing health care using evidence-based clinical protocols. The QI program must also include a health information system to collect, analyze, and report Medicare Parts C and D quality performance data, including HEDIS, HOS, and CAHPS data. Additionally, as described at § 422.152(c), an MA organization’s QI program must include a chronic care improvement program. Part D sponsors must also have established quality assurance measures and systems in place to reduce medication errors and adverse drug interactions and improve medication use. In addition to the requirements to focus on clinical-based care, MA and Part D plans, given their payment structures should have E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations incentives to decrease inappropriate medical and pharmaceutical spending. Comment: Some commenters argued that if physicians do not proceed thoughtfully, patient experience measures could easily result in adverse consequences that are potentially dangerous to the patient. A commenter noted that if a person who is addicted to opioids seeks a prescription and the physician does not provide one, the patient could retaliate by leaving a negative review. It was suggested that in some cases physicians who overprescribe opioids may have very high reviews from patients, despite putting patients in real danger and contributing to the nation’s opioid epidemic. Response: The CAHPS survey questions are based on statistically valid samples of Medicare enrollees in each contract and should not be influenced by a particular physician providing opioids or not. They are not like crowdsourced reviews. Most of the CAHPS survey questions focus on enrollees’ experiences of care such as whether they got an appointment to see a specialist as soon as they needed, whether they got care as soon as they needed, whether the health plan’s customer service gave them the information or help needed, and whether the doctor’s office followed up on test results.24 There are also global ratings of the health care quality, health plan, and drug plan. The change in measure weights does not suggest that any physicians behave in a manner that puts patients in danger, nor does it provide an excuse for a physician who does so. Comment: A few commenters supported the increased weight of patient experience/complaints measures and access measures but only if the increase is gradual by moving it to a weight of 2.5 or 3 first to promote stabilization of the Star Ratings. It was noted that this proposal is a radical increase considering that CMS had maintained for eight consecutive Star Ratings cycles (2012–2019) the original weight of these measures (at a weight of 1.5). Commenters argued that when changes are made to an organization’s culture, it can take years to see the improvements in patient experience scores since many beneficiaries interact with the health care system only a few times a year. 24 CAHPS composite items included in the Part C & D Star Ratings are: Getting Needed Care, Getting Appointments and Care Quickly, Customer Service, Care Coordination, and Getting Needed Prescription Drugs. All of these measures are considered patient experience of care measures. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 Response: We disagree that this is an unexpected and sudden change. The April 2018 final rule adopted an increase from 1.5 to 2 in the weight of patient experience and complaints measures and access measures. CMS signaled in that final rule that, given the importance of hearing the voice of patients when evaluating the quality of care provided, we intended to further increase the weight of these measures in the future. While we appreciate that organizations are being incentivized to quickly adjust to this weighting change, we believe it is important to proceed at this time, in particular, in light of the COVID–19 pandemic. The uncertainty from the pandemic is a critical time for plans to be focused on patient experience. Plans need to enhance patient experience to deal with the challenges of COVID–19 pandemic, to work with beneficiaries in customized ways, and be as supportive as possible. This is also an opportunity for them to distinguish themselves and be innovative in maintaining access to care. A goal of the Star Ratings program is to foster continuous improvement. Comment: A handful of commenters opposed the weight increase for measures from the CAHPS survey. These commenters argued that the CAHPS survey measurement tool and methodology are outdated and need to be updated to accurately capture beneficiaries’ perspectives of care since the private insurance market has significantly changed over time. Some commenters opposed the survey due to a variety of other reasons, including what they perceive as a lack of statistical reliability, small sample sizes, compression of cut points, differences in methodologies across CAHPS surveys and with the NCQA rating system, cut point variability, contract-level rating volatility, and lack of clinical relevance. A commenter stated that the measures are based on a limited sample that may yield inaccurate, unreliable, or biased data. A commenter stated that younger patients, those with disabilities, and members enrolled in a D–SNP are underrepresented in the survey. A couple of commenters stated that the CAHPS survey has no mechanism for health plans to identify and address negative experiences for a particular enrollee; therefore, these commenters encouraged CMS to release secure beneficiary-level CAHPS response data. A commenter said survey data should receive third-party validation. Response: CAHPS measures 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 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 33839 matters that patients themselves say are important to them and for which they are the best or only source of information. As a result of more than twenty years of research that is ongoing and leading to continuous improvement, CAHPS surveys are very good measures of patient experience. The CAHPS program, initiated in 1995, which includes the Medicare CAHPS Health Plan Surveys, seeks to advance the scientific understanding of patient experience with healthcare. Since then, CAHPS surveys have become recognized as the most widely validated, reliable, and applied patient experience surveys in the United States (Holt et al. 2019). Many articles documenting the reliability and face, content, and construct validity of the CAHPS surveys have been published (for example, Crofton, Lubalin, & Darby, 1999; Darby, Hays, & Kletke, 2005; Hays et al., 2014; Martino et al., 2009). In addition, many studies establish the validity of CAHPS measures by assessing their association with measures of structures, processes, and outcomes. For example, the 2014 review article (Anhang Price et al., 2014), in reviewing 34 studies, found that evidence indicated positive associations between patient experiences and other aspects or indicators of health care quality, including patient behavior (adherence), best practice clinical processes, better patient safety culture, and lower unnecessary utilization.25 The Medicare CAHPS survey is designed to capture changes in the insurance market that may adversely affect patient experience. The survey measures patient experience with care and captures whether enrollees in MA 25 Anhang Price, R., Elliott, M.N., Zaslavsky, A.M., Hays, R.D., Lehrman, W.G., Rybowski, L., Edgman-Levitan, S. & Cleary, P.D. (2014). Examining the role of patient experience surveys in measuring health care quality. Medical Care Research and Review, 71(5), 522–554. Crofton, C., Lubalin, J.S., & Darby, C. (1999). Consumer Assessment of Health Plans Study (CAHPS). Foreword [Review]. Medical Care, 37(3 Suppl.), MS1–MS9. Darby, C., Hays, R.D., & Kletke, P. (2005). Development and evaluation of the CAHPS hospital survey. Health Services Research, 40(6 Pt 2), 1973– 1976. Hays, R.D., Martino, S., Brown, J.A., Cui, M., Cleary, P., Gaillot, S., & Elliott, M. (2014). Evaluation of a care coordination measure for the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Medicare survey. Medical Care Research and Review, 71, 192–202. Holt, J.M. (2019). Patient experience in primary care: A systematic review of CG–CAHPS surveys. Journal of Patient Experience, 6(2), 93–102. Martino, S.C., Elliott, M.N., Cleary, P.D., Kanouse, D.E., Brown, J.A., Spritzer, K.L., Hays, R.D. (2009). Psychometric properties of an instrument to assess Medicare beneficiaries’ prescription drug plan experiences. Health Care Financing Review, 30(3), 41–53. E:\FR\FM\02JNR2.SGM 02JNR2 33840 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 plans with narrow networks or closed panels or providers who are not accepting new patients have less positive experiences or receive lower quality care in the responses to existing questions on the survey. If care is worse in some MA contracts because of these aspects of how care is provided, the survey functions as intended by identifying and reporting these differences to beneficiaries, contracts, and CMS. The statistical reliability of the CAHPS measures is high, so that higher star categories correspond to meaningfully better performance. Generally, reliabilities of 0.7 or more are considered high for a quality measure (Price, Elliott, Zaslavsky, et al., 2014). The reliability of Medicare CAHPS measures ranges from 0.76 to 0.92. Contracts may further increase the reliability of their own scores by requesting sample sizes greater than the required minimum. While the star category bands may appear to be narrow, the reliability of CAHPS measures meet or exceed standards for quality measurement (Adams 2009 26), so that higher star categories correspond to meaningfully better performance. While the CAHPS scoring using linear means may make between-plan differences appear to be compressed, the high contract-level reliability establishes excellent ability to differentiate plan performance. Based on the peer-reviewed measurement and quality-measurement literature, experts in measurement generally agree that reliability greater than 0.70 indicates acceptable reliability; reliabilities of 0.80 or greater are preferable for higherstakes applications (Adams et al. 2010, Elliott et al. 2010; Nunnally & Bernstein, 1994; Roland et al. 2009; Safran et al., 2006).27 26 https://www.rand.org/pubs/technical_reports/ TR653.html. 27 Adams, J.L., Mehrotra, A., Thomas, J.W., & McGlynn, E.A. (2010). Physician cost profiling— reliability and risk of misclassification. New England Journal of Medicine, 362(11), 1014–1021. Elliott, M.N., Lehrman, W.G., Goldstein, E., Hambarsoomian, K., Beckett, M.K., & Giordano, L.A. (2010). Do hospitals rank differently on HCAHPS for different patient subgroups? Medical Care Research and Review, 67(1), 56–73. Nunnally, J.C., & Bernstein, I.H. (1994). Psychometric theory (3rd ed.). New York: McGrawHill. Roland, M., Elliott, M., Lyratzopoulos, G., Barbiere, J., Parker, R.A., Smith, P., . . . & Campbell, J. (2009). Reliability of patient responses in pay for performance schemes: Analysis of national General Practitioner Patient Survey data in England. British Medical Journal, 339, b3851. Safran, D.G., Karp, M., Coltin, K., Chang, H., Li, A., Ogren, J., et al. (2006). Measuring patients’ experiences with individual primary care physicians: Results of a statewide demonstration VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 The differences between CMS’s Medicare CAHPS implementation and others largely reflect CMS’s use of additional survey items, case-mix adjustment, and reliability and statistical significance criteria to improve the validity, reliability, and accuracy of Medicare CAHPS scores and stars (https://www.ma-pdpcahps.org/ globalassets/ma-pdp/scoring-and-starratings/2019-analysis-of-reportedmeasures.pdf); several of these beneficial features are not included in other CAHPS implementations. For example, the CMS Medicare CAHPS Getting Appointments and Care Quickly composite includes a highly-reliable item that is not present in alternate versions. The use of percentile cutoffs, combined with reliability and statistical significance testing, reduces the effects of chance and results in reliable, valid star assignment for CAHPS measures. This methodology, combined with highly-reliable underlying scores, ensures that changes in cut points reflect changes in contract performance rather than chance. These changes in cut points ensure that CAHPS Star Ratings continue to accurately differentiate contract performance. Patient experience is an inherently important dimension of healthcare quality. It is also the case that the preponderance of evidence shows that better patient experience is associated with better patient adherence to recommended treatment, better clinical processes, better hospital patient safety culture, better clinical outcomes, reduced unnecessary healthcare use, and fewer inpatient complications (Anhang Price et al., 2014; Anhang Price et al., 2015). Medicare CAHPS case-mix adjustment, which is informed by 20 years of research, accounts for factors such as age, health status, and dual eligibility and ensures that contract scores are not influenced by patientlevel factors beyond their control. This adjustment ensures that contract-level scores fairly represent all contracts. Analyses of nonresponse in CAHPS data (Elliott et al. 2005; Elliott et al. 2009) have shown little or no evidence of nonresponse bias in the presence of CAHPS case-mix adjustment. Medicare CAHPS survey vendors have access to beneficiary-level data and are permitted to conduct analyses with these data that do not risk disclosing the identity of respondents to plan sponsors, including restrictions on reporting cell sizes smaller than 11. These restrictions are necessary to project. Journal of General Internal Medicine, 21, 13–21. PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 ensure the confidentiality and validity of beneficiary responses to the Medicare CAHPS survey. The collection and processing of CAHPS data undergo a rigorous quality assurance process that includes dual program coding, use of test data sets, team review of products, investigation of outliers, and comparisons to historic results. This quality assurance process is as rigorous as that followed for the production of other quality measures. Comment: A couple of commenters suggested different updates to the content of the CAHPS survey. A commenter recommended that the Agency for Healthcare Research and Quality (AHRQ) and CMS consider expanding the survey to include questions on accuracy of provider directories and ease of accessing the information. Another commenter noted that questions on the CAHPS survey are not consistent across different lines of business. Response: The Medicare CAHPS Survey was updated in 2016 to incorporate AHRQ’s 5.0 updates to the CAHPS Health Plan Survey. CMS uses the most current version of the CAHPS Health Plan Survey as it is the national standard for measuring and reporting on the experiences of consumers with their health plan, and the only assessment of patient experiences with health plans endorsed by the National Quality Forum. In May 2019, AHRQ published a request for information inviting public comment to inform potential revisions to the Health Plan Survey (84 FR 21340). CMS will give careful consideration to any updates to the CAHPS Health Plan Survey that AHRQ may provide in the future. Additional testing and development to refine CAHPS items in areas such as care coordination is ongoing. With regard to adding questions around provider directories and ease of accessing plan information, specific measures of information seeking, such as experience with written health plan materials, have been explored in the context of CAHPS but have not resulted in reliable measures due to too few plan members reporting experience in the survey samples. CMS is exploring alternate ways of improving the accuracy of plan directories. Differences in CAHPS composite items across lines of business, such as in the Getting Appointments and Care Quickly composite, in some cases reflect additional items that Medicare CAHPS includes to maximize the reliability and validity of the CAHPS measures. Comment: A commenter supported the increase in the weight for administrative access measures but E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations suggested keeping the CAHPS measures at their current weight because the administrative measures already take into account member experience. Another commenter said they would support an increase in access measures because plans have a direct impact on the outcome of these measures and can analyze, pinpoint root causes, and take action to avoid adverse outcomes. Response: We appreciate these comments. CMS wants to ensure that the experiences of beneficiaries getting needed care, getting appointments and care quickly, care coordination, and ratings of health care quality, for example, are also emphasized with this weight change. MA plans are responsible for providing all of the Part A and B benefits and providing a managed care alternative to the traditional FFS Medicare program. In some cases, the MA plans provide additional (supplemental) benefits. One of the advantages of MA is the MA plan is responsible for coordinating the care among the enrollee’s health care providers. Since the primary purpose of the health plan is to ensure their enrollees get needed health care services, patient experience and access measures that focus on whether the enrollee is getting needed care are critical in evaluating whether a plan is fulfilling its fundamental requirements. Comment: A couple of commenters opposed the weight increase for access measures but also asked for clarification and requested a methodology change to the Call Center measures. A commenter requested CMS consider publishing Call Center results in HPMS on the same frequency as the Part C and Part D Timeliness Study (quarterly) to allow plan sponsors to better align internal testing/monitoring against CMS thirdparty testing. A commenter asked for clarification on the definition of the ‘‘Call Center,’’ noting it is unclear if this encompasses the Star Ratings measure for prospective members or if this is in reference to the member customer service call center. Response: While we appreciate feedback on the usefulness of the Accuracy and Accessibility Study results and the request for publication of those results quarterly, we cannot do this because of the timing of the study. The Timeliness Study is conducted quarterly, and CMS publishes the results quarterly; conversely the Accuracy and Accessibility Study is conducted once a year, between February and May, and CMS publishes the results once a year, as soon as they are available in August. For purposes of the Star Ratings measure, the prospective customer service call center VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 results are included in the measure calculation. The measure specification has not changed from prior years. Comment: A few commenters opposed the current appeals measures and, consequently, did not believe the higher weight was prudent. One noted that these measures are distorted because beneficiaries may be unaware of the extent to which they are or are not receiving the proper benefits. The commenter recommended CMS conduct a survey of providers on how efficiently and accurately MA plans make organizational determinations and appeals. A commenter expressed concern regarding increasing the weight for appeals measures citing what they believe are fundamental flaws in these measures. They stated both the plan and Independent Review Entity (IRE) have difficulty reaching sound decisions in the 72 hour timeframe and argued the IRE demonstrates the same lack of medical expertise or misunderstanding of coverage guidelines as the MA plan; the commenter recommended providing more meaningful measures such as independent audits of the MA plans’ initial determinations, the frequency with which physicians appeal MA plans initial determinations, the timeliness of initial determinations (using a much shorter standard than 72 hours), and other measures they say capture the patient and provider experience more accurately. A commenter stated health plans should be held accountable for their administrative responsibilities and insurance functions through compliance standards and plan monitoring, not Star Ratings. Response: CMS clarifies that both Part C appeals measures assess the timeliness of appeals sent to the IRE and how often the IRE agrees with the plan’s decisions. The purpose of these measures is not to directly assess the enrollees’ comprehension of all of their plan benefits. CMS acknowledges the comments for new measurement suggestions for the Part C appeals process and is actively evaluating these suggestions for future measure development. However, CMS does not agree that there are fundamental flaws in the current Part C Appeals measures. The purpose of the appeals measures is to ensure appeals that are denied are processed in a timely manner and to assess if the denial by the health plan was consistent with the benefit or coverage requirements. CMS reminds plans that they can access timeliness and compliance data in real time at www.medicareappeal.com and bring to the attention of the IRE any data discrepancies. CMS disagrees that both the plan and IRE have difficulty making PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 33841 sound decisions in the 72-hour time frame and both lack the medical expertise or misunderstand the coverage guidelines. CMS notes only expedited reconsiderations must be sent to the IRE within 72 hours for Part C appeals (see § 422.590). In these cases this timeframe is required to avoid endangering the life or health of the enrollee or the enrollee’s ability to regain or maintain maximum function; thus, a de novo review of an adverse organization determination must be processed quickly. Examples of cases that should be expedited include pre-service skilled nursing facility cases, pre-service acute inpatient care cases and cases in which a physician indicates that applying the standard timeframe for making a determination could seriously affect the life or health of the enrollee or the enrollee’s ability to regain maximum function. Medicare health plans have an obligation to determine if an appeal should be expedited, including responding to an enrollee or provider request for expedited determination. We also remind plans that in expedited and standard service appeals, IRE may extend the decision timeframe by up to 14 calendar days if it is in the enrollee’s interest. Please remember if a plan fails to provide the appellant with a reconsidered determination within the required timeframes, this failure constitutes an affirmation of its adverse organization determination, and the plan must submit the case file to the IRE for review. Plans and sponsors must continue to have procedures in place for requesting and obtaining information necessary for making timely and appropriate decisions. The IRE’s decision is based on the information gathered during its review process and the IRE must issue a decision within the same appeals timeframe as the plan. Please refer to 42 CFR 426.600(d). Therefore, the timeframes for the plan and the IRE are aligned. In response to the recommendation that plans be held accountable for their administrative responsibilities and insurance functions through compliance standards and plan monitoring instead of Star Ratings, we assure commenters that this also happens. The Star Ratings measures only focus on two aspects of the appeals processes. Program audits provide a more comprehensive review of a sponsoring organization’s compliance with the terms of its contract with CMS, including access to medical services and other enrollee protections required by Medicare. For more information about the program audit process, please see https:// www.cms.gov/files/document/2020- E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33842 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations program-audit-process-overview.pdf. The purpose of the Star Ratings system is to measure quality of a health and drug plan and to provide information to help beneficiaries make more informed choices. The appeals measures are such indices of quality. Comment: A few commenters focused their comments on the Complaints about the Health and Drug Plan measures. A commenter said they support a modest increase in weight for these measures because plans are generally able to analyze the root cause of the complaint and implement strategies to address beneficiary concerns. A few commenters noted that complaints not within the plans’ control and complaints resulting from CMS policy decisions should be excluded. Response: CMS thanks the commenter for their support of a modest increase in the weight of the complaints measure. Although a few commenters noted that complaints not within the plans’ control and complaints resulting from CMS policy decisions should be excluded, CMS expects plans to be integral in assisting beneficiaries and ensuring their access to care is not disrupted, regardless if they directly created the issue at question, or not. CMS expects health plans and Part D sponsors will assist their enrollees in situations such as these, and help them understand how to correct issues, even if the underlying cause of complaints is not the sponsors’ fault. Sponsors have an important responsibility for providing continued access to services. The fact that CMS received a complaint indicates the sponsor has not helped service their enrollee, as Medicare instructs beneficiaries to seek resolution first through their sponsors. If sponsors take the opportunity to assist their enrollees proactively, they will avoid having complaints recorded in the Complaints Tracking Module (CTM). CMS issued guidance in the HPMS memo dated May 10, 2019, Complaints Tracking Module (CTM) File Layout and Updated Standard Operating Procedures, which describes the Plan Request process for plans to submit requests to change incorrect contract assignments, change issue designation (that is, from Plan Issue level to CMS Issue), and change category/subcategory. The memo states that, for matters that are delegated to CMS for handling and/or final resolution, plans are to submit a CMS Issue Change Request and it lists examples of applicable situations. In the SOP Appendix A, CMS lists the subcategories and notes which subcategories are excluded from plan performance metrics. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 Comment: A few commenters focused their comments on the disenrollment measure, Members Choosing to Leave the Plan, stating that the measure is flawed and misrepresents some changes in enrollment as dissatisfaction. They suggest CMS consider excluding members who switch plans but stay with the same parent organization, as it may actually suggest a high level of satisfaction with the parent organization. A commenter stated the measure is extremely volatile and can be impacted by many factors beyond a member’s experience with their health plan, including job loss/movement, changes in individual finances, provider changing plans, relocations and changes in member needs. Response: CMS appreciates these comments, but disagrees that the current specification for this measure is flawed. This measure reflects voluntary movements from one contract to another. For example, if a change in the provider network results in a beneficiary changing contracts, this reflects a decision by the beneficiary that the current contract is no longer providing the care or access to services that they want. Similarly, if the health status of the enrollee changes, and the current plan is not meeting the enrollee’s changing health needs, this may result in a voluntary disenrollment and should be reflected in this measure. This measure is a contract-level measure focused on quality at that level; therefore, disenrollments are considered voluntary even when a member enrolls into a different contract under the same parent organization. The member is changing from one contract to another for a reason and this should be reflected in this measure. If we were to change the measure specification to consider disenrollments as no longer voluntary when a member enrolls into another contract under the same parent organization, this change would be advantageous to larger parent organizations that have multiple contracts. There are only 4 disenrollment codes used in this measure (11—Voluntary Disenrollment through plan, 13— Disenrollment because of enrollment in another Plan, 14—Retroactive and 99— Other (not supplied by beneficiary)). We agree that there are reasons for disenrollment that should not be counted against the plan. For example, enrollment changes because of a contract service area reduction, a PBP termination, LIS reassignments, passive enrollment of the enrollee into a Demonstration (MMP), and changes in residence out of the service area are not counted in the measure. PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 Comment: Some commenters supported the weight increase, indicating they appreciate CMS adding further emphasis on the voice of the patient. Some argued that better patient experience has been shown to improve patient compliance with medical advice. Response: CMS appreciates the commenters’ support of our proposal. Comment: Several commenters expressed concern about implementing a weighting change during the COVID– 19 pandemic because of the current uncertainty how the public health emergency will impact care delivery and patient experiences going forward. One noted this weight change would not give health plans adequate time to adjust for the volatility and inconsistency of CAHPS responses and difficulties in measurement during this time. A couple of commenters noted that depending on the state of the pandemic, additional weight afforded to the current patient experience and complaints measures will not accurately capture plan performance during this public health emergency and crisis. Another commenter noted patient experience data during this period may not be particularly accurate or useful as a measure of overall performance of Medicare Advantage or individual plans due to how the pandemic may impact how beneficiaries may respond to these types of surveys. Response: The changes to the weighting of patient experience/ complaints and access measures apply to the 2021 measurement year, not the 2020 measurement year when the pandemic first started. CMS agrees that there is a lot of uncertainty about how COVID–19 will impact the healthcare system and quality measurement and recognizes the challenges placed on the healthcare system and Part C and D plans; however, plans have until the 2021 measurement year to adjust their processes to account for the impact of COVID–19 on Star Ratings measures. One thing that is certain for plans is how much they focus on addressing their members’ needs during the time of a pandemic. We believe that given the uncertainty during such times, it is even more important that plans be proactive, anticipate enrollees’ needs, and work with them in a customized way to mitigate any challenges that enrollees might face in a pandemic environment. Therefore, it is important to move forward with these Star Ratings changes to further emphasize the importance of patient experience/complaints and access measures at this time. We reiterate that patient experience is an inherently important dimension of E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations healthcare quality and associated with better health outcomes and improved care delivery. This is critical information to help beneficiaries make more informed choices. Comment: Some commenters noted that different areas of the country are experiencing different limitations of health care resources related to COVID– 19, some of which may require redeployment of resources, so differences in CAHPS and HOS survey scores may be neither meaningful nor appropriate to compare plan performance. They request that CMS reevaluate these measures after the COVID–19 crisis is resolved. Several commenters noted their concern about the long-term impact of the public health crisis on respondents’ physical and mental health, and their perception of the health care system and health plans. Response: CMS recognizes the challenges that COVID–19 has placed on the healthcare system and quality measurement. We understand the concern that it may impact how beneficiaries respond to CAHPS surveys and, consequently, the CAHPS measure scores. To that end, we believe that this would be a great opportunity for plans to focus even more on supporting their enrollees, being proactive and anticipating enrollees’ needs, and working with them in a customized way to mitigate any challenges that enrollees might face in a pandemic environment. We are continuing to monitor whether additional Star Ratings adjustments need to be proposed for future years. Comment: Several commenters stated the weight increase should not proceed at this time due to widespread restricted access to providers due to concern about capacity and public safety as a result of COVID–19, and the unknown duration of such restrictions. For example, beneficiaries may not be able to assess their experience with in-person encounters, and responses may be biased by exigencies secondary to COVID–19. One notes the proposed CAHPS weight changes for the 2021 measurement period provide little time for health plans to adjust for the volatility and consistency of CAHPS responses and difficulties in measurement. Response: Again, we believe that this would be the ideal time for plans to take the opportunity to focus even more on supporting their enrollees, being proactive and anticipating enrollees’ needs, and working with them in a customized way to mitigate any challenges that enrollees might face in a pandemic environment, particularly challenges in accessing services. As VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 previously stated, these changes are for the 2021 measurement period so plans have time to adjust to the impacts of COVID–19. Even in a pandemic environment, increasing the weight for experience measures will encourage plans to focus on an enrollee’s experience with the plan (for example, plan communication, plan innovation, mitigation of access issues). CMS will continue to monitor the impact of the public health emergency on quality measurement. For CAHPS measures, widespread changes in industry performance should be reflected in the cut points. Summary of Regulatory Changes After consideration of the comments and for the reasons indicated in the proposed rule and in the responses to comments, we are finalizing the provisions regarding the weight increase for patient experience/complaints and access measures as proposed at §§ 422.166(e)(1)(iii) and (iv) and 423.186(e)(1)(iii) and (iv). In the proposed rule, we stated that if both Tukey outlier deletion and increasing the weight of patient experience/complaints measures and access measures were adopted the net savings for the Medicare Trust Fund would be $368.1 million for 2024, increasing to $999.4 million for 2030. We are finalizing the use of Tukey outer fence outlier deletion as proposed but to begin one year later, with the 2024 Star Ratings, and are finalizing the proposal to increase the weights of the patient experience and complaints measures and the access measures to 4 for the 2023 Star Ratings. Based on the combination of these final policies, we project the net cost to the Medicare Trust Fund would be $345.1 million for 2024, increasing to a net savings of $999.4 million for 2030. There is a net cost for 2024 since the increase in weight for patient experience/ complaints measures and access measures results in an overall increase in the highest ratings for MA contracts, while in future years with the addition of the Tukey outlier deletion there is an overall decrease in the highest ratings for MA contracts. 5. Reclassification of the Statin Use in Patients With Diabetes (SUPD) Measure (§§ 422.164(d)(2), 423.184(d)(2) Currently, the SUPD measure specifications require two diabetes medication fills to meet the denominator while only a single fill of a statin therapy is required to meet the numerator criteria. Recently, the Pharmacy Quality Alliance (PQA), the measure steward, has clarified SUPD as PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 33843 a process measure in a Frequently Asked Question (FAQ) (the FAQ can be found at https://www.pqaalliance.org/ measures-overview#supd), therefore CMS no longer believes that the intermediate outcome measure classification for the SUPD measure is appropriate. We proposed to modify the classification of the SUPD measure from an intermediate outcome measure to a process measure, starting with the 2023 Star Ratings, based on data from the 2021 measurement period. We received the following comments related to our proposal, and our responses follow: Comment: The majority of commenters supported modifying the SUPD measure classification from an intermediate outcome to a process measure, changing the weight from 3 to 1. Commenters noted that outcomes are not measured in SUPD since it only requires a single fill of a statin medication. They agreed that SUPD is a process measure that is based on an important procedural intervention but does not capture a therapeutic outcome since SUPD does not monitor the medication adherence of a statin over a course of treatment. In addition, commenters noted that classifying SUPD as a process measure is consistent and aligns with the Part C Statin Therapy for Patients with Cardiovascular Disease measure. Response: CMS appreciates the commenters’ support of this proposal. It is consistent with the clarification from the measure steward, the Pharmacy Quality Alliance (PQA), in 2019 that SUPD is a process measure based on the National Quality Forum’s (NQF) criteria. Comment: A few commenters that support CMS’s proposal to modify the SUPD measure category to a process measure also noted that CMS should exercise caution when creating additional measures in the Star Ratings program or changing measure categorizations. Commenters were concerned that measure weights are being changed too rapidly. One commenter also expressed concerns with selecting the SUPD measure and recommends that CMS consider replacing SUPD with the Healthcare Effectiveness Data and Information Set (HEDIS) measure Statin Therapy for Patients with Diabetes (SPD). Response: CMS thanks the commenters for this feedback. CMS carefully evaluates all of the measures incorporated in the Star Ratings. CMS will continue to monitor each of the measures included in the Star Ratings as well as future measures incorporated into the Star Ratings. CMS also carefully evaluates the weights of each measure. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33844 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations The weights are based on measure type. Typically, CMS aligns the measure specifications with the measure steward. The Statin Therapy for Patients with Cardiovascular Disease (SPC) is already included in the Part C Star Ratings while the SUPD measure is included for Part D. CMS first discussed the HEDIS SPD and SPC measures, and the PQA SUPD measure in the 2016 Call Letter. As stated in the 2017 Call Letter, the SPD measure overlapped with the SUPD measure. Therefore, CMS added only one of the HEDIS measures (the Part C SPC measure) to the 2017 display page as well as the Part D SUPD measure after consideration of stakeholder feedback through the Call Letter process. CMS gained experience with calculating and reporting the measures and added SPC and SUPD to the Star Ratings as announced in the 2019 Call Letter. Comment: Commenters provided feedback on the timeline proposed for reclassifying SUPD starting with the 2023 Star Ratings (using 2021 data). Some noted that SUPD is a process measure that has not changed in terms of specifications to warrant retaining SUPD as an intermediate outcome measure for the 2021 and 2022 Star Ratings. Additionally, commenters were concerned that retaining the classification as an intermediate outcome with a weight of 3, rather than immediately reclassifying SUPD as a process measure with a weight of 1, could lead to confusion, and is inconsistent with the guidance of expert measure developers, which could lead to instability for the Star Ratings. However, there were a few commenters who supported CMS’s proposed timeline as it would take into consideration plan efforts and coordination needed to account for the SUPD measure reclassification. Response: Reclassifying SUPD as a process measure (including its weight), is a substantive change that must be proposed and finalized through rulemaking as required by § 423.184(d)(2). In the April 2018 final rule, CMS finalized the weight of 3 for SUPD for the 2021 and 2022 Star Ratings. In the February 2020 proposed rule, CMS proposed to reclassify SUPD as a process measure with a weight of 1 for future years, starting with the 2023 Star Ratings. This timeline and approach is consistent with the April 2018 final rule which outlined that a key tenet of the Star Ratings program is to make changes prior to the measurement year and to give sponsors enough lead time, in order to ensure greater transparency and stability for the Star Ratings program for plan sponsors. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 Comment: A few commenters opposed reclassifying SUPD to a process measure or changing the weight of 3 to 1. Commenters noted that statin use for diabetic patients is an important and valuable intervention; thus, SUPD should remain classified as an intermediate outcome measure. Additionally, commenters were concerned with reclassifying SUPD and lowering the weight in the absence of outcomes-focused measures within the Star Ratings that address appropriate care for diabetes and cardiovascular care, given the strong correlation between the two conditions. Response: CMS agrees that SUPD is an important measure that is included in the Star Ratings. Per NQF’s definition of process measures, CMS agrees that prescribing a statin is a step in providing good care, rather than an outcome of such care. Furthermore, the measure steward, PQA, has classified SUPD as a process measure based on NQF’s definition. As such, CMS proposed to reclassify SUPD as a process measure with a weight of 1 to align with the industry definitions. Comment: Several commenters gave specific feedback regarding exclusion criteria related to SUPD, such as beneficiaries predisposed to statin intolerance or history of rhabdomyolysis. Commenters were concerned that only using prescription claims limited the types of exclusions included in SUPD. In addition, a few commenters noted this quality measure does not reflect or capture achievable outcomes related to reversing chronic disease or decreasing cardiovascular morbidity and mortality. Response: We thank the commenters for the feedback, but these comments are out of scope for this rule since the comments do not reference the reclassification of the SUPD measure and the subsequent change to the measure weight. CMS will share the measure specification comments with the measure steward, PQA, about the additional populations that were recommended for exclusion, the concerns with using prescription claims and exclusions, and to consider future measures on outcomes related to reversing chronic disease. Comment: A commenter was concerned with the current COVID–19 public health emergency and how it could impact the accuracy of the measure. Response: Thank you for this feedback. CMS will continue to monitor the impact of the public health emergency on the SUPD measure. After considering the comments we received and for the reasons outlined in PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 the proposed rule and our responses to the comments, we are finalizing the proposal without modification. Starting with the 2023 Stars Rating, the SUPD measure will be reclassified as a process measure with a weight of 1. This change will be reflected in the Medicare Part C & D Star Ratings Technical Notes for the 2023 Star Ratings, which are based on the 2021 measurement period. C. Medical Loss Ratio (MLR) (§§ 422.2420, 422.2440, and 423.2440) In the February 18, 2020 proposed rule (85 FR 9008), we proposed certain modifications to the medical loss ratio (MLR) regulations for the Medicare Part C and Part D programs. Briefly, we proposed to amend § 422.2420(b)(2)(i) to allow MA organizations to include in the MLR numerator as ‘‘incurred claims’’ all amounts paid for covered services, including amounts paid to individuals or entities that do not meet the definition of ‘‘provider’’ as defined at § 422.2. We also proposed to codify the definitions of partial, full, and noncredibility and credibility factors that we published in the May 2013 Medicare MLR final rule (78 FR 31295 through 31296). Finally, for MA medical savings account (MSA) contracts receiving a credibility adjustment, we proposed to apply a deductible-based adjustment to the MLR calculation in order to recognize that the variability of claims experience is greater under health insurance policies with higher deductibles than under policies with lower deductibles. 1. Background 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. The proposed rule provided background on the Part C and Part D medical loss ratio (MLR) requirements, including the statutory and regulatory authority. The Part C statute, at section 1857(e)(4) of the Act, expressly imposes a minimum medical loss ratio requirement for MA plans. 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 E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 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 §§ 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. 2. Regulatory Changes to Incurred Claims (§ 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 § 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. We proposed to revise the regulation text regarding the incurred claims portion of the numerator. Under current § 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 § 422.2420(a)(2), ‘‘covered services’’ are the benefits defined at § 422.100(c): basic benefits, mandatory supplemental benefits, and optional supplemental benefits. As explained in greater detail in section II.A. of this final rule and sections II.A. and VI.F. of the proposed rule, we proposed revisions to the regulations at § 422.100 in order 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 § 422.100(c)(2) would codify our longstanding interpretation of the statute to require a supplemental benefit to be an item or service (1) that is primarily health related; (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 2019 Call Letter, issued on April 2, 2018, we announced that we had reinterpreted the scope of what would be ‘‘primarily health related’’ in order to meet this criterion to be a supplemental benefit. Under this reinterpretation, to be considered ‘‘primarily health related,’’ a supplemental benefit must diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional or psychological impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization; we explained in the contract year 2019 Call Letter how this means the benefit must focus directly on an enrollee’s health care needs and must be medically appropriate and 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 § 422.100(c)(2), to account for the types of supplemental benefits that may be offered under the policy changes addressed in section II.A. of this final rule and sections II.A. and VI.F. of the proposed rule, we also proposed 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 § 422.102(f), as finalized in section II.A. of this final rule, we are codifying regulation text implementing amendments made by the BBA of 2018 to section 1852(a)(3) of the Act to expand the types of supplemental PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 33845 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 special supplemental benefits for the chronically ill (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. As explained in the proposed rule, under current § 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 amendments to implement that change at § 422.102(f) and the continuation of our policy for establishing what it means for a benefit 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 § 422.2. A provider, as defined in § 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 § 422.2420(b)(2)(i), we proposed to amend the regulation to remove the specification that incurred claims are payments to providers for covered services. The proposed rule explained that, if incurred claims do not include amounts an MA organization pays to individuals or entities that are not providers for supplemental benefits, including SSBCI, these expenditures could still potentially be included in the MLR numerator as expenditures related to quality improvement activities (QIAs). To be considered a QIA under § 422.2430, a 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, E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33846 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations specific groups of enrollees, or other populations as long as enrollees do not incur additional costs for populationbased 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. As explained in the proposed rule, although we believe that supplemental benefits that meet the expanded ‘‘primarily health related’’ standard at proposed § 422.100(c)(2)(ii)(A) and nonprimarily health related SSBCI described at § 422.102(f) could potentially qualify as QIAs under § 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 proposed amendments to § 422.2420(b)(2)(i), 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 amounts paid for covered services would be included in the incurred claims portion of the MLR numerator. As explained in the proposed rule, we believe that including in the MLR numerator amounts MA organizations spend on supplemental benefits that meet the ‘‘primarily health related standard’’ at proposed § 422.100(c)(2)(ii)(A) and on nonprimarily health related SSBCI under § 422.102(f), as amended in this final rule, 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 our current guidance and on non-primarily health related SSBCI under § 422.102(f), as adopted in this final rule, we proposed the following modifications to the regulation at § 422.2420(b)(2)(i): • Remove the specification that incurred claims are direct claims that an MA organization pays to providers for VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 covered services provided to all enrollees under the contract. • Remove the specification that incurred claims include payments under capitation contracts with physicians. • Replace the phrase ‘‘direct claims,’’ which customarily refers to billing invoices providers submit to payers for reimbursement, with the general term ‘‘amounts.’’ As amended under our proposal, § 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 § 422.2. Including in incurred claims amounts spent on these expanded supplemental benefits, as proposed, avoids creating uncertainty over whether payments for such covered 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. We received 27 comments on the proposed amendments to § 422.2420(b)(2)(i). The following is a summary of the comments we received on the proposal and our responses: Comment: The majority of commenters supported the proposal. Many commenters believed that including in the MLR numerator as incurred claims all payments for covered services would provide greater certainty and reduce plan burden by eliminating the need to assess whether individual benefits meet the criteria to qualify as QIAs under § 422.2430. A number of commenters believed that the proposed change would encourage the expansion of supplemental benefits to address social barriers to care and MA enrollees’ other health needs. A few commenters commended us for recognizing the role played by individuals and entities that are not providers in implementing the expanded supplemental benefit flexibility. A couple of commenters noted that they agreed with our view that including in incurred claims amounts spent on these expanded supplemental benefits is consistent with our prior determination that incurred claims should reflect the benefit design under the contract. Response: We thank the commenters for their support. We reiterate that under our proposal and this final rule, only amounts expended by the MA organization for covered services, which PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 must meet the standards of the MA program for coverage, can be included in the MLR numerator as incurred claims. Comment: A commenter supported the proposal but requested that we clarify that the incurred claims portion of the MLR numerator will include capitated payments by MA organizations to clinical risk-bearing entities (for example, Independent Practice Associations (IPAs), Physician Hospital Organizations (PHOs), and Accountable Care Organizations (ACOs)) that include amounts for both medical and administrative services, provided the arrangement satisfies a four-factor test that was originally set forth in a guidance document 28 related to the MLR rules that apply to issuers of employer group and individual market private insurance (hereinafter referred to as the ‘‘commercial MLR rules’’), and later incorporated into our annual MLR Data Form Filing Instructions for MA organizations and Part D sponsors. The commenter expressed concern that, if the four-factor test does not remain in place, all capitated payments to providers would need to be divided between medical services and delegated administrative services, and then aggregated up to the plan level to determine the amount to be excluded from the MLR as administrative costs. Response: The amendment to § 422.2420(b)(2)(i), as proposed and finalized, includes 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 § 422.2. This revision removes the specification that the recipient of a payment for a covered service must be a provider (or a physician, in the case of capitated payments) to be included in incurred claims. The proposed change would not, if finalized, exclude from the incurred claims portion of the MLR numerator any payments that could be included in the numerator as incurred claims under the current MLR rules. However, this amendment also does not authorize inclusion in the numerator of costs that are excluded from incurred claims, such as administrative expenses addressed in § 422.2420(b)(4). The four-factor test referenced by the commenter has been incorporated into our annual MLR Data Form Filing Instructions (formerly the MLR Report Filing Instructions) (OMB control no. 28 CCIIO Technical Guidance (CCIIO 2012—001): Questions and Answers Regarding the Medical Loss Ratio Interim Final Rule. February 12, 2012. E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 0938–1232) (CMS–10476) for each contract year since contract year 2014. The instructions specify that amounts paid by an MA organization or Part D sponsor to clinical risk-bearing entities can be included in the MLR numerator as incurred claims if the following criteria are met: (1) The entity contracts with an issuer to deliver, provide, or arrange for the delivery and provision of clinical services to the issuer’s enrollees but the entity is not the issuer with respect to those services; (2) The entity contractually bears financial and utilization risk for the delivery, provision, or arrangement of specific clinical services to enrollees; (3) The entity delivers, provides, or arranges for the delivery and provision of clinical services through a system of integrated care delivery that, as appropriate, provides for the coordination of care and sharing of clinical information, and which includes programs such as provider performance reviews, tracking clinical outcomes, communicating evidencebased guidelines to the entity’s clinical providers, and other, similar care delivery efforts; and (4) Functions other than clinical services that are included in the payment (capitated or fee-for-service) must be reasonably related or incident to the clinical services, and must be performed on behalf of the entity or the entity’s providers. Payments to risk-bearing entities that include payments for administrative functions performed on behalf of the entity’s member providers are incurred claims for purposes of § 422.2420 if all four factors outlined above are met.29 However, to the extent that administrative functions are performed on behalf of the MA organization or Part D sponsor, that portion of the organization’s or sponsor’s payment that is attributable to administrative functions may not be included in incurred claims. This is the case regardless of whether payment is made according to a separate, fee-for-service payment schedule or as part of a global, capitated fee payment for all services provided.30 We will continue to use this 29 For example, a bundled payment to an Independent Practice Association (IPA) or similar entity for providing clinical services to enrollees which includes: The IPA processing claims payments to its member providers and submitting claims reports to issuers on behalf of its providers; performing provider credentialing to determine a provider’s acceptability into the IPA network; and developing a network for its providers’ benefit, can be included in incurred claims. 30 For example, payment for processing claims in order to issue explanations of benefits (EOBs) to enrollees and handling any stage of enrollee appeals VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 four-factor test to determine whether an MA organization can include payments to clinical risk-bearing entities. Comment: A commenter expressed concern that the proposed changes to the definition of ‘‘incurred claims’’ could be interpreted as sufficiently broad to permit MA plans and PDPs to include in the MLR numerator costs associated with pharmacy benefit manager (PBM) services due to the nexus between those services and beneficiary access to covered drugs. The commenter was concerned in particular that the proposed change would allow MA organizations and Part D sponsors to include costs for implementing utilization management tools and strategies in the MLR numerator as incurred claims. Response: We appreciate the commenter’s concerns. Amending § 422.2420(b)(2)(i) as proposed to include in incurred claims amounts paid for covered services, regardless of whether the payment is made to a provider, does not allow MA organizations or Part D sponsors to include in the MLR numerator amounts that are identified as non-claims costs and excluded from incurred claims under our current rules. These nonclaims costs that continue to be excluded from the MLR numerator include amounts paid to third party vendors for network development, administrative fees, claims processing, and utilization management (§ 422.2420(b)(4)). We note, however, that our current rules permit a clinicalrisk bearing entity’s costs related to utilization management and other administrative services to be included in incurred claims if all four factors outlined in the previous response are met. In addition, consistent with CCIIO’s Technical Guidance,31 our MLR Data Form Filing Instructions specify that when a third party vendor, through its own employees,32 provides clinical services directly to enrollees, the entire portion of the amount the issuer pays to the third party vendor that is attributable to the third party vendor’s direct provision of clinical services cannot be included in incurred claims. Payments for non-clinical services for which the contract between the clinical risk-bearing entity, such as an IPA, and the MA organization or Part D sponsor contains a ‘‘clawback’’ provision are not considered incurred claims for MLR reporting purposes. 31 See, for example, the May 13, 2011 CCIIO Technical Guidance (CCIIO 2011–002), Q&A #12, available at: https://www.cms.gov/CCIIO/Resources/ Files/Downloads/mlr-guidance-20110513.pdf. 32 The term ‘‘through its own employees’’ does not include a third party vendor’s contracted network of providers because such network providers are not considered employees of the third party vendor. PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 33847 should be considered incurred claims, even if such amount includes reimbursement for administrative costs directly related to the vendor’s direct provision of clinical services.33 Comment: A commenter opposed the proposal because they believed that including all payments for covered services in the incurred claims portion of the MLR numerator would be an unnecessary and inappropriate deviation from the commercial MLR rules, which only include payments to non-providers in the MLR numerator if they meet the requirements for QIArelated expenditures. The commenter expressed approval for the approach we took in the May 2013 Medicare MLR final rule, which was to use the commercial MLR rules as a reference point for developing the MLR rules for Medicare Advantage and Part D (hereinafter referred to as the ‘‘Medicare MLR rules’’) and to only depart from the commercial rules to extent necessary and appropriate given the Medicare context (78 FR 31285, 31290). The commenter stated the proposed rule did not identify any reason that the Medicare context makes it necessary and appropriate to depart from the requirement in the commercial MLR rules that incurred claims be paid to providers for covered services. The commenter asserted that the Medicare context does not meaningfully differ from the commercial context with respect to the benefits at issue. Response: We respectfully disagree with the commenter. We continue to believe that it is important that we align the Medicare MLR rules with the commercial 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. However, as stated in the February 2013 Medicare Program; Medical Loss Ratio Requirements for the Medicare Advantage and the Medicare Prescription Drug Benefit Programs Proposed Rule (78 FR 12428 through 12429) (hereinafter referred to as the ‘‘February 2013 Medicare MLR proposed rule’’), we also recognize that the commercial MLR rules may need to be revised in order to fit unique 33 The MLR Data Form Filing Instructions include the example of a Part D sponsor that contracts with a pharmacy benefit manager (PBM) to provide clinical services directly to enrollees through a mail order pharmacy. The instructions explain that the sponsor’s payments to the PBM for mail order pharmacy services provided directly by the PBM’s employees, including administrative costs related to the PBM’s direct provision of such mail order pharmacy services, would be included in the sponsor’s incurred claims. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33848 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations characteristics of the MA and Part D programs. We believe that it is appropriate that we depart from the commercial MLR rules and expand the meaning of ‘‘incurred claims’’ to include covered services furnished by individuals and entities that are not providers, as proposed. The amendment to section 1852(a)(3)(D) of the Act by the BBA of 2018 to expand the types of supplemental benefits that can be ‘‘covered services’’ under an MA plan and the implementation of that change at § 422.102(f), as well as CMS’ reinterpretation of what it means for a supplemental benefit offered by an MA plan to be primarily health related, mean that permissible supplemental benefits might include items and services that would not be furnished by a ‘‘provider’’ as defined at § 422.2. As we explained in the contract year 2019 Call Letter, a benefit is primarily health related if it diagnoses, prevents, or treats an illness or injury, compensates for physical impairments, acts to ameliorate the functional or psychological impact of injuries or health conditions, or reduces avoidable emergency and healthcare utilization; and while we indicated that supplemental benefits must be medically appropriate and recommended by a licensed provider, we acknowledged that they might not be directly provided by a health care professional. Because SSBCI are only required to have a reasonable expectation of maintaining or improving the health or overall function of the chronically ill enrollee and are not required to be primarily health related, we believe those benefits can be provided by someone who is not a health care professional. We are concerned that uncertainty about whether payments for these benefits can be included in the MLR numerator may make MA organizations less inclined to include them in their plan offerings. We believe that it is contrary to Congress’ intent in amending section 1852(a)(2)(D) of the Act, and that it undermines CMS’ efforts to provide MA organizations with additional flexibility to meet beneficiaries’ health needs through supplemental benefits, if the MLR fails to adapt to changes in the permissible benefit design and ultimately deters MA organizations from offering those benefits. In addition, we note that section 2718 of the Public Health Service Act specifies that commercial MLRs shall reflect the percentage of total premium revenue spent ‘‘on reimbursement for clinical services provided to enrollees,’’ QIAs, and nonclaims costs (which are excluded from the MLR numerator). By contrast, VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 section 1857(e)(4) of the Act, which sets forth the minimum MLR requirement for the MA program, does not require that the portion of the MLR numerator consisting of non-QIA expenditures should be for ‘‘clinical services’’ or otherwise specify how the Secretary should calculate Medicare MLRs. Although the commercial and Medicare MLR requirements were both created by the Affordable Care Act of 2010, the statute gives the Secretary greater flexibility in determining how to integrate an MLR requirement into the Medicare program. We continue to use this flexibility to revise the calculation of the Medicare MLR as appropriate based on the unique characteristic of the MA and Part D programs, and we believe that amendment here is such an appropriate change. Comment: A commenter believed that the proposed change was both unnecessary and unlikely to be effective as a means of encouraging MA organizations to expand their supplemental benefit offerings. The commenter cited data showing that MA organizations had been increasing their supplemental benefit offerings in recent years, which the commenter attributed to previous rule changes. The commenter recommended that instead of adjusting the MLR calculation to encourage the expansion of coverage of supplemental benefits, we should address the barriers to providing supplemental benefits that have been identified by MA organizations— specifically, upfront costs, trade-offs among benefits, return on investment, and provider availability. The commenter cautioned that the proposal may have unintended, negative impacts on non-supplemental benefit coverage, but the commenter did not specify what it meant by non-supplemental benefit coverage or what those negative impacts might be. Response: We thank the commenter for their feedback and recommendations. As indicated in our response to other comments, we proposed to revise the meaning of ‘‘incurred claims’’ to include payments for covered services furnished by individuals or entities that are not providers as defined at § 422.2 in order to avoid creating uncertainty about whether expenditures for supplemental benefits can be included in the MLR numerator, which might deter MA organizations from offering those benefits. Although the purpose of our proposal was not to give MA organizations an incentive to offer expanded supplemental benefits, as noted above, we did receive numerous comments, some of which were PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 submitted by MA organizations, which expressed support for the proposed change because the commenters believed it would encourage plans to offer expanded supplemental benefits. Our efforts to change how supplemental benefits are accounted for in the MLR numerator do not preclude us from pursuing other opportunities that are appropriate for CMS to take to promote the expansion of supplemental benefits. Comment: A commenter requested that we clarify in final rulemaking the review and enforcement actions we undertake to ensure that QIA is not abused at the expense of MA enrollees. Another commenter requested that we closely examine all MA activities that are currently categorized as QIA to ensure that their utilization improves quality. Response: At present, we do not actively collect information on MA organizations’ QIA expenditures. As a result of change to the MLR reporting requirements finalized in the April 2018 final rule (83 FR 16674), MA organizations are not required to include in their annual MLR submissions information on their QIA expenditures. We have the authority under § 422.2480 to conduct selected audit reviews of the data reported under § 422.2460, which includes the capability to request detailed data regarding the QIA expenditures included in the Medicare MLR, in order to determine that the MLR and remittance amounts were calculated and reported accurately, and that sanctions were appropriately applied. MA organizations are required to attest to the accuracy of the MLR data submitted. In addition, we note that MA organizations and Part D sponsors are required to submit and attest to the data that details their spending on enrollee health care services as part of their annual bids. Comment: Several commenters requested that we expand our proposal to include in incurred claims all expenditures related to combating COVID–19. Response: The commenters did not provide specific information on the types of expenditures they wish to make that they believe would not already be included in the MLR numerator as incurred claims under our proposal. Without more detailed information, we are unable to determine whether including the expenditures that the commenters are contemplating in incurred claims would in fact necessitate a modification to our proposal, or whether there is logical outgrowth to make such a modification E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 or whether it is consistent with our overall policies on the Medicare MLR. Comment: We received several recommendations for additional changes to the MLR requirements that are outside the scope of this final rule. A commenter recommended that we delay implementation of the MLR enrollment sanctions for contracts that fail to meet the MLR requirement for three consecutive contract years; that we develop a fixed quality improvement (QI) rate that could be added to the MLR numerator, similar to what is permitted under the commercial MLR regulations (45 CFR 158.221(b)(8)); that we provide guidance to plan sponsors concerning corrections of prior MLR submissions when errors are found that impact remittance calculations and that we develop a process to correct such data; and that we not apply the MLR requirements to standalone Part D plans. A commenter recommended that we mandate in the final rule that Part D sponsors must utilize a system to apply direct and indirect remuneration (DIR) fees at the point of sale as a means of improving the accuracy of the reported MLRs. Response: We thank the commenters for their recommendations and will consider whether they are appropriate to address through future rule-making or other guidance. After considering the comments we received and for the reasons outlined in the proposed rule and our responses to the comments, we are finalizing the proposal without modification. 3. Codifying Current Definitions of Partial, Full, and Non-Credibility and Credibility Factors (§§ 422.2440 and 423.2440) The regulations at §§ 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 2013 Medicare MLR proposed rule (78 FR 12438), 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 §§ 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 §§ 422.2440(c) and 423.2440(c), a contract with noncredible 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 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 31295 through 31296), 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 appeared in that final rule in Tables 1A (finalized here as Table 1 to § 422.2440) and 1B to (finalized here as Table 1 to § 423.2440). Consistent with that final rule and regulations at §§ 422.2440 and 423.2440, for contract years 2015 through 2020, we finalized through the annual Advance Notice and Rate Announcement process the continued use of these definitions and credibility factors. As explained in the proposed rule, 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 PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 33849 Fairness in Civil Administrative Enforcement and Adjudication (October 9, 2019) that we define and publish the definitions of partial, full, and noncredibility 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 proposed to amend our regulations at §§ 422.2440 and 423.2440 to codify the definitions of partial, full, and non-credibility and the credibility factors that we published in the May 2013 Medicare MLR final rule (78 FR 31296). We proposed to amend paragraph (d) of §§ 422.2440 and 423.2440 by removing the current text (which states that CMS will define and publish definitions of partial, full, and noncredibility 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 proposed 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 proposed 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 noncredible if it has fewer than 2,400 member months. For Part D contracts, we proposed 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 proposed to amend §§ 422.2440 and 423.2440 by removing from paragraphs (a) and (b) of both sections the text which indicates that CMS determines whether a contract’s experience is partially credible or fully credible, respectively, and by adding at paragraphs (a), (b), and (c) of both sections 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 § 422.2440, we proposed to add new paragraph (e) to address the credibility adjustment for partially E:\FR\FM\02JNR2.SGM 02JNR2 33850 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 credible contracts. We proposed 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 new paragraph (f), we proposed 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 Table 1 to § 422.2440. New paragraph (f) also states the rules for using Table 1 to § 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 Table 1 to § 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 Table 1 to § 422.2440 is determined by linear interpolation. At § 423.2440, we proposed 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 Table 1 to § 423.2440. New paragraph (e) states the rules for using Table 1 to § 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 Table 1 to § 423.2440, the value associated with that number of member months is the credibility adjustment; and (2) the credibility adjustment for a number of member months between the values shown in Table 1 to § 423.2440 is determined by linear interpolation. We received no comments on this proposal and are finalizing this provision without modification for the reasons outlined in the proposed rule. 4. Deductible Factor for MA Medical Savings Account (MSA) Contracts (§ 422.2440) We proposed 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 proposed that the credibility adjustment for partially credible MA MSA contracts will be calculated by multiplying the applicable base credibility factor in Table 1 to § 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 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. In the February 2013 Medicare MLR proposed rule (78 FR 12428), we explained that we used the commercial MLR rules as a reference point for developing the Medicare MLR rules. We sought to align the commercial and Medicare MLR rules in order to limit the burden on organizations that participate in both markets, and to make commercial and Medicare MLRs as comparable as possible for comparison and evaluation purposes, including by Medicare beneficiaries. 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 deductiblebased 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). As explained in the proposed rule, 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. The proposed rule noted PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 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. In light of this information, we believe that it is clear that our policy of excluding a deductible factor for MA MSA contracts should be revisited. Further, 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 proposed rule noted that our proposal to add a deductible factor to the MLR calculation for MA MSA contracts 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). The proposed rule also noted that, for many Medicare beneficiaries, the greatest barrier to enrolling in an MA MSA has been 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 § 422.2410—could dissuade MA organizations from offering plans of this type. We noted in the proposed rule our belief that finalizing a deductible factor for MA E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations MSAs would make it less likely that MA organizations would be deterred from offering MA MSA plans 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 proposed to adopt the same deductible factors that apply under the commercial MLR regulations at 45 CFR part 158. As noted in the December 1, 2010 Health Insurance Issuers Implementing Medical Loss Ratio (MLR) Requirements Under the Patient Protection and Affordable Care Act Interim Final Rule (75 FR 74881 through 74882), 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). We explained in the proposed rule that we would prefer to use Medicare data to develop the deductible factors that apply to MA MSAs, and that we intend to assess the feasibility of using Medicare data for this purpose. We noted in the proposed rule and continue to 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. We proposed to apply the commercial deductible factors in the MLR calculation for MA MSAs. We solicited 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 Medicarespecific deductible factors. We also solicited 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 solicited comment on potential consequences of the application of a deductible factor to the MLR calculation VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 for MA MSA contracts, such as impacts on benefits for enrollees in MSA plans. We proposed new § 422.2440(e)(2) to specify that the credibility adjustment for an MA MSA contract would be the base credibility factor determined under new paragraph (f), multiplied by the deductible factor determined under new paragraph (g). At new paragraph (g), we proposed to specify that the applicable deductible factor for an MA MSA contract would 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 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 Table 2 to § 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 Table 2 to § 422.2440 is determined by linear interpolation. We received 5 comments on the proposal to add a deductible factor to the MLR calculation for MA MSAs. The following is a summary of the comments we received on the proposal and our responses: Comment: A commenter supported the proposal. The commenter expressed hope that adding a deductible factor to the MLR calculation for MA MSA contracts would lead to the greater availability of MA MSA products in the marketplace, which the commenter believed would be an attractive option for many consumers. Response: We thank the commenter for their support. Comment: A commenter stated that they do not support policies that single out high-deductible health plans for preferential MLR treatment for the purpose of encouraging beneficiaries to enroll in such plans. Response: We appreciate the commenter’s objection to MLR policies that favor certain plan types over others. However, we disagree with the commenter’s characterization of the proposed application of a deductible factor to the MLR calculation for certain MSA contracts as a form of preferential treatment. As explained in the proposed rule and summarized here, we believe an additional adjustment to the MLR calculation for MSA contracts is PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 33851 appropriate because 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. This is the case because high-deductible health plan enrollees’ medical expenses must exceed a higher threshold before the plan begins to incur claims costs that can be included in the MLR numerator. 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 a low average deductible. The deductible factor, which functions as a multiplier on the credibility adjustment factor, is calibrated so that the probability that a contract will fail to meet the MLR requirement is the same for all contracts that receive a credibility adjustment, regardless of the deductible level. Because the deductible factor is intended to mitigate the increased likelihood that a contract with a high deductible will fail to meet the MLR requirement due to random variations in claims experience, we believe that its application to the Medicare MLR calculation for MSA contracts serves to level the playing field for all MA contract types. We believe that the absence of a deductible factor from the current regulations unduly penalizes MSA contracts and that adding a deductible factor removes this potential deterrent to the offering of MSAs. Comment: Three commenters opposed the proposal because they objected to CMS giving MA organizations an incentive to enroll beneficiaries in high deductible health plans such as MSAs. A commenter expressed concern that beneficiaries may enroll in these plans due to their low premiums and tax benefits, without realizing that they could be responsible for thousands of dollars of predeductible costs should they need significant medical attention. Another commenter warned that Medicare beneficiaries have limited incomes and frequently experience chronic conditions, the proliferation of highdeductible MSAs among this vulnerable population could have catastrophic effects on beneficiary health, as enrollees forego care to avoid paying high out-of-pocket costs. A couple of commenters cited research which suggests that although high deductible plans reduce costs, this may be attributable to a decrease in utilization of necessary medical services or to high E:\FR\FM\02JNR2.SGM 02JNR2 33852 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations deductible plans enrolling younger, healthier members. Response: We appreciate the commenters’ concerns. Expanding access to MSAs so that Medicare beneficiaries who see the advantages in enrolling in a high-deductible plan have the option of doing so is a priority of the Trump administration. As discussed in the proposed rule, the proposal to add a deductible factor to the MLR calculation for MA MSA contracts 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). We note that the research cited by the commenters is mostly based on the experience of enrollees in highdeductible health plans operating outside of the Medicare context. We believe that the widespread availability of zero premium MA plans makes it less likely that Medicare beneficiaries will enroll in high deductible plans due to the low premiums and tax benefits without adequately considering their potential out of pocket liability. In addition, there are protections to ensure that MSA enrollees have information that enables them to assess the coverage provided by MSA plans. Section 1852(c)(1)(B) of the Act and § 422.111(b)(2)(ii) require that MSA plans disclose, in clear, accurate, and standardized form to each enrollee at the time of enrollment and at least annually thereafter, a comparison of the benefits under the plan with benefits under other MA plans. After consideration of the public comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the proposal without modification. khammond on DSKJM1Z7X2PROD with RULES2 V. Codifying Existing Part C and D Program Policy A. Medicare Advantage (MA) and Cost Plan Network Adequacy (§§ 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 generally implemented at § 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 § 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 § 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.34 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 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, we require 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 34 See ‘‘Medicare Advantage and Section 1876 Cost Plan Network Adequacy Guidance’’ https:// www.cms.gov/Medicare/Medicare-Advantage/ MedicareAdvantageApps/index. PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 standards. We update and refine the data and information that feed into network adequacy measures and perform 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. In this final rule, we are codifying existing network adequacy standards to provide MA organizations with a greater understanding of how CMS measures and assesses network adequacy by adding a new regulation at § 422.116. Specifically, we are codifying in § 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 regulation also addresses 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. The final regulation reflects modifications from 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 amending § 417.416(e) to require 1876 cost organizations to also comply with the network adequacy standards described in § 422.116. A summary of our proposal follows. 1. General Provisions We proposed in § 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 §§ 422.112(a) and 422.114(a), and the rules in new § 422.116. We also proposed that when required by CMS, an MA organization E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 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 explained 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 cross-referenced § 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 § 422.4(a)(1), network-based MA private-fee-for-service (PFFS) plans in § 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 § 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 proposed to exclude MSA plans from the requirements in § 422.116. By cross-referencing § 422.114(a)(3)(ii), we carved 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 § 422.116. We proposed, at paragraph (a)(2), to codify the general rule underlying § 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 our MA Medicare Sample Census) in order to count toward the minimum number. 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. The minimum number criteria and the time and distance criteria vary by the county type. We proposed 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 § 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 compliance with the standards. At paragraphs (a)(3) through (4), we proposed to codify additional general rules about the network adequacy requirements in this section. At paragraph (a)(3), we proposed general rules for which provider types are not counted in evaluating network adequacy. In paragraph (a)(4), we proposed to codify certain administrative practices we have instituted over the past several years. Specifically, we proposed to 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 also proposed that we would 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. We may also update the Provider Supply file based on its findings from validation of provider information. 2. Provider and Facility Specialty Types We proposed to codify at § 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. We identified and proposed to codify the 27 provider specialty types and 14 facility specialty types that are currently used in the evaluation of network adequacy in each service area. We 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 proposed to codify at § 422.116(a)(3) existing policy on the 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 proposed that hospital-based dialysis may count in network adequacy criteria for the facility type of Outpatient Dialysis. We clarified that primary care providers, the first provider specialty in our proposed PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 33853 list in paragraph (b)(1), are measured as a single specialty by combining provider specialty codes (001–006) in the HSD reference file. Section 2005 of the SUPPORT Act establishes a new Medicare Part B benefit for Opioid Use Disorder 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 did not propose to include OTPs as a facility type in § 422.116(b)(2) and explained it was due to the newness of the benefit and that we may consider adding OTPs to the facility type list in future proposals. However, we reminded MA organizations that they are required to pay for medically necessary care from certified OTPs. We proposed at § 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 as a provider specialty type 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. We proposed at § 422.116(a)(1) to require an MA plan to submit an attestation when required by CMS. We explained that 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 did not propose any means for CMS to add new provider specialty or facility types to the network adequacy evaluation without additional rulemaking. 3. County Type Designations We proposed at § 422.116(c) to codify our current policy regarding county designations. Network adequacy is E:\FR\FM\02JNR2.SGM 02JNR2 33854 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 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 proposed to codify at § 422.116(c) the five county type designations using population size and density parameters that were identified in Table 6 in the proposed rule (85 FR 9094). Under our proposal, a county must meet both the population and density parameters for inclusion in a given county type designation and we explained that the proposed parameters are consistent with those we have used in conducting network adequacy reviews in prior years. We explained that we 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 35 estimate by the land area 36 for that county. We also stated that our county designation methodology was designed specifically for MA network adequacy and may not be appropriate for other purposes. khammond on DSKJM1Z7X2PROD with RULES2 4. Maximum Time and Distance Standards and Customization We proposed in § 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 § 422.116(d), we proposed that CMS determines maximum time and distance 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 35 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. 36 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. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 standards, or by a process referred to as ‘‘customization.’’ We proposed to codify the base time and distance standards by county designation that are in current practice with recent network reviews and included the standards in Table 7 of the proposed rule (85 FR 9095) as well as in the proposed regulation text as Table 1 to paragraph (d)(2). We also explained in greater detail how the specific time and distance standards we proposed for each provider and facility type and county designation were developed and refer readers to the proposed rule for that discussion (85 FR 9097). As explained in the proposed rule, we have added flexibility in recent years 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 proposed to codify this flexibility and the process for using it at § 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.37 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 percent 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 requested comment on our customization methodology and whether we should adjust factors in the distance calculation to achieve outcomes that are more equitable. 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 proposed 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 37 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. PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 standards. We solicited 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, we have 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 an effort to encourage more MA offerings in rural areas, we proposed 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.38 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’’ but 90 percent in urban counties.39 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.40 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.41 Further, our data indicates that existing failures in MA plans’ meeting the time and distance standards frequently occur at the range between 80 to 89 percent of beneficiaries. As a result, we proposed to adopt a similar change in our MA network adequacy approach to account for access challenges in Micro, Rural, 38 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/2018Rural-Health-Insurance-Market-Challenges.pdf. 39 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 lllll, 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. 40 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. 41 Section 423.120(a)(1.). E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations and CEAC counties; at § 422.116(d)(4)(i) we proposed 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 estimated 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 proposed to codify the existing policy of using a 90 percent threshold for Large Metro and Metro counties in § 422.116(d)(4)(ii). We noted that this specific proposal did not include a change from current policy requirements for a minimum number of provider specialties and facilities and that we proposed, at paragraph (e), that MA plans would still be required to maintain contracts with a minimum number of providers in each county. We also proposed 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 would receive an additional 10 percentage points towards the 85 percent requirement should they contract with applicable telehealth providers under § 422.135. We explained that this is not currently part of the network adequacy evaluation, but we believed 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 § 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 approximately 35 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, rather than supplement, inperson healthcare delivery. A commenter stated that it is imperative that beneficiaries continue to have the VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 are not left without care. Section 1852(m)(4) of the Act and the regulation at § 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 did not propose any changes to how we currently calculate minimum provider requirements and MA plans would still contract with a minimum number of providers for each specialty type. We explained that we believed this is imperative for MA plans to be able to provide in-person care when needed or when preferred by the beneficiary and that contracting with telehealth providers as a supplement to an existing in-person contracted network would give enrollees more choices in how they receive health care. Further, we explained that 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 proposed, at § 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 § 422.135, in its contracted network. Since additional telehealth benefits described at § 422.135 only apply to MA plans, cost plans would not be eligible for this 10-percentage point credit under proposed § 417.416(e)(3). We explained that 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, we noted how information from prior network adequacy reviews show that many failures in meeting time and distance standards occur in this 80 to 89 percent range. Therefore, we stated, a 10-percentage point credit is significant enough to have an impact on MA plans and encourage the use of telehealth, while being proportionate to the role that telehealth providers have PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 33855 in a contracted network. Further, we proposed to apply this telehealth credit only to five specific provider specialty types: Dermatology, psychiatry, neurology, otolaryngology and cardiology. We explained that this limited approach would allow CMS to monitor the effectiveness of the credit, 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. We explained how we identified the five provider types for this proposal. CMS considered previous input 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. In our experience, 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 stated that it is critical to quality health care that Medicare beneficiaries have a primary care provider that they can visit in person and within a suitable time and distance. Therefore, despite the potential and prevalence of telehealth for furnishing primary care services, we did not believe that it was necessary to take telehealth access into account when measuring and setting minimum standards for access to primary care providers. We solicited comments on the provider specialty types we proposed to be eligible for the telehealth credit and whether CMS should expand or limit this credit to a different set of provider specialties. In the proposed rule, we explained that we had 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 suggested that home-based dialysis may offer advantages over incenter hemodialysis, including patient convenience, reduction in costs associated with dialysis, and potentially improved patient quality of life and blood pressure control with greater E:\FR\FM\02JNR2.SGM 02JNR2 33856 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 survival and fewer hospitalizations.42 We acknowledged in the proposed rule that there is more than one way to access medically necessary dialysis care and stated that we wanted plans to exercise all of their options to best meet a beneficiary’s health care needs. We solicited 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. Additionally, we explained that CMS had received comments concerning patterns of provider consolidation and its impact on higher costs for patients. We received feedback from stakeholders that providers in concentrated areas may leverage network adequacy requirements in order to negotiate prices well above Medicare FFS rates. We solicited comment on existing problems and behavior in non-rural, consolidated provider markets and recommendations that we could take to encourage more competition in these markets. We also proposed a policy to incorporate consideration of Certificate of Need (‘‘CON’’) laws into our network evaluations, as a modification from our current policy after a brief summary of the topic. 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 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.43 A number of studies have found no evidence that CON programs have led to resource savings, and in some 42 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/. 43 Daniel Sherman, ‘‘The Effect of State Certificate-of-Need Laws on Hospital Costs: An Economic Policy Analysis,’’ Federal Trade Commission, January 1988. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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.44 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.45 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.46 After listing this research, we stated that it pointed out that CON laws restrict the supply and competition for healthcare services and increases costs and that 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 proposed in § 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 anticompetitive restrictions, that limit the number of providers or facilities in a county or state. In the proposed rule, 44 Vivian Ho, Meei-Hsiang Ku-Goto, ‘‘State Deregulation and Medicare Costs for Acute Cardiac Care,’’ Med Care Res Rev., April 2013. 45 Matthew D. Mitchell, ‘‘Do Certificate-of-Need Laws Limit Spending?’’ Mercatus Working Paper, Mercatus Center at George Mason University, Arlington, VA, September 2016. 46 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. PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 we explained that, where appropriate, CMS may instead address network adequacy by customizing base time and distance standards in states with CON laws. We explained that the proposal was justified based on the studies cited 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 proposed to make this credit equal to and in addition to, if applicable, the proposed telehealth credit (10 percentage points) for reasons similar to those for the telehealth credit policy: Information from prior network adequacy reviews show that many failures in meeting time and distance standards occur in the 80 to 89 percent range. We explained that, under our proposal, CMS could 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 solicited 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 solicited comment about what other actions CMS could take in markets with state CON laws. We also considered whether there are circumstances where a more limited application of network adequacy flexibility might be more appropriate. We solicited 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. 5. Minimum Number Standards We proposed to codify the current policy that MA plans must contract with a specified minimum number of each provider and facility specialty type in § 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 explained the general rules at § 422.116(e)(1) 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 also proposed to codify the E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations methodology for establishing the minimum number requirements for specific contracted provider and facility specialty types per county. We explained that CMS would use this methodology each year to determine and publish the updated minimum provider standards on an annual basis and that 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. Our proposal required the provider/ facility to be within the maximum time and distance of at least one beneficiary in order to count towards the minimum number requirements. We noted that 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. We proposed to codify at § 422.116(e)(2)(iii), our existing practice that all facilities, except for acute inpatient hospitals facilities, have a minimum number requirement of one. We limited the methodology for establishing and changing the required minimum number standard to acute inpatient hospitals and other nonfacility provider specialties. We proposed the methodology at § 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 were proposed in paragraphs (e)(3)(i) and (ii) and explained in the preamble of the proposed rule. 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. We stated that CMS had 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, U.S. Census population data, National Ambulatory Medical Care Survey data, AMA data on physician productivity, and published literature. We proposed to codify those minimum ratios in the regulation at § 422.116(e)(3)(i) and reproduced it in the preamble as Table 13. (85 FR 9101) We stated that the Number of Beneficiaries Required to Cover is also calculated by CMS based on an VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 proposed at § 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. We explained that CMS uses its MA State/ County Penetration data to calculate the total number of Medicare beneficiaries residing in a county. For counties with lower populations, and particularly for specialties with lower minimum ratios, the minimum number is usually one. We proposed to continue the current policy of calculating the 95th Percentile Base Population Ratio annually for each county type. We explained in the proposed rule that CMS has previously allowed MA organizations to provide their expected enrollment and then define their networks based on that number, but had later developed and implemented a more objective means to measure network adequacy for all MA plans consistently. Based on our position that the 95th Percentile Base Population Ratio is a fair and consistent enrollment estimate that can be applied to new and current plans, we proposed to codify its continued use. 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 percent of plans have enrollment lower than this level). We explained in the proposed rule how to calculate the 95th Percentile Base Population Ratio. We use the List of PFFS Network Counties 47 to exclude PFFS plans in non-networked counties 48 from the calculation at the county type level. We use the MA State/County Penetration 47 CMS. PFFS Plan Network Requirements. Retrieved from: https://www.cms.gov/Medicare/ Health-Plans/PrivateFeeforServicePlans/Network Requirements.html. 48 Non-networked counties in this context means there are not at least two networked plans operating in that county. PO 00000 Frm 00063 Fmt 4701 Sfmt 4700 33857 data 49 to determine the number of eligible Medicare beneficiaries in each county, and our Monthly MA Enrollment data 50 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 proposed to codify the methodology for calculating the 95th Percentile Base Population Ratio at § 422.116(e)(3)(ii)(B). 6. Exceptions Finally, we also proposed to codify in paragraph (f) a process by which an MA plan may request and receive an exception from the network adequacy standards in § 422.116. Under our current policy, 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 proposed 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 the standards in § 422.116. We proposed that an MA organization may request an exception when two criteria are met: (1) 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 (2) 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 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 49 CMS. MA State/County Penetration. Retrieved from: https://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-and-Reports/MCR AdvPartDEnrolData/MA-State-CountyPenetration.html. 50 CMS. Monthly MA Enrollment by State/ County/Contract. Retrieved from: https:// www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/MCR AdvPartDEnrolData/Monthly-MA-Enrollment-byState-County-Contract.html. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33858 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations organizations or exclusively with another organization. We proposed that we would implement and interpret the regulation such that the MA plan would have to contract with telehealth providers, mobile providers, or providers outside the time and distance standards, but accessible to most enrollees (or consistent with the local pattern of care), in order for the MA plan to request an exception by CMS. In evaluating exception requests, CMS proposed that it would 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 § 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. These three criteria were proposed to be codified at paragraph (f)(2)(i), (ii) and (iii). Currently, CMS collects information for purposes of testing an MA organization’s network adequacy using the PRA-approved collection titled, ‘‘Triennial Network Adequacy Review for Medicare Advantage Organizations and 1876 Cost Plans, CMS–10636, OMB 0938–1346.’’ 51 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 PRA package, CMS explained that organizations must comply with the current CMS network adequacy criteria posted in the HSD reference file on CMS’s website and updated annually. We proposed to codify the standards in order 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). We proposed that CMS would continue to use the HSD reference file as a means to communicate these standards to MA organizations and that we anticipated that there would be no updates or changes required to the approved collection of information for CMS to assess network adequacy. We stated in the proposed rule how the codified provisions would not impose any new 51 https://www.cms.gov/Regulations-andGuidance/Legislation/PaperworkReduction Actof1995/PRA-Listing-Items/CMS-10636. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 or revised information collection requirements (that is, reporting, recordkeeping, or third-party disclosure requirements) or burden. We confirm here that these provisions are not subject to the PRA. We thank commenters for their input to help inform our final rule on network adequacy policies. We received the following comments on this proposal, and our response follows: Comment: A number of commenters gave feedback regarding the provider and facility specialty type lists in § 422.116(b). Some commenters suggested that CMS add provider specialty types for physical therapist, occupational therapist, transplant providers, psychologists, clinical social workers, nurse specialists, emergency physicians, and optometry. A few commenters suggested that CMS add transplant centers and inpatient rehabilitation hospitals and units to the list of facility specialty types. Response: We appreciate the many viewpoints and recommendations on this subject. The regulation at § 422.112(a) require that MA organizations must ensure that all covered services are available and accessible under the plan. Further, MA organizations must maintain a network of providers to provide adequate access to covered services and must make arrangements for care outside the plan provider network, at in-network costsharing, when network providers are unavailable. As a result of this critical protection, we do not require that all provider and facility specialties be subject to network adequacy standards. In past network adequacy reviews, we have not evaluated every possible provider type that may provide a Medicare covered benefit in our network reviews. We also have not evaluated provider subspecialties, especially those that are extremely specialized in nature. We ensure access to all Medicare covered services through monitoring and investigating complaints in the CMS Complaint Tracking Module. We identify which provider and facility specialty types are critical and necessary to evaluate separately based on a review of Medicare FFS utilization patterns, utilization of provider/facility specialty types in Medicare FFS, specialties in other managed care programs, and the clinical needs of Medicare beneficiaries. For example, we consider the utilization rate of specific provider types in order to determine if it justifies the effort of developing specific standards, collecting data from plans, and analyzing the information. Therefore, we proposed to codify network PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 adequacy standards for the 27 provider specialty types and 14 facility specialty types that are currently used in the evaluation of network adequacy in each service area and have well-established base time and distance standard associated with them. We emphasize that MA enrollees are entitled to access to all medically necessary services from Medicare participating providers and facilities whether or not the provider or facility type is subject to specific network adequacy standards under § 422.116. Comment: In response to our identification of other options we were considering regarding outpatient dialysis centers, many commenters supported removing outpatient dialysis from the list of facility specialty types, and instead, requiring an attestation in its contract application. These commenters explained that this change would drive patient-centered innovation in dialysis treatment, encourage competition, and bring down high reimbursement costs for dialysis treatment. They also pointed out that this change would be consistent with how CMS monitors and ensures beneficiary access to durable medical equipment, home health care, and transplant services. Commenters suggested that the use of an attestation would ensure patient protection while also giving plans the flexibility they need to expand the delivery of innovative solutions to beneficiaries with End Stage Renal Disease (ESRD) requiring dialysis treatment. A few commenters that supported the removal of outpatient dialysis also suggested that providing exceptions for plans covering home dialysis for all beneficiaries who need such services or customizing time and distance standards for dialysis facilities would also improve the proposal. On the other hand, many commenters recommended that CMS finalize its proposal and maintain maximum time and distance standards for outpatient dialysis centers without change. These commenters raised concerns that the removal of outpatient dialysis as a facility type would result in the discrimination of ESRD patients by MA plans because the network design would discourage patients with ESRD from enrolling. A few commenters believed that the removal of outpatient dialysis centers from the list of facility and specialty types for which we would use specific standards would conflict with the intent of the 21st Century Cures Act, which allows ESRD patients to enroll in MA plans in 2021. Some commenters raised access to care concerns and pointed out barriers to home dialysis, E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations such as housing insecurity and a lack of caregiver support, and others explained the need to have both home dialysis and in-center dialysis options of care and to leave the treatment choice in the hands of the patient. Lastly, a couple commenters did not believe that CMS provided adequate notice in the proposed rule to make any changes to outpatient dialysis in the final rule. Response: In our proposal, we explained that we believed that there is more than one way to access medically necessary dialysis care and we sought to improve our network adequacy standards as they relate to measuring and setting minimum standards for access to dialysis services. We do not agree with commenters that the removal of outpatient dialysis facilities will result in network designs that discriminate against or discourage ESRD beneficiaries from enrolling in MA plans. Regardless of whether a facility or provider specialty type is subject to network adequacy standards, MA organizations are required in § 422.112(a)(3) to arrange for health care services outside of the plan provider network when network providers are unavailable or inadequate to meet an enrollee’s medical needs. Section 422.112(a)(10) requires MA plans to ensure access and availability to covered services consistent with the prevailing community pattern of health care delivery in the areas served by the network. The factors making up community patterns of health care delivery that CMS considers when evaluating an MA plan network—and which continue to apply regardless whether a specific time and distance or minimum number requirement is established pursuant to § 422.116 for a provider specialty or facility type—are at § 422.112(a)(10). For example, for any provider or facility types that are not included in network adequacy standards at § 422.116, CMS may consider the number and geographical distribution of eligible health care providers available to potentially contract with an MA organization to furnish plan covered services within the service area when deciding if MA plans meet access and availability requirements. Additionally, we may consider the prevailing market conditions in the service area of the MA plan and, more specifically, the number and distribution of health care providers contracting with other health care plans (both commercial and Medicare) operating in the service area of the plan. Therefore, if network providers are incapable of meeting the enrollee’s medical needs because the burden of VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 travel to the in-network dialysis center is inconsistent with the prevailing community pattern of health care delivery in the area, the MA plan must arrange for care outside of the network and at in-network cost-sharing in order to meet the MA plan’s obligation under the MA program rules to furnish covered services. The network adequacy maximum time and distance standards proposed at § 422.116 are one way that we quantify prevailing patterns of health care delivery in areas, but it is not the only way to evaluate a network, as § 422.112(a)(10) provides. Most importantly, it does not mean that MA organizations do not need to maintain an adequate contracted network of contracted providers simply because a provider or facility type is not included in the network adequacy standards at § 422.116. MA organizations must maintain a network of contracted providers that is sufficient to provide adequate access to covered services to meet the needs of the population served and is consistent with the prevailing community pattern of health care delivery in the areas where the network is being offered. This critical beneficiary protection ensures that MA enrollees have similar reasonable access to providers and facilities as beneficiaries in FFS Medicare. Therefore, we believe that MA plans will continue to provide adequate access to dialysis providers. We disagree with commenters that believe that the removal of outpatient dialysis from the list being finalized in § 422.116 of facility types that are separately evaluated on time and distance and minimum number standards would necessarily lead to discrimination against ESRD patients or would conflict with the intent of the 21st Century Cures Act. The 21st Century Cures Act removed the prohibition against beneficiaries with ESRD from enrolling in an MA plan effective for plan years beginning on or after January 1, 2021. MA organizations must abide by all existing legal and regulatory anti-discrimination requirements, which include prohibitions on discrimination on the basis of health status, for any beneficiaries with ESRD enrolling in an MA plan. For CMS performance data collected for Part C Star Ratings, CMS surveys beneficiaries on the ease of getting needed care and seeing specialists, as well as getting appointments and care quickly, through the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey questions. MA organizations are incentivized by CMS Star Ratings policies to maintain high- PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 33859 star ratings by scoring well on these types of survey measures. Further, if beneficiaries believe that an MA organization is discriminating against them, complaints may be submitted into the Complaint Tracking Module (CTM). We monitor and investigate complaints related to access concerns and work with regional office caseworkers to resolve any issues with the MA organizations. We would take compliance or enforcement actions against an MA organization for failing to provide adequate access to medically necessary services, as warranted. Also, we do not believe that the removal of outpatient dialysis as a facility type would cause access to care concerns. As we pointed out, MA organizations must maintain a contracted network that is sufficient to provide adequate access to covered services, and this includes the ability for enrollees to receive care in-person at an outpatient dialysis facility. We agree with commenters that this change will drive patient-centered treatment in dialysis services, which is at the heart of our intent in considering this change in policy. While we proposed to codify maximum time and distance standards for the facility type outpatient dialysis, we also solicited comments about four options to improve measuring and setting standards for access to dialysis services because we wanted MA plans to use more than one treatment modality to address access to dialysis services: (1) Removing outpatient dialysis from the list of facility types with specific evaluation 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); (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. We believe that by eliminating the outpatient dialysis facility type from the list in § 422.116(b)(2), MA organizations have the freedom to enhance their networks by contracting with dialysis providers that offer dialysis treatment through home-based modalities. These home based modalities give enrollees flexibility and control over their lives so that enrollees can choose the treatments that best meet their needs. We agree with commenters and understand that beneficiaries undergoing dialysis treatment often face changes in circumstances that may warrant movement from one modality to another. We believe this further E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33860 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations supports our intent to encourage MA organizations to establish networks that provide the most advanced and available treatment options to Medicare beneficiaries. We also agree with commenters that the removal of outpatient dialysis from the list of facilities for which there are specific time and distance and minimum provider standards could encourage greater competition in dialysis treatment and treatment modalities, which will eventually lead to lower costs for Medicare beneficiaries without resulting in the denial of, or access to, lesser care. The removal of outpatient dialysis as a facility type from our network adequacy standards allows all dialysis treatments to be treated equally, which will encourage MA organizations to contract with facilities that offer different forms of dialysis treatments, rather than just dialysis at an outpatient facility. We believe this increased competition among treatment modalities could drive down plan and patient costs for dialysis services. We do not believe that creating exceptions related to home dialysis or customizing time and distance standards will bring about the same level of change that CMS is seeking. CMS will continue to oversee the provision of dialysis services through its monitoring efforts to ensure that MA beneficiaries have access to medically necessary care that meets their needs. We routinely monitor access to care complaints and impose compliance or enforcement actions, when necessary, to hold MA organizations accountable for the provision of all medically necessary covered services. Lastly, a few commenters did not believe that CMS provided adequate notice and sufficient detail in the proposed rule for the alternative that we are finalizing here. We disagree and believe that our proposal and continued consideration of other options for outpatient dialysis were clear in the proposed rule. We received numerous comments discussing the four options we identified in the proposed rule (85 FR 9099), as well as the proposal to include outpatient dialysis as a facility type with maximum time and distance standards. The comments, as we have previously discussed, weighed these options and clearly discussed the benefits and drawbacks on the merits of the issues presented, indicating to us that our consideration of other options for outpatient dialysis was understood by commenters. We thank commenters for all of their input in helping to inform us as we considered a final policy concerning outpatient dialysis. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 In this final rule, we are removing outpatient dialysis as a facility specialty type at § 422.116(b)(2) that is subject to network adequacy standards. Under our authority in § 422.116(a)(1), we intend to require that MA organizations submit an attestation that it has as an adequate network that provides the required access and availability to dialysis services, including outpatient facilities. We are finalizing the 27 provider specialty types and the other 13 facility types (that is, the types other than outpatient dialysis facilities) in § 422.116(b) as proposed. Comment: A few comments questioned our proposal at § 422.116(b)(3) specifying that CMS may remove a provider 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. A few commenters recommended that both additions and removals of provider and facility types be subject to notice and comment rulemaking. Response: The HSD reference file is built annually by applying the rules in § 422.116. We reiterate the importance of the beneficiary protection at § 422.112(a), that even if a provider or facility specialty type is not subject to network adequacy standards, that access to providers at in-network cost-sharing must be provided by the MA organization. We proposed the ability to remove specialty types in the HSD reference file to account for circumstances where it may not be necessary to evaluate the number and accessibility of each of the 27 specialty and 13 facility types in a particular year. Additionally, as we described in our proposal, § 422.116(a) will permit us to require an MA plan to complete an attestation that it has an adequate network that provides the required access to and availability of provider or facility specialty types even where we do not evaluate access ourselves. Since network adequacy criteria are measured for each individual specialty type and do not roll up into an aggregate score, the removal of a specialty type from the network review will not affect the outcome of an MA plan’s network review and, as discussed throughout this section of this final rule, we believe that there are adequate protections available to ensure that enrollee access to services is not compromised. We are finalizing § 422.116(b)(3) to allow CMS to remove a provider 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. PO 00000 Frm 00066 Fmt 4701 Sfmt 4700 Comment: Most commenters supported the proposed base time and distance standards. There were a few commenters that suggested that CMS consider alternative approaches to codifying a uniformly applied time and distance standard. A commenter suggested that CMS allow for the use of a combination of qualitative and quantitative standards. Others commenters suggested measures of provider availability (for example, percentage accepting new patients, timeliness of appointment availability), performance on access-related quality and patient experience measures, and degree of physical co-location of services. Response: We appreciate the recommendations and, because we are always looking for new ways of improving the network adequacy reviews, will take them into consideration for potential future policy development. Our network adequacy methodology, as proposed and as finalized here, aims to objectively evaluate the networks of various types of coordinated care plans across a national landscape that includes urban, suburban, and rural regions. We believe that using quantitative methods that account for some degree of variance across these different regions provides a fair and reasonable evaluation that we can efficiently test against hundreds of MA plans annually. Therefore, we are finalizing base time and distance standards that vary by county type designation and take into account the nature of the provider or facility supply in the health care marketplace. Further, the customization process, which we are finalizing as proposed at paragraph § 422.116(d)(3), allows us to adjust the base time and distance standards, when needed, to take into account the unique characteristics of specific regions, such as geographic landscape, which may alter the pattern of care in a county. We also proposed an exceptions process at § 422.116(f), which allows us to also consider qualitative characteristics that may serve as the rationale for a valid exception when an MA network fails to meet time and distance standards. We have continued to hone and improve our network adequacy methodology since 2011 and believe our objective and transparent approach allows for the proper balance of quantitative and qualitative measures that allows CMS to quickly and efficiently measure the adequacy of hundreds of MA networks in a given year. We also note that some of the performance measures (for example, patient experience and accessrelated quality measures) suggested are E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations already included in CMS’s MA plan Star Ratings system, which is used to measure how well plans perform in several categories, including quality of care and customer service. We do not believe it is necessary to duplicate those as part of network evaluations. Therefore, we are finalizing the general rules for network adequacy proposed at § 422.116(a), with the exception of § 422.116(a)(3)(ii), which will not be finalized to align with how we are not finalizing specific standards for Outpatient Dialysis facilities. Also, we are finalizing the county type designations at § 422.116(c) and the maximum time and distance standards at § 422.116(d) as proposed, with the exception of the maximum time and distance standards for the Outpatient Dialysis facility type for reasons previously discussed. Comment: A number of commenters supported the proposed base time and distance standards at § 422.116(d). A few commenters recommended changes to the proposed base time and distance standards in specific county type designations or due to the plan type. Some commenters recommended that Institutional Special Needs Plans (I– SNPs) should have reduced network adequacy standards for specific provider or facility types like podiatry, primary care, diagnostic radiology, physical therapy, occupational therapy, and speech therapy, or should be excepted altogether from the measures. Others recommended that we reduce time and distance standards for occupational therapy and dermatology in all county types, and for primary care and psychiatry in non-metro county types. Response: We conduct network adequacy reviews at the contract level, meaning we evaluate the adequacy of the MA organization’s network across all of their plan types (for example, HMOs, PPOs, SNPs); we do not singularly evaluate the network of a specific plan benefit package. We believe that conducting network reviews at the contract level allows us to consider the broadest availability of contracted providers and facilities for an MA organization while also providing administrative efficiency for CMS to evaluate fewer HSD network submissions. Therefore, our network methodology does not change base time and distance standards based on the plan type being reviewed, such as an I– SNP. We also do not believe that it would be necessary to change our network adequacy standards based on the plan types that we review. For example, while I–SNPs may be unique in that beneficiaries may receive a number of health care services from a VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 single institution, there are also I–SNP institutionalized-equivalent beneficiaries that reside at home. Further, these beneficiaries may still need to travel to another facility to receive specialized care or the specialty providers will need to travel to deliver the care. As a result, we believe that even for plans like I–SNPs, it is important that MA organizations maintain a contracted network that can deliver medically necessary care and is compliant with our network adequacy standards. We have honed and improved its base time and distance standards for each specific provider and facility type in each county designation over a period of nine years. For example, we updated maximum time and distance standards when the new county designation methodology was implemented (that is, moving from classifying counties based on metropolitan statistical areas to the current county designations) and have adjusted some standards based on a significant change in supply. We proposed base time and distance standards that we believe represent a fair expectation for health care patterns of delivery in the five county types based on many years of data and network evaluation. Additionally, the customization process, as proposed and finalized, allows us to adjust standards at the county and provider/facility type level where needed to take into account factors like utilization or supply patterns that indicate the base time and distance standards are not reflective of prevailing patterns of community health care delivery. Therefore, we are not making any changes to our base time and distance standards in the final rule and are finalizing these standards as proposed. Comment: A number of commenters supported the minimum provider number requirements at § 422.116(e). Commenters supported CMS’s policy that there be at least one contracted provider or facility specialty type within required time and distance standards that is accessible to Medicare beneficiaries. A commenter recommended that CMS use the same minimum provider ratio in the calculation of the minimum provider number requirement in all county types. Response: We thank commenters for their support of this policy. As we described in our proposed rule, 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, U.S. Census PO 00000 Frm 00067 Fmt 4701 Sfmt 4700 33861 population data, National Ambulatory Medical Care Survey data, AMA data on physician productivity, and published literature. We proposed Minimum Ratios for each provider and county type at § 422.116(e)(3)(i). The Minimum Ratio is the number of providers required per 1,000 beneficiaries. As the overall population and population density widely varies between large metro and rural county types, so does the rate of health care utilization in these areas. Health care utilization patterns are higher in metro areas, and therefore, our proposed Minimum Ratios are slightly higher in metro county types. In accordance with our current rules at § 422.112(a)(10), we considered the prevailing patterns of community health care delivery, such as whether the service area is comprised of rural or urban areas, when developing the Minimum Ratios. We are finalizing the minimum number requirements as proposed in § 422.116(e). Comment: Many commenters supported our proposed customization process at § 422.116(d)(3). In particular, commenters supported that CMS may only use customization to increase time and distance standards from the base standards. A commenter suggested that CMS allow health plans to provide feedback on county time and distance standard changes to ensure appropriate customization is consistent year after year. Other commenters suggested that geographic barriers like rivers, mountains, and oceans should trigger customization, in addition to supply shortages. Response: We appreciate commenters’ support of our customization process. We agree with commenters that geographic barriers that play a significant role in utilization patterns are triggering events that may result in the customization of time and distance standards by CMS. We clarify here, and in additional regulation text being finalized at § 422.116(d)(3), that when necessary due to utilization or supply patterns, CMS may set maximum time and distance standards for specific provider or facility types for specific counties by customization. We stated in the proposed rule that customization of base criteria may be triggered based on provider or facility supply shortages, information received through exception requests from plans, or from other sources, such as restrictions or limitations caused by state certificate of need (CON) laws. When information from these sources shows that utilization or supply patterns indicate the base time and distance standards are not reflective of prevailing patterns of community health care delivery, CMS E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33862 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations may customize the maximum time and distance standards. In the past, CMS has only customized maximum time and distance standards by increasing them above the base time and distance standard and will continue this policy by finalizing § 422.116(d)(iv). We solicited comment in the proposed rule about other sources of information that we should consider as part of the customization analysis, but we do not believe that it is necessary or appropriate to limit the source or type of information that could be used to trigger the customization analysis. By codifying a standard to guide when we will use customization without limiting the information that would indicate that utilization or supply standards make it necessary to use customized, instead of the base, time and distance standards, we are ensuring that the network adequacy evaluations appropriately reflect access and availability of health care for each area. Customization of base time and distance standards occurs narrowly and is very specific to the provider or facility specialty type and county where the triggering event occurs. Further, MA organizations will not be subject to reductions in the time and distance standard below the base standards at § 422.116(d)(2); CMS will only be increasing from the base standards through customization to take into account the information and utilization and supply standards that trigger the need for customization and make it easier for MA organizations to comply with network adequacy standards. As such and because the regulation describes the standards governing the customization process, we do not believe an opportunity for prior review and comment on customized time and distance standards before implementation is the best course of action. As we mentioned, we consider information from exception requests to help inform our customization of time and distance standards. Should an MA organization continue to fail to meet customized time and distance standards, the organization may submit an exception request and provide further information about why its network cannot meet the standard. CMS will take that information under consideration for the current network review and may make additional adjustments to the customized time and distance standards in the following year. We believe this is the most efficient means of receiving MA organization input on customized standards as circumstances in counties change year over year. Therefore, we are finalizing VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 the customization process at § 422.116(d)(3), with an addition to clarify that CMS may set maximum time and distance standards for provider or facility types for specific counties when necessary due to utilization or supply patterns. Comment: We received numerous comments expressing support for the reduction in the percentage of beneficiaries residing within maximum time and distance standards in Micro, Rural, and CEAC counties from 90 percent to 85 percent. Some commenters described this as a reasonable adjustment in light of the limited availability of some providers in rural areas. They explained that this proposal could increase access to MA plans for beneficiaries residing in rural areas by bringing competition and better health care choices to beneficiaries. Other commenters that were supportive of the proposal also requested that CMS make this reduction applicable to all five county type designations, rather than limiting it to Micro, Rural, and CEAC counties. A few commenters suggested that we further reduce the percentage down to 80 percent. We also received some comments that expressed opposition to this reduction. Some commenters expressed concern that reducing the threshold requirement may result in the unintended consequence of leaving some rural communities without appropriate access to essential services because it would reduce the incentives for MA plans to contract with specialists. Response: We thank commenters for their viewpoints on our proposal to reduce the percentage of beneficiaries residing within maximum time and distance to 85 percent at § 422.116(d)(4)(i). We agree that a reduction is necessary in rural counties (Micro, Rural, and CEAC) due to the limited availability of providers and the lower population density in those areas. CMS considers the number and geographical distribution of eligible providers available to potentially contract with an MA organization when evaluating a network based on community patterns of care under § 422.112. The beneficiary population is typically less dense per square mile than in metro counties so we believe having a reduced threshold will make the standards more consistent with the community patterns of care in rural areas. As a result, we agree with commenters that this adjustment may increase access to MA plans for beneficiaries residing in rural areas. We do not believe that this reduction will result in leaving some rural communities without appropriate access PO 00000 Frm 00068 Fmt 4701 Sfmt 4700 to essential services. Our minimum number requirements proposed at § 422.116(e) require that an MA plan contract with at least one provider within maximum time and distance standards of a beneficiary in the area. Further, CMS rules at § 422.112(a) require that MA organizations must ensure that all covered services are available and accessible under the plan, regardless of how many providers or facilities are contracted with the MA organization. MA organizations must make arrangements for care outside the plan provider network, at in-network cost-sharing, when network providers are unavailable or the network is insufficient. Therefore, beneficiaries in these rural communities will continue to have access to specialty providers and facilities because MA organizations are still required to contract with at least one or must pay for health care services rendered at non-contracted Medicare participating providers at the Medicare FFS rate. We proposed a modest reduction of 5 percent and limited this reduction to only Micro, Rural, and CEAC counties. We believe this to be an appropriate adjustment based on our data that shows that existing failures in MA plans’ meeting the time and distance standards frequently occur at the range between 80 to 89 percent of beneficiaries. We understand that some commenters would like CMS to see an increased reduction or expand this reduction to all county types, however, we believe that the approach we are finalizing will allow us to observe the impacts of this policy change on MA plans and health care providers; we may consider further adjustments to the percentage as needed. Additionally, as this policy change was also intended to drive more MA plan access in rural areas, we do not believe it is necessary or appropriate at this time to apply this reduction to the access standard for metro counties. We are finalizing the reduction in the percentage of beneficiaries residing within maximum time and distance to 85 percent for Micro, Rural, and CEAC counties at § 422.116(d)(4)(i). Comment: We received numerous comments about the 10-percentage point telehealth credit towards the percentage of beneficiaries residing within published time and distance standards for applicable provider specialty types proposed at § 422.116(d)(5). Most commenters were very supportive and appreciated CMS’ support of telehealth goals and thought that CMS’s proposal would incentivize MA organizations to contract with providers that have adopted telehealth technology. A few E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations commenters were opposed to this ‘‘telehealth credit’’ and felt that telehealth should be implemented into network adequacy in a way that does not diminish access to in-person care. These commenters believed that allowing a telehealth credit would make it too easy for MA organizations to comply with a standard that is set for inperson access to a provider. Also, opposing commenters believed that this policy may unintentionally encourage plans to use telehealth services as substitutes for existing in-person services, even in areas where provider availability and beneficiary access are strong. Response: We appreciate commenters support for this proposal as well as the concerns that were raised by the commenters that opposed it. We believe the telehealth credit that we proposed upholds maximum time and distance standards for the applicable provider specialty types and provides a modest incentive for MA organizations to supplement their networks with providers that can furnish additional telehealth benefits. Our proposal does not decrease the maximum time and distance standards that must be maintained for compliance with our network adequacy measures for the applicable provider types; it allows for a reduced portion of the beneficiary population to be within those maximum time and distance standards. For example, in Metro counties, MA organizations would still need to ensure that they contract with in-person providers that are within maximum time and distance standards of at least 80 percent of the beneficiary population even after the credit is applied. 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, in-person networks with telehealth providers. The rules at § 422.135(c) for providing additional telehealth benefits require that the MA organizations furnish in-person access to the specified Part B service at the election of the enrollee. This protection preserves the beneficiary’s right to choose when they would prefer to have medically necessary care provided inperson rather than through electronic exchange (that is, through electronic information and telecommunications technology). Further, our telehealth credit proposal does not count telehealth-only providers as equal to providers that deliver in-person care. We limited the impact that supplementing a network with VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 telehealth providers could have on the network adequacy standards by offering a 10-percentage point credit, while maintaining the maximum time and distance standards required for the applicable provider types. We believe this approach appropriately incentivizes MA organizations to contract with providers that offer additional telehealth benefits and maintains standards that ensure that in-person providers are within a reasonable time and distance for most beneficiaries. Comment: Some commenters suggested that CMS modify the telehealth credit by increasing the credit to as high as a 20-percentage point credit. Response: Our proposal attempted to strike the proper balance between incentivizing MA organizations to contract with providers that offer additional telehealth benefits while also maintaining adequate access to inperson care for the same provider specialties. Therefore, we proposed a 10-percentage point credit towards the percentage of beneficiaries residing within maximum time and distance standards. We believe a 10-percentage point credit is an appropriate amount that proportionately supplements a plan’s percentage threshold 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 to 89 percent range. We believe an increase to a 20-percentage point credit would be too significant at this time. We plan to observe the frequency and impact of this telehealth credit in network adequacy reviews and will consider adjusting this percentage in the future as needed. Comment: A few commenters recommended that CMS add to the applicable provider list of dermatology, psychiatry, cardiology, neurology, and otolaryngology proposed at § 422.116(d)(5) by also including the provider types of ophthalmology, allergy and immunology, nephrology, primary care, gynecology, endocrinology, infectious diseases, or making all provider types applicable for the telehealth credit. Commenters encouraged CMS to expand the list of specialty providers to account for advances in medical technology and promote beneficiary choice in how to receive medical services. Response: We appreciate commenters’ suggestions on expanding the list of applicable provider types for this telehealth credit. As we explained in the PO 00000 Frm 00069 Fmt 4701 Sfmt 4700 33863 previous comment response, we believe the telehealth credit amount is properly balanced to maintain adequate access to in-person care while also incentivizing MA organizations to contract with telehealth providers. We note that in the proposed rule, we did not believe it was necessary to take telehealth into account for primary care providers. 85 FR 9099. However, the use of and access to primary care doctors via telehealth, as well as other provider specialties highlighted by commenters (whose comments referred to circumstances outside the Public Health Emergency), has been critically important in delivering medical care to Medicare beneficiaries during the during the COVID–19 pandemic Public Health Emergency. Based on our experience during this emergency, we observed how important it is to have policies that encourage the widespread availability of telehealth services at all times. Additionally, President Trump’s Executive Order 13890 on Protecting and Improving Medicare for Our Nation’s Seniors (October 3, 2019) called for enhanced access to health outcomes made possible through telehealth services or other innovative technologies as a way to secure and improve Medicare. In light of the COVID–19 pandemic and this Executive Order, we now believe that we should expand the list of specialty provider types finalized at § 422.116(d)(5) and there is no reason to restrict this credit to only provider types that are the most apt to provide telehealth services or for which we have seen potential for failing to meet the specific time and distance standards. New medical technologies and treatments are rapidly evolving across various providers and we would like to broaden the scope of eligible providers to account for these developments by implementing recommendations from commenters on the provider types in § 422.116(b)(1) that should be eligible for the telehealth credit. However, we also do not believe that it is appropriate to make this credit available to all provider types at this time. Therefore, based on the comments received, we are adding the following provider types to the list finalized at § 422.116(d)(5): Ophthalmology, Allergy and Immunology, Nephrology, Primary Care, Gynecology/OB/GYN, Endocrinology, and Infectious Diseases. Comment: A few commenters recommended that we modify CMS’s proposal at § 422.116(d)(5) to include 1876 cost plan telehealth providers that provide telehealth services through supplemental benefits. Response: Our proposal at § 422.116(d)(5) limited the credit to E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33864 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations providers that provide additional telehealth benefits, as defined in § 422.135, in its contracted networks. As we pointed out in the proposed rule, additional telehealth benefits described at § 422.135 only apply to MA plans. For that reason, our proposal did not extend the 10-percentage point credit to cost plans. We believe this is appropriate because of the protections and rules that exist for additional telehealth benefits that that require access to in-person care at the election of the enrollee. Telehealth services offered through supplemental benefits are not subject to these rules and may be too limited in scope to warrant a credit for network adequacy. Therefore, we are finalizing this telehealth credit as proposed at § 422.116(d)(5). Comment: We received numerous comments in support of our proposal at § 422.116(d)(6) 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 anticompetitive restrictions, that limit the number of providers or facilities in a county or state. Some commenters expressed agreement with our discussion in the proposed rule that CON laws have a negative impact on network adequacy, reduce competition, result in higher prices and lower patient access. Other commenters opposed the ‘‘CON law credit’’ and disagreed with our viewpoint on the impact that CON laws. Opposing commenters suggested that CON laws are not a significant barrier to providers in underserved areas and help assure that there is not an overabundance of specialized facilities that need to treat patients in order to remain in business, which causes an overutilization of services. These commenters were concerned that a 10-percentage point credit may hinder enrollee access to providers. We received some comments seeking clarification on the term ‘‘other anticompetitive restrictions’’ and the conditions under which the CON law credit will be available. Response: We appreciate commenters’ varying viewpoints on CON laws and their impact on network adequacy. We continue to believe that CON laws adversely affect competition and free market entry, and therefore, MA organizations must pay more for benefits when there is a limited supply of providers or facilities. We believe the 10-percentage point credit is an appropriate adjustment to make for MA organizations that contract with providers or facilities that are affected VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 by CON laws in counties and states. As previously mentioned, prior network adequacy reviews show that many failures in meeting time and distance standards occur in the 80 to 89 percent range. Like the telehealth credit, this credit does not reduce the maximum time and distance criteria required for specific providers or facilities; it reduces the compliance threshold that MA organizations must meet in order to meet our network adequacy standards. Even when this credit applies, MA organizations must still contract providers and facilities where a majority of beneficiaries reside within maximum time and distance standards. We proposed 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 anticompetitive restrictions, that limit the number of providers or facilities in a county or state. We are implementing this network adequacy policy in furtherance of President Trump’s Executive Order 13890 on Protecting and Improving Medicare for Our Nation’s Seniors (October 3, 2019), which called 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. We clarify here that the term ‘‘anticompetitive restrictions’’ at § 422.116(d)(6) is meant to encompass state laws that restrict the provider or facility supply of specialty types listed at § 422.116(b), even if the state does not formally call them CON laws. For example, Wisconsin does not have a CON law, but has a limit on the maximum number of approved hospital beds .52 Additionally, we clarify that CMS will identify the states, counties and provider/facility specialty types where the CON law credit will be available for MA organizations. CMS has conducted comprehensive research on every state to determine whether the state uses CON laws or other anticompetitive restrictions and whether those laws affect the provider or facility types in our network adequacy standards at § 422.116(b). As we have described in regulation text, CMS may customize base time and distance standards in states with CON laws in lieu of allowing for the 10-percentage point credit. We clarify here and in regulation text at 52 https://docs.legis.wisconsin.gov/statutes/ statutes/150/VII/93. PO 00000 Frm 00070 Fmt 4701 Sfmt 4700 § 422.116(d)(6), that CMS may use customization when necessary due to utilization or supply patterns. Therefore, the 10-percentage point credit will not be allowable in counties where the specific provider or facility type maximum time and distance standards have already been customized. CMS will use the HPMS Network Management Module to identify the county and provider/facility combinations that are eligible for this 10-percentage point credit and MA organizations will need to submit a credit request for each provider or facility type they believe has been affected by the CON or anticompetitive laws. Therefore, we are finalizing at § 422.116(d)(6) that in a state with CON laws, or other state imposed anticompetitive restrictions that limit the number of providers or facilities in the state or a county in the state, CMS will either award the MA organization a 10percentage 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, when necessary due to utilization or supply patterns, customize the base time and distance standards. Comment: We received some comments about the cumulative effect of the telehealth and CON law credits on the percentage of beneficiaries residing within published time and distance standards. Some commenters questioned whether it was allowable to combine the two credits and others expressed concern with the effect of combining the two credits. Commenters were concerned that the combined change in the compliance percentage would likely have adverse impacts on provider access and choice. Response: When discussing the CON law credit in the proposed rule, we stated that the CON law credit could be ‘‘in addition to’’ the telehealth credit, when applicable. We confirm that interpretation here and reiterate that both of these credits may be applied together to the percentage of beneficiaries residing within maximum time and distance standards at § 422.116(d)(4). We note that these credits do not reduce the actual maximum time and distance standards themselves, and that CMS still requires that MA organizations contract with providers where a majority of beneficiaries (that is, no less than 65 percent in rural counties, and 70 percent in non-rural counties, when both credits apply) reside within maximum time and distance standards for in-person access to care when E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations needed. Additionally, we reiterate that § 422.112(a) requires that MA organizations must ensure that all covered services are available and accessible under the plan and that MA organizations must maintain a network of providers to provide adequate access to covered services and must make arrangements for care outside the plan provider network, at in-network costsharing, when network providers are unavailable or the network is inadequate. Comment: A few commenters recommended changes to our proposed exceptions process. Some commenters recommended that CMS shift from categorically treating an ‘‘inability to contract’’ as an invalid rationale for an exception and instead consider it a valid rationale relating to consolidated or concentrated provider markets. Others recommended that CMS consider exceptions based on documented provider activities that have resulted in anticompetitive practices impeding efforts to meet network adequacy standards. Another commenter suggested that where there may be repeated exception requests based on geographical barriers, CMS should consider granting permanent exceptions. Finally, a commenter requested that CMS revise its language in § 422.116(f) to expressly provide for exceptions for I–SNPs because they commonly furnish services in long-term care facilities. Response: Under our proposal, an MA organization may request an exception when two criteria are met. First, 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; second, 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. We explained in the proposed rule the meaning of ‘‘available’’ by providing examples, such as when the provider has moved or retired, or when the provider/facility does not contract with any organizations or exclusively with another organization. (85 FR 9102– 9103). However, we distinguish these examples from situations where an MA organization is unable to successfully negotiate and establish a contract with a provider or facility, which we refer to as the ‘‘inability to contract.’’ The noninterference provision at section 1854(a)(6) of the Act prohibits us from requiring any MA organization to VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 contract with a particular hospital, physician, or other entity or individual to furnish items and services or require a particular price structure for payment under such a contract. As such, we cannot assume the role of arbitrating or judging the bona fides of contract negotiations between an MA organization and available providers or facilities. With respect to comments about ‘‘documented provider activities that have resulted in anticompetitive practices,’’ we believe that commenters are also referring to price negotiations between MA organizations and providers. We maintain that the ‘‘inability to contract’’ with an available provider or facility is not a valid justification for an exception at § 422.116(f). Therefore, we will generally not accept an organization’s assertion that it cannot meet our network adequacy criteria because providers/facilities are not willing to contract with it. With respect to comments about permanent exceptions for geographic barriers, we clarify here that we would not create a ‘‘permanent’’ exception, as this would unnecessarily burden the exception process. Instead, we would utilize our customization process to recalibrate maximum time and distance requirements in accordance with the local pattern of care. As mentioned in our discussion about customization, we use information received through exception requests to stay informed and determine which counties or provider/ facility types require a permanent adjustment in maximum time and distance standards through customization to account for things such as geographic characteristics or changes in supply. Finally, we reiterate here that we do not believe it is necessary to change network adequacy standards based on the plan types that we review. Beneficiaries may still need to travel to another facility to receive specialized care or the specialty providers may need to travel to deliver the care to the longterm care facility. As a result, we do not believe any specific exceptions are needed for I–SNPs. We proposed to codify the three criteria that we consider when evaluating exception requests at paragraphs (f)(2)(i), (ii) and (iii); that CMS considers whether the current access to providers and facilities is different from the HSD reference and Provider Supply files for the year; there are other factors present, in accordance with § 422.112(a)(10)(v), that demonstrate that network access is consistent with or better than the original Medicare pattern of care; and PO 00000 Frm 00071 Fmt 4701 Sfmt 4700 33865 approval of the exception is in the best interests of beneficiaries. We reiterate that all three criteria must be met for CMS to approve an exception. We are finalizing the exceptions process and these criteria at § 422.116(f) as proposed. Comment: Some commenters, in connection with a proposal to revise § 422.502 to address how CMS would use an entity’s past performance on an MA contract in evaluating applications for new plans or service area expansions, stated that CMS should be more specific about what is and is not a basis for denying applications in connection with network adequacy in order to minimize uncertainty and unpredictability for MA organizations. Commenters suggested that CMS should add other and more specific criteria for use in considering applications. Response: Although we are not addressing in this final rule the proposal to revise § 422.502 to address our use of information about past performance in evaluating an application, we understand that our statement in the proposed rule about how we would require an entity applying for a new MA contract to provide an attestation about the adequacy of its network could be seen as touching on that topic. We will address our proposal about § 422.502 in a future final rule, but believe that additional clarity regarding attestations about meeting the network adequacy regulation and how they would be used in the context of applications for new MA contracts or service area expansions should be addressed as part of our network evaluation regulation. We proposed specific regulation text (which we are finalizing) in § 422.116(a) that each network-based MA plan must demonstrate that it has an adequate contracted provider network. In addition, we proposed 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 (85 FR 9093). We explained that we anticipated requiring 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. Under our current network adequacy policy, as described in the PRA approved collection of information titled, ‘‘Triennial Network Adequacy Review for Medicare Advantage Organizations and 1876 Cost Plans’’ (CMS–10636) and referenced in our E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33866 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations proposed rule, we removed network reviews from the application process beginning in 2018 for contract year 2019. Therefore, failures detected during network reviews are no longer used as a basis to deny an MA application. In the proposed rule, we made clear that an attestation could be used in connection with applications. In light of the comments discussed above, and to address the intersection of our regulations regarding network adequacy and the bases for denying applications, we are finalizing regulatory text to explicitly provide that we do not require information other than an attestation regarding compliance with network adequacy requirements as part of the application for a new or expanding service area and will not deny such an application on the basis of such requirements. This provides greater clarity regarding how network adequacy and the application process intersect by codifying the current practice of relying on other mechanisms, such as our triennial reviews, to evaluate compliance with the specific network adequacy standards finalized in § 422.116 and to enforce those standards. The provision we are finalizing here at § 422.116(a)(1)(ii), however, does not prohibit CMS from considering or using information about an entity’s failure to comply with a MA contract for purposes of an application denial when or if that compliance failure was associated with access to services or network adequacy evaluations and resulted in the imposition of an intermediate sanction or civil money penalty under to part 422 subpart O, with the exception of a sanction imposed under § 422.752(d). Therefore, we are finalizing regulatory text at § 422.116(a)(1)(ii) that CMS does not require information, other than an attestation, regarding compliance with § 422.116 as part of an application for a new or expanding service area and will not deny application on the basis of an evaluation of the applicant’s network for the new or expanding service area. After careful consideration of all comments received, and for the reasons set forth in the proposed rule and in our responses to the related comments summarized earlier, we are finalizing the proposed changes to §§ 417.416(e)(3) and 422.116 with the following modifications: • We are finalizing regulatory text at § 422.116(a)(1)(ii) that CMS does not require information, other than an attestation, regarding compliance with § 422.116 as part of an application for a new or expanding service area and will not deny application on the basis of an evaluation of the applicant’s network for VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 the new or expanding service area. Accordingly, we are designating the text we proposed at paragraph (a)(1) as paragraph (a)(1)(i) in the final regulation. • We are not finalizing § 422.116(a)(3)(ii), which clarified the definition of the facility type Outpatient Dialysis. • We are not finalizing Outpatient Dialysis in the list of facility specialty types at § 422.116(b)(2) and are finalizing the list of other facility-types as proposed but with different numbering, accordingly. • We are not finalizing the base maximum time and distance standards for Outpatient Dialysis for all county designations at § 422.116(d)(2). • We are finalizing the customization process at § 422.116(d)(3) with a modification that describes what triggers customization by CMS. • We are finalizing § 422.116(d)(5) as proposed with the addition of Ophthalmology, Allergy and Immunology, Nephrology, Primary Care, Gynecology/OB/GYN, Endocrinology, and Infectious Diseases provider specialty types to the list of provider types for which the telehealth credit is available. • We are finalizing § 422.116(d)(6) with a modification that describes when CMS may use the customization process as it relates to Certificate of Need or other anticompetitive laws. M. Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62, 422.68, 423.38, and 423.40) 1. Part C Special Election Periods (§ 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: • SEP for Non-renewals or Termination. • SEP for Changes in Residence. • SEP for Contract Violation. 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 § 422.62(b)(4). CMS has historically included in regulation those SEPs that the statute explicitly authorizes and has established the SEPs for exceptional PO 00000 Frm 00072 Fmt 4701 Sfmt 4700 circumstances in our subregulatory guidance rather than through regulation. We proposed to codify a number of SEPs that we have adopted and implemented through subregulatory guidance as exceptional circumstances SEPs. Consistent with § 422.68(c), we also proposed to revise § 422.68(d) to clarify that for SEPs that are described in § 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. The proposed MA SEPs are summarized below. (Readers should refer to the proposed rule for more detail on these SEPs.): SEP for Employer/Union Group Health Plan (EGHP) Elections. We proposed to revise § 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. SEP for Individuals Who Disenroll in Connection with a CMS Sanction. At new § 422.62(b)(5), we proposed to codify the SEP for individuals enrolled in an MA plan offered by an MA organization that is sanctioned by CMS. SEP for Individuals Enrolled in Cost Plans that are Non-renewing their Contracts. At new § 422.62(b)(6), we proposed to codify the SEP for individuals enrolled in cost plans that are non-renewing their contracts for the area in which the enrollee lives. SEP for Individuals in the Program of All-inclusive Care for the Elderly (PACE). At new § 422.62(b)(7), we proposed to codify the SEP allowing an MA plan enrollee to disenroll from an MA plan at any time in order to enroll in PACE. 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. We proposed, at new § 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. SEP for Individuals With ESRD Whose Medicare Entitlement Determination Was Made Retroactively. We proposed to codify at new § 422.62(b)(9) that individuals whose Medicare entitlement determination based on ESRD was made retroactively would have a SEP to prospectively elect an MA plan offered E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations by the MA organization, provided they met certain requirements. SEP for Individuals Whose Medicare Entitlement Determination Was Made Retroactively. We proposed, at new § 422.62(b)(10), to codify a SEP for individuals whose Medicare entitlement determination was made retroactively. SEP for Individuals Who Lose Special Needs Status. At new § 422.62(b)(11), we proposed 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. SEP for Individuals Who Belong to a Qualified SPAP or Who Lose SPAP Eligibility. At new § 422.62(b)(12), we proposed 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. SEP for Enrollment Into a Chronic Care SNP and for Individuals Found Ineligible for a Chronic Care SNP. At new § 422.62(b)(13), we proposed 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. SEP for Disenrollment from Part D to Enroll in or Maintain Other Creditable Coverage. At new § 422.62(b)(14), we proposed to codify the SEP that provides an opportunity for individuals to disenroll from an MA–PD plan (only by electing Original Medicare or an MAonly plan) in order to enroll in or maintain other creditable drug coverage (such as TRICARE or VA coverage) as defined in § 423.56(b). SEP to Enroll in an MA Plan with a Star Rating of 5 Stars. At new § 422.62(b)(15), we proposed 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. SEP for Non-U.S. Citizens who Become Lawfully Present. At new § 422.62(b)(16), we proposed to codify the SEP for non-U.S. citizens who become lawfully present in the United States. SEP for Providing Individuals who Requested Materials in Accessible Formats Equal Time to Make Enrollment Decisions. We proposed to codify, at new § 422.62(b)(17), a SEP for situations where an 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 individuals who did not request an accessible format. SEP for Individuals Affected by a FEMA-Declared Weather-Related Emergency or Major Disaster. We proposed to codify, at new § 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. SEP for Significant Change in Provider Network. At new § 422.62(b)(23), we proposed 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. SEP for Individuals Enrolled in a Plan Placed in Receivership. We proposed to establish a new SEP, at new § 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. SEP for Individuals Enrolled in a Plan that has been Identified by CMS as a Consistent Poor Performer. We proposed to establish a new SEP, at new § 422.62(b)(25), for individuals who are enrolled in plans identified with the low performing icon (LPI) in accordance with § 422.166(h)(1)(ii). SEP for Individuals Affected by a Federal Employee Error. At new § 422.62(b)(21), we proposed 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. SEP for Other Exceptional Circumstances. Lastly, we proposed to retain the authority currently at § 422.62(b)(4) to create SEPs for individuals who meet other exceptional conditions established by CMS and move it to new § 422.62(b)(26). Also based on the Secretary’s authority to create SEPs for individuals who meet exceptional conditions, we proposed 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 § 422.62(b)(19), we proposed 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 PO 00000 Frm 00073 Fmt 4701 Sfmt 4700 33867 including any such loss or reduction due to a failure to pay premiums. SEP for Individuals Who Are Not Adequately Informed of a Loss of Creditable Prescription Drug Coverage. At new § 422.62(b)(20), we proposed 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. SEP for Individuals Eligible for an Additional Part D IEP. At new § 422.62(b)(22), we proposed 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. These 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 also proposed minor editorial changes in § 422.62(b) and (c), such as changing ‘‘Original Medicare’’ to ‘‘original Medicare.’’ In general, we received support for the proposed SEPs. We received specific comments on the following proposed SEPs. (Comments that apply to SEPs proposed for both MA and Part D will be addressed in this section and not repeated in the Part D SEP section.) The comments on those proposals and our responses follow: SEP for Employer/Union Group Health Plan (EGHP) Elections Comment: A commenter recommended that we revise the current description of this SEP, which is that it is available to individuals who have (or are enrolling in) an employer or union sponsored MA plan, and change it to indicate that it is available to individuals who have (or are enrolling in) an employer or union sponsored plan. Response: We interpret this comment as a request to ensure that this SEP is available to individuals who have (or are enrolling in) an employer or union sponsored plan that is not an MA plan. As proposed, this SEP is available to individuals who are moving from employer or union coverage of any kind to an employer or union sponsored MA plan. In addition, the SEP is available to individuals who wish to disenroll from an MA plan to take employer or union sponsored coverage of any kind. As such, we believe the comment is addressed by the SEP, as proposed. E:\FR\FM\02JNR2.SGM 02JNR2 33868 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Comment: A commenter recommended that CMS codify the retroactive effective date guidelines related to this SEP, which are referenced in subregulatory guidance. Specifically, where there is a delay between the time in which the member completes the enrollment or disenrollment request with the EGHP and when it is ultimately received by the health plan, the current guidelines indicate that the effective date may be retroactive up to, but may not exceed, 90 days from the date the MA organization received the request from the employer or union group. The disenrollment effective date guidelines indicate up to 90 days’ retroactive payment adjustment is possible in cases where the EGHP does not provide the plan with timely notification of a member’s requested disenrollment. Response: We did not propose to codify a provision for retroactive payment adjustment due to employer or union delays in providing the MA organization with timely notification of a member’s requested disenrollment, and we decline to adopt such a provision at this time. It has been CMS’ longstanding expectation that in the event an MA organization chooses to delegate to an employer or union the collection and initial processing of beneficiary enrollment and disenrollment requests, the MA organization’s agreement with the employer or union would require the employer or union to meet enrollment and disenrollment processing timeliness requirements that ensure the timely submission of enrollment and disenrollment requests. As such, retroactivity is necessary when the employer or union fails to meet these processing timeliness requirements. khammond on DSKJM1Z7X2PROD with RULES2 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 Comment: A commenter who expressed support for this proposal urged CMS to ensure that beneficiaries under age 65 with ESRD who have guaranteed issue rights under state laws and rules are aware of them. Response: We appreciate the commenters’ support and agree that education and outreach are essential for individuals to understand their enrollment options. We will continue to partner with existing stakeholders to ensure that clear and comprehensive information is provided to beneficiaries so they are able to make an informed coverage choice. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 SEP for Individuals Affected by a Federal Employee Error Comment: A commenter, citing some stakeholder concerns regarding the 2019 redesign of the Medicare Plan Finder (MPF) tool, requested that CMS articulate in regulatory language (either in the SEP for individuals affected by a federal employee error or a separate entry) that a SEP for exceptional circumstances may exist when there are errors in the MPF or other CMS-issued or managed information platforms that beneficiaries used when making their decisions. Response: We appreciate the comment. As the MPF and other CMSissued or managed information platforms are the responsibility of the federal government, a beneficiary who relied on erroneous information on these platforms would be eligible for this SEP. As a result, we do not see a need to revise the current regulatory text or establish a new, separate SEP. SEP for Individuals Affected by a FEMA-Declared Weather-Related Emergency or Major Disaster Comment: A number of commenters supported the proposal to codify this SEP and many of them recommended that it be expanded to address Statedeclared emergencies and public health emergencies such as COVID–19. A commenter questioned if the SEP would apply when FEMA provides fire management assistance. Commenters also requested that the end date should be revised so that the SEP is available to eligible individuals in cases where the emergency is declared with a retroactive effective date and/or lasts for more than 4 months. Response: We appreciate the comments and agree that eligibility for this SEP should not be solely contingent upon a FEMA declaration. Based on these comments and consistent with our goal of providing an enrollment or disenrollment opportunity to an individual who missed an election period due to circumstances beyond his or her control, we will revise the proposed SEP to include any emergency declaration issued by a Federal, state, or local government entity in response to a disaster or other emergency. This would not include instances in which fire management assistance is provided by FEMA, as this occurs prior to the declaration of an emergency or major disaster as part of state and/or local government efforts to stop the spread of fire and mitigate fire risk to the built environment, and is not itself an emergency declaration. We also agree with the comment that the SEP end date PO 00000 Frm 00074 Fmt 4701 Sfmt 4700 should be revised so that the SEP is available to eligible individuals in cases where the emergency is declared with a retroactive effective date and/or lasts for more than four months. We believe that the SEP end date should be related to the end of the emergency period, not the start of the emergency period. As such, in §§ 422.68(b)(18) and 423.38(c)(23) we will change the scope of the SEP so that it applies to FEMAdeclared emergencies/disasters, as well as disaster or other emergency declarations issued by a federal, state or local government entity. It will be available in the geographic areas identified in the emergency/disaster declaration. We also specify in this paragraph that the SEP will— • Start as of the date the declaration is made, the incident start date or, if different, the start date identified in the declaration, whichever is earlier; and • End 2 full calendar months following the end date identified in the declaration or, if different, the date the end of the incident is announced, whichever is later. This 2-month period is consistent with other longstanding SEPs such as the SEP for Significant Change in Provider Network and the SEP for Individuals Whose Medicare Entitlement Determination Made Retroactively. In finalizing the SEP with these revisions, we will retain the requirement that the individual was eligible for an election period at the time of the incident period and did not make an election during that election period because he or she was prevented from doing so due to the incident. We will refer to this SEP as the SEP for Government Entity-Declared Disaster or Other Emergency. SEP for Individuals Enrolled in a Plan Placed in Receivership Comment: A commenter stated that it is unclear how an MA organization might know if another MA organization is having financial problems during the enrollment period and, therefore, would not know if a beneficiary is eligible for this SEP. Response: The SEP is available only to individuals enrolled in a plan offered by an organization that has actually been placed into receivership, which, in our experience, is always a wellpublicized event in the impacted area, usually involving a high level of media attention. We believe that MA organizations offering plans in the area in which another MA organization has been placed into receivership will be aware of such an event through its normal course of business in the areas it serves. When a beneficiary requests E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 enrollment on the basis of their current plan being placed into receivership, the new plan can accept the beneficiary’s verbal or written attestation as proof of their eligibility for this SEP. Comment: Two commenters suggested that CMS allow MA plans and Part D sponsors to accept verbal beneficiary attestation as proof of eligibility for this SEP and not require additional proof of election eligibility. They believed that allowing verbal beneficiary attestation will expedite enrollment processing and may reduce enrollment denials. Additionally, they believed it would be consistent with current SEPs permitting verbal attestation for election period eligibility, such as the SEPs for Change in Residence, EGHP, etc. Response: We did not propose that additional proof of eligibility for this SEP be required. Consistent with longstanding policy regarding eligibility for any SEP, an applicant’s written or verbal attestation of SEP eligibility is sufficient. SEP for Individuals Enrolled in a Plan That Has Been Identified by CMS as a Consistent Poor Performer Comment: A commenter, who expressed support for this new SEP and the new SEP for Individuals Enrolled in a Plan Placed in Receivership, requested that if a beneficiary who is eligible for these new SEPs or any other SEP has an agent of record, that a pathway be created for the agent of record to make the plan change. Response: Beneficiaries are not precluded from using an agent/broker or any other available means to enroll in a plan when the beneficiary qualifies for a SEP. Comment: Another commenter who expressed support for this new SEP and the new SEP for Individuals Enrolled in a Plan Placed in Receivership stated that impacted beneficiaries should be able to make elections utilizing these new SEPs only through contacting CMS directly, adding that to include these two new SEPs on plan enrollment forms, enrollment websites and other enrollment mechanisms is an unnecessary burden. The commenter believed that adding two new SEPs would be confusing for beneficiaries, as there are already numerous SEPs for beneficiaries to understand. This commenter also stated that the two new SEPs should be available to beneficiaries only outside of the Annual Enrollment Period (AEP) and only until such time as CMS terminates its contract with the plan. The commenter stated that an MA parent organization would not be able to identify a plan that has been identified by CMS as a VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 consistent poor performer or a plan that has been placed in receivership and requested that CMS not require plans to offer these two new SEPs until contract year 2022. Response: We appreciate the comment and believe that any potential beneficiary confusion can be minimized by presenting these two new election opportunities to beneficiaries in a clear and accurate manner. We believe that it is important that the SEPs be available throughout the year, not just outside of the AEP, given the effective date implications. That is, if a beneficiary finds it necessary to change plans during October or November using one of these SEPs, their new coverage should be effective the next month and they should not have to wait until January 1 or later. We disagree with the commenter and do not believe that it is an unnecessary burden to mention these two SEPs in plan materials where other SEPs are listed, such as the Attestation of Eligibility for an Enrollment Period. Exclusion of the two new SEPs would result in beneficiaries not being fully aware of all potential election periods available to them. With regard to the comment that an MA parent organization would not be able to identify a plan that has been identified by CMS as a consistent poor performer, we note that since plans are able to accept a verbal or written attestation from the beneficiary that they are eligible for a SEP, plans are able to accept a verbal or written attestation regarding eligibility 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. In addition, plans are able to verify another organization’s LPI status via the Medicare Plan Finder or the released Star Rating summary report. As a result, we do not see a reason to delay the offering of these two new SEPs until contract year 2022. SEP for Significant Change in Provider Network Comment: A commenter suggested that CMS revise this SEP so that it may be used when an individual plan enrollee’s provider is terminated without cause, adding that while there is an existing SEP for significant change in an MA provider network, it is only triggered when a threshold of terminations is met. The commenter states that an individual may have joined a plan specifically because their provider contracts with it, or have developed a relationship with that provider they wish to maintain. PO 00000 Frm 00075 Fmt 4701 Sfmt 4700 33869 Response: We appreciate the comment. As stated in the proposed rule, 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. CMS appreciates that an individual would want to maintain a relationship with an individual provider, however, an individual provider’s termination from a plan would not disrupt or affect that enrollee’s continued access to covered benefits. CMS continues to believe this SEP is best reserved for network changes that are significant and have the potential to affect the access of covered benefits for a large number of enrollees. SEP for Individuals with ESRD Whose Medicare Entitlement Determination Was Made Retroactively Comment: Two commenters supported the proposal to codify a SEP for individuals with ESRD whose Medicare entitlement determination was made retroactively because it would allow beneficiaries to enroll who were not able during the customary period, as well as ensure that beneficiaries may enroll into an MA plan if certain conditions are met prior to the MA ESRD enrollment rule taking effect in 2021. Both commenters recommended that educational outreach be made to individuals with ESRD. Response: We appreciate the commenters’ support and agree that education and outreach are essential for individuals to understand their enrollment options. We will continue to partner with existing stakeholders to ensure that clear and comprehensive information is provided to beneficiaries so they are able to make an informed coverage choice. SEP for Other Exceptional Circumstances Comment: A commenter expressed strong support for CMS’ statement that it retains the ability to grant case-bycase exceptional circumstance SEPs, and that the list at § 422.62(b)(26) is not exhaustive. The commenter expressed concern that leaving the creation of new SEPs solely to rulemaking will mean that it will take longer to implement new, necessary SEPs should the need arise and will make the agency’s response less nimble and may hinder its ability to quickly meet the needs of beneficiaries. The commenter urges CMS to reiterate, or otherwise educate, plan sponsors, 1–800–MEDICARE counselors and CMS staff that despite exceptional circumstance SEPs now being codified, that such discretion still exits. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33870 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Response: We appreciate the commenters’ support and continue to believe that it is important to retain the discretion to establish SEPs on a caseby-case basis. As such, at newly redesignated § 422.62(b)(26) and newly redesignated § 423.38(c)(34), we are finalizing our proposal to codify a SEP for other exceptional circumstances, which are, as stated in the proposed rule, situations in which it is in the best interest of the beneficiary that she or he be provided an enrollment (or disenrollment) opportunity. To date, CMS has used the existing authority at §§ 422.62(b)(4) and 423.38(c)(8)(ii) to assist individuals whose unique situations are outside the parameters of the existing SEPs, in order to address an individual’s exceptional circumstances related to new enrollments or enrollment/disenrollment from an MA or Part D plan. These SEPs, which we also refer to as enrollment exceptions, are utilized when the reason is not captured in an existing SEP or specific circumstances require an exception to the predefined criteria. Consistent with current practice, CMS will consider granting an enrollment exception when one or more of the following factors is present: ++ Extraordinary Circumstances— Circumstances beyond the beneficiary’s control that prevented him or her from submitting a timely request to enroll or disenroll from a plan during a valid enrollment period. This is inclusive of, but not limited to, a serious medical emergency of the beneficiary or their authorized representative during an entire election period, a change in hospice status, or mailed enrollment forms returned as undeliverable on or after the last day of an enrollment period. ++ Erroneous Election—Situations in which a beneficiary provides a verbal or written allegation that his or her enrollment in a MA or Part D plan was based upon misleading or incorrect information provided by a plan representative or State Health Insurance Assistance Program (SHIP) counselor, including situations where a beneficiary states he or she was enrolled into a plan without his or her knowledge or consent, and requests cancellation of the enrollment or disenrollment from the plan. ++ Plan Accessibility—A SEP may be warranted to ensure beneficiary access to services and where without the approval of an enrollment exception, there could be adverse health consequences for the beneficiary. This is inclusive of, but not limited to, maintaining continuity of care for a VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 chronic condition and preventing an interruption in treatment. CMS will review supporting details and documentation to determine eligibility for the SEP for exceptional circumstances, which, as currently implemented, can be in response to an individual beneficiary’s request for an exception to the current enrollment rules, as well as CMS’ determination that an exception is warranted for a group of beneficiaries. The SEP would take effect once CMS makes its determination and the enrollee has been notified. The effective date for an enrollment or disenrollment election using an approved enrollment exception would be based on the beneficiary’s circumstances and may either be prospective or retroactive. In addition to proposing to codify SEPs established in sub-regulatory guidance, as well as proposing two new SEPs (related to plans placed into receivership or being identified as a consistent poor performer), we requested comments on other SEPs that should be considered for codification. In response to that request, we received the following feedback: Comment: A commenter urged us to establish a SEP for individuals in MA or Part D plans who are impacted by significant changes in their plan benefits from one year to the next, for example, significantly higher premiums or reduced benefits. They believed that this was particularly important for individuals with standalone PDPs since they do not have the same option to change plans during the first three months of the year afforded to those who begin the year enrolled in an MA plan (pursuant to the MA OEP). The commenter stated that most people who are enrolled in a given plan tend to rely on that plan remaining more or less the same, and, as a consequence, many people do not carefully scrutinize their Annual Notice of Change (ANOC) or other plan documents describing annual changes. Response: Every Fall, CMS conducts a robust educational campaign that urges beneficiaries to review their plan benefits and make changes if their plan no longer meets their needs or if there are other options that could lower their out-of-pocket expenses. The ANOC is an important resource that plans are required to send to members detailing how benefits will change in the next plan year. Ultimately, it is the beneficiary’s responsibility to assess their own drug and healthcare needs and determine if there is a better plan for them. We appreciate the commenter’s concern, but will not be finalizing the suggested SEP. PO 00000 Frm 00076 Fmt 4701 Sfmt 4700 Comment: Two commenters recommended that we establish a SEP for beneficiaries who have been accepted for admission to, or have been admitted to, an extended neoplastic disease care hospital and a physician has noted that the individual has life expectancy of ninety days or less. The commenters stated that this was important because individuals who are diagnosed with advanced cancer are often at the end of their lives and should be able to disenroll from their MA plan to Original Medicare if the hospital where they choose to receive their care is outside of the plan’s network. The commenters also noted that, as an alternative or an addition, CMS should determine extended neoplastic disease care hospitals to be ‘‘institutions’’ so that beneficiaries would be eligible for the Open Enrollment Period for Institutionalized Individuals (OEPI). The commenters noted that if this change was made, an additional revision should be made to waive the 90-day length of stay requirement. Response: While we understand and are sympathetic to beneficiaries diagnosed with advanced cancer, we do not believe that the establishment of a new SEP is an appropriate remedy to this very specific situation. When establishing (and now codifying) SEPs, we look for broad scenarios where we believe it is imperative that beneficiaries have opportunities to join, change, or disenroll from plans. Beneficiaries who are not able to disenroll from their MA plan to return to Original Medicare still have access to Medicare Part A and Part B benefits. MA plans are required to cover all services covered by Original Medicare and if a member needs covered medical care that the providers in the plan’s network cannot provide, the plan must cover care from an outof-network provider. The absence of neoplastic disease care hospitals from the list of facilities considered to be institutions is outside the scope of this proposal. Comment: A commenter requested that we codify two SEPs that are in Chapter 2 of the Medicare Managed Care manual that were not included in the proposed SEPs in 42 CFR part 422: The SEP for Dual-Eligible Individuals and Other LIS Eligible Individuals and the SEP for CMS and State-Initiated Enrollments. Similarly, they also requested that we codify two SEPs in Chapter 3 of the Medicare Prescription Drug Benefit Manual that were not included in the proposed SEPs in 42 CFR part 423: The SEP for Full-Benefit Dual Individuals with Retroactive Uncovered Months and the SEP for Individuals Involuntarily Disenrolled E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations from an MA–PD plan due to loss of Part B. Response: We appreciate the comments. The commenter requests that we codify in the Part C regulations the SEP for Dual-Eligible Individuals and Other LIS Eligible Individuals that is included in Chapter 2 of the Medicare Managed Care Manual. We disagree that this SEP should be codified as a Part C SEP, as it is included in the Part C enrollment guidance merely as a reiteration of an already existing Part D SEP at § 423.38(c)(4). To codify this in the Part C regulations would result in the establishment of additional election periods that we did not intend to establish. The basis for the existing SEP for Dual-Eligible Individuals and Other LIS Eligible Individuals is the fact that the beneficiary is (or has been) receiving the Part D low income subsidy, which is specific to Part D and why the SEP is codified in 42 CFR part 423 and not proposed as a SEP in part 422. Therefore, we decline to codify a SEP for Dual-Eligible Individuals and Other LIS Eligible Individuals in the Part C regulations. The commenter also requests that we codify in the Part C regulations the SEP for CMS and State-Initiated Enrollments that is included in Chapter 2 of the Medicare Managed Care Manual. This SEP is based on § 422.60(g)(5), which states that individuals who are passively enrolled by CMS into an MA–PD plan are eligible for the Part D SEP described in § 423.38(c)(10). To codify a new Part C SEP would be redundant; therefore, we decline the commenter’s request to do so. The commenter also requests that we codify in the Part D regulations the SEP for Full-Benefit Dual Eligible Individuals with Retroactive Uncovered Months that is included in Chapter 3 of the Medicare Prescription Drug Benefit Manual. As described in guidance, this SEP addresses the scenario in which a Part D eligible individual needs prescription drug coverage through the Limited Income Newly Eligible Transition (LI NET) program prior to his or her enrollment in a Part D plan, either by submitting an application to a plan or by being auto-enrolled by CMS into a plan for a future date. Since the process for establishing retroactive drug coverage through LI NET is a CMSdirected process, and does not involve an individual taking action to request enrollment in a plan, we did not propose to codify this SEP, and we decline to do so in this final rule. Lastly, the commenter requests that we codify in the Part D regulations the SEP for Individuals Involuntarily Disenrolled from an MA–PD plan due to VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 loss of Part B that is included in Chapter 3 of the Medicare Prescription Drug Benefit Manual. As described in subregulatory guidance, individuals who are involuntarily disenrolled from an MA–PD plan due to loss of Part B but who continue to be entitled to Part A have a SEP to enroll in a PDP. The SEP begins when the individual is advised of the loss of Part B and continues for two additional months. We agree with the commenter that this SEP should be codified; the fact that it was not included in the proposed rule was an oversight. In response to this comment, we will codify at § 423.38(c)(33) the SEP for Individuals Involuntarily Disenrolled from an MA–PD plan due to loss of Part B. In addition to comments received on specific SEPs and suggested SEPs, we also received the general comments discussed below. Comment: A commenter recommended that CMS codify its guidance from Chapter 2 of the Medicare Managed Care Manual (MMCM), section 30.4, that an organization is not required to contact an applicant to confirm SEP eligibility if the enrollment request includes the applicant’s attestation of SEP eligibility. The commenter stated that codifying this guidance would be particularly helpful in instances where the SEP is based on factual circumstances such as the beneficiary’s former plan is placed in receivership or has been consistently poor performing, and the beneficiary attestation is the easiest source of the information. Response: In codifying these SEPs, we focused on what the SEPs were and detailed the situations when they would be applicable. We did not include in the proposed rule the codification of subregulatory guidance regarding attestation of SEP eligibility. We believe that details concerning the operational processing of enrollment requests are better suited for sub-regulatory guidance where we are able to go into more detail and provide examples and context. As such, we are declining the commenter’s recommendation to codify guidance related to beneficiary attestations. Comment: A commenter urged CMS to also consider that some beneficiaries may experience financial or enrollment difficulties stemming from the COVID– 19 disruption. Concerned that some beneficiaries who have temporarily lost their Part B coverage for non-payment of premium may miss their opportunity to enroll through the open enrollment that ended in March 2020 due to staffing disruptions at local social security offices. PO 00000 Frm 00077 Fmt 4701 Sfmt 4700 33871 Response: We are aware that given the ongoing COVID–19 pandemic, stakeholders are looking for flexibilities for all aspects of Medicare enrollment and entitlement. However, it appears that the commenter is providing feedback regarding Medicare Part B enrollment and associated rules in 42 CFR part 407. We did not include in the proposed rule any new or revised regulations regarding Part B enrollment periods or loss of Part B coverage for non-payment of premium. We thank the commenter for their insights, but decline to address or modify any Part B enrollment rules given that they are outside the scope of this rulemaking. Comment: A commenter stated that CMS should clarify whether the effective date for certain SEPs should be the first of the month following when the request is made. The commenter referenced SEPs such as the SEP for Individuals Who Disenroll in Connection with a CMS Sanction, the SEP for Individuals in PACE or the SEP for Individuals Who Dropped a Medigap Policy When They Enrolled For the First Time in an MA Plan and Who are Still in a ‘‘Trial Period.’’ In addition, another commenter requested that we clarify the effective date for enrollment requests the organization receives from individuals eligible for the SEP for Individuals Whose Medicare Entitlement Determination Made Retroactively. As stated in the proposed rule, the effective date is the first day of the month following the MA organization’s receipt of the election, but cannot be earlier than the first day of the month in which the notice of the Medicare entitlement determination is received by the individual. The commenter recommends that CMS permit retroactive enrollment based on when the beneficiary receives the notice of entitlement. Response: We proposed to specify at §§ 422.68(d) and 423.40(c) that the effective date for elections made using SEPs described in §§ 422.62(b) and 423.38(c) is the first day of the calendar month following the month in which the election is made, unless otherwise noted. This applies to the SEP for Individuals Whose Medicare Entitlement Determination Made Retroactively as well, since it is not until an individual is notified of the Medicare entitlement determination that he or she, or an MA or Part D plan sponsor for that matter, would be aware of the determination and the Part A and/or Part B effective dates. We therefore disagree with the commenter that CMS should permit an enrollment to be retroactive to a date prior to when an individual received notification of E:\FR\FM\02JNR2.SGM 02JNR2 33872 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Medicare entitlement or prior to the date the individual requests enrollment in the plan. After considering the public comments, we are finalizing all MA SEPs as proposed, with the exception of the SEP for Individuals Affected by a FEMA-Declared Weather-Related Emergency or Major Disaster at § 422.68(b)(18), which will be renamed the SEP for Government Entity-Declared Disaster or Other Emergency. This paragraph is being revised to change the scope of the SEP so that it applies to FEMA-declared emergencies, as well as emergency declarations issued by a federal, state or local government entity. We are also specifying in this paragraph that the SEP will— • Start as of the date the declaration is made, the incident start date or, if different, the start date identified in the declaration, whichever is earlier; and • End 2 full calendar months following the end date identified in the declaration or, if different, the date the end of the incident is announced, whichever is later. In addition, we are adopting without modification the minor editorial changes in § 422.62(b) and (c) and the changes proposed at § 422.68 regarding effective dates of the SEPs. khammond on DSKJM1Z7X2PROD with RULES2 2. Part D Special Election Periods (§ 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: • SEP for Involuntary Loss of Creditable Prescription Drug Coverage. • SEP for Individuals Not Adequately Informed about Creditable Prescription Drug Coverage. • SEP for Enrollment/Non-enrollment in Part D due to an Error by a Federal Employee. • SEP for Dual- and Other LISEligible Individuals. • SEP for MA–PD enrollee using the MA SEP65. 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 MA program that have been codified for Part D include the following: • SEP for Non-renewals or Terminations. • SEP for Changes in Residence. • SEPs for Contract Violation. 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 § 423.38(c)(8)(ii). Pursuant to this authority, we have previously codified SEPs for the following circumstances: • SEP for Individuals Who Gain, Lose, or Have a Change in their Dual or LIS-Eligible Status. • SEP for CMS and State-Initiated Enrollments. CMS proposed to codify the following SEPs for exceptional circumstances, which are currently outlined in subregulatory guidance. Except as was noted in the proposed rule, our intent was to codify the current policy, and we solicited specific comment as to whether we overlooked any feature of the current policy that should be codified and if there were other exceptional circumstances we did not identify for which we should consider establishing a special election period. We also proposed to revise § 423.40(c) to clarify that for SEPs that are described in § 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 noted 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. The proposed Part D SEPs are summarized below. (Readers should refer to the proposed rule for more detail on these SEPs. SEP for Employer/Union Group Health Plan (EGHP) elections. At new § 423.38(c)(11), we proposed 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. SEP for Individuals Who Disenroll in Connection with a CMS Sanction. At new § 423.38(c)(12), we proposed to codify the SEP for individuals enrolled in a PDP offered by a Part D plan sponsor that is sanctioned by CMS. PO 00000 Frm 00078 Fmt 4701 Sfmt 4700 SEP for Individuals Enrolled in Cost Plans that are Non-renewing their Contracts. At new § 423.38(c)(13), we proposed to codify the SEP for individuals enrolled in cost plans that are non-renewing their contracts for the area in which the enrollee lives. SEP for Individuals in the Program of All-inclusive Care for the Elderly (PACE). At new § 423.38(c)(14), we proposed to codify the SEP allowing individuals to disenroll from a PDP at any time in order to enroll in PACE. SEP for Institutionalized Individuals. At new § 423.38(c)(15), we proposed to codify the SEP allowing individuals who move into, reside in, or move out of an institution, as defined at § 422.2, to enroll in or disenroll from a PDP. SEP for Individuals Who Enroll in Part B during the Part B General Enrollment Period (GEP). At new § 423.38(c)(16), we proposed 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. SEP for Individuals Who Belong to a Qualified SPAP or Who Lose SPAP Eligibility. At new § 423.38(c)(17), we proposed 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. SEP for Disenrollment from Part D to Enroll in or Maintain Other Creditable Coverage. At new § 423.38(c)(18), we proposed 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 § 423.56(b). SEP for Individuals Disenrolling from a Cost Plan who also had the Cost Plan Optional Supplemental Part D Benefit. At new § 423.38(c)(19), we proposed 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. SEP to Enroll in a PDP with a Star Rating of 5 Stars. At new § 423.38(c)(20), we proposed 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. SEP for Non-U.S. Citizens who become Lawfully Present. At § 423.38(c)(21), we proposed to codify the SEP for non-U.S. citizens who become lawfully present in the United States. SEP for Providing Individuals who Requested Materials in Accessible Formats Equal Time to Make Enrollment E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Decisions. At § 423.38(c)(22), we proposed 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. SEP for Individuals Affected by a FEMA-Declared Weather Related Emergency or Major Disaster. At § 423.38(c)(23), we proposed to codify 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. SEP for Individuals Enrolled in a Plan Placed in Receivership. We proposed to establish a new SEP, at new § 423.38(c)(31), for individuals enrolled in a Part D plan 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. SEP for Individuals Enrolled in a Plan that has been Identified by CMS as a Consistent Poor Performer. We proposed to establish a new SEP, at new § 423.38(c)(32), for individuals who are enrolled in plans identified with the low performing icon (LPI) in accordance with § 423.186(h)(1)(ii). SEP for Other Exceptional Circumstances. We proposed to retain the authority currently at § 423.38(c)(8)(ii) to create SEPs for individuals who meet other exceptional conditions established by CMS and move it to new § 423.38(c)(34). Also based on the Secretary’s authority to create SEPs for individuals who meet exceptional conditions, we proposed 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. We proposed to codify at new § 423.38(c)(24) a coordinating Part D SEP for individuals who disenrolled from their MA plan during their trial period (and have guaranteed issue rights). SEP for an Individual using the MA Open Enrollment Period for Institutionalized Individuals (OEPI) to Disenroll from a MA–PD plan. At new § 423.38(c)(25), we proposed to codify that an individual disenrolling from an MA–PD plan has a SEP to request enrollment in a PDP. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 Medicare Advantage Open Enrollment Period (MA OEP). At new § 423.38(c)(26), we proposed to codify that MA enrollees using the MA OEP would have a SEP to add or change Part D coverage. 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. At new § 423.38(c)(27), we proposed 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. SEP for Enrollment into a Chronic Care SNP and for Individuals Found Ineligible for a Chronic Care SNP. At proposed § 423.38(c)(28), we proposed 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. SEP for Individuals Using the 5-Star SEP to Enroll in a 5-Star Plan without Part D Coverage. At new § 423.38(c)(29), we proposed to codify that individuals who use the 5-star SEP we proposed to be codified at § 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. 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 proposed to codify at new § 423.38(c)(30) that MA enrollees using the ‘‘SEP for Significant Change in Provider Network’’ to disenroll from an MA plan (proposed at § 422.62(b)(23)) would be able to request enrollment in a PDP. The revisions we proposed 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 also proposed a few minor editorial changes in § 423.38(c), such as changing ‘‘3’’ to ‘‘three.’’ While most of the comments received on our SEP proposals related to SEPs that are applicable to both MA and Part D and, thus, were addressed above, we did receive one Part D-specific SEP comment. Comment: While commenting on the proposed SEPs, a few commenters requested that we revisit the changes to the dual SEP finalized in April 2018 (83 PO 00000 Frm 00079 Fmt 4701 Sfmt 4700 33873 FR 16514), when this SEP was changed from a monthly SEP to one that allows an individual to enroll in, or disenroll from, an MA plan once per calendar quarter during the first nine months of the year. A commenter stated that an ongoing SEP for dual eligible individuals to enroll in either a FIDE SNP or a HIDE SNP would provide greater choice and access to integrated care options. Other commenters believed these beneficiaries needed the flexibility to change their healthcare coverage at any time during the year and viewed the previous ongoing dual SEP as an important beneficiary protection. Response: As we noted in the April 2018 final rule, we understood that many commenters preferred an ongoing dual SEP, but we believed that adopting limitations was an appropriate step toward encouraging care coordination, achieving positive health outcomes, and discouraging extraneous beneficiary movement during the plan year. We were—and continue to be—mindful of the unique health care challenges that dual and other LIS-eligible beneficiaries may face. Under the revised rules, dual and other LIS-eligible beneficiaries continue to have additional flexibilities not afforded to other Part D-eligible beneficiaries and are able to make elections during the year. Given that our overall goals of improving administration of benefits and coordination of care have not changed, and we believe that continuity of enrollment helps us achieve these goals, we will not be revising the dual SEP at this time. After considering the public comments, we are finalizing all SEPs as proposed, with the exception of the following: • The SEP for Individuals Affected by a FEMA-Declared Weather-Related Emergency or Major Disaster at § 423.38(c)(23) will be renamed the SEP for Government Entity-Declared Disaster or Other Emergency. This paragraph is being revised to change the scope of the SEP so that it applies to FEMA-declared emergencies/disasters, as well as disaster or other emergency declarations issued by a federal, state or local government entity. We are also specifying in this paragraph that the SEP will— Æ Start as of the date the declaration is made, the incident start date or, if different, the start date identified in the declaration, whichever is earlier; and Æ End 2 full calendar months following the end date identified in the declaration or, if different, the date the end of the incident is announced, whichever is later. This 2 month period E:\FR\FM\02JNR2.SGM 02JNR2 33874 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations is consistent with other longstanding SEPs. • As discussed in the MA SEP section, at § 423.38(c)(33) we are codifying the SEP for Individuals Involuntarily Disenrolled from an MA– PD plan due to loss of Part B. This SEP is currently in subregulatory guidance, but was inadvertently omitted from the proposed rule. • We are designating the SEP for Other Exceptional Circumstances from proposed § 423.38(c)(33) to § 423.38(c)(34). In addition, we are adopting without modification the minor editorial changes in § 423.38(c) and the changes proposed at § 423.40 regarding effective dates of the SEPs. VI. Technical Changes khammond on DSKJM1Z7X2PROD with RULES2 A. Advance Notice and Announcement of Part D Risk Adjustment Factors (§ 423.329) The Part D statute, and the regulations implementing the statute, specify that we 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 § 423.329(b)(4)). We proposed to amend § 423.329(b)(4) to stipulate our intention to publish Part D risk adjustment factors using the process through which we would adopt, and announce the capitation rates and risk adjustment methodology for the MA program (section 1853(b)(1)(B) of the Act and § 422.312(a)(1)(ii)). 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. In the vein of the MMA, which added a new ‘‘Part D’’ to the Medicare statute (sections 1860D–1 through 42 of the Act), and 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 (section 1853(b)(1)(B) of the Act and § 422.312(a)(1)(ii)). This 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. This final rule codifies the current interpretation of the statutory requirement and will not VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 change how we propose and finalize the Part D risk adjustment model. We did not receive comments on this proposal and therefore are finalizing this provision without modification. B. Advance Notice and Announcement of Part C Annual Capitation Rate, Benchmarks, and Methodology Changes (§ 422.312) In the February 18, 2020 proposed rule, we proposed a technical change to align the timeframes identified in § 422.312(b)(1) and (2) with the current statutory text (section 1853(b) of the Act). Section 1853(b) of the Act specifies the process through which we propose, adopt, and announce changes in risk adjustment methodology and capitation rates for the MA program. 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, the Securing Fairness in Regulatory Timing Act of 2015 (Pub. L. 114–106) (SFRTA) amended section 1853(b) of the Act to require a 60-day advance notice period and a 30-day comment period. The regulation implementing the advance notice and comment period, as written, mirrors the statute’s original timeframe for issuance of the advance notice and requires only a 15-day comment period. While CMS adjusted operational practices to comply with current statutory requirements, we did not update the CFR provision. In this final rule, we update the advance notice of changes in methodology requirements at § 422.312(b)(1) and (2) by revising paragraph (b)(1) to refer to 60 days and paragraph (b)(2) to refer to 30 days, as stated in statute. Comment: A commenter supported the proposal to revise the timeframes to follow the current statute to provide a 60-day advance notice period and a 30day comment period. The commenter believes the 60-day timeframe allows more time for analysis and comment on methodology changes, including risk adjustment in MA. Response: We thank the commenter for their support. We are finalizing this provision as proposed without modification. VII. 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 PO 00000 Frm 00080 Fmt 4701 Sfmt 4700 1320.3(c) of the PRA’s implementing regulations, is submitted to the Office of Management and Budget (OMB) for review and approval. To fairly evaluate whether an information collection requirement should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. In our February 18, 2020, proposed rule (85 FR 9002), we solicited public comment on our proposed information collection requirements, burden estimates, and assumptions. We did not receive any such public comments as it pertains to the proposed information collection requirements, burden estimates, and assumptions that are being finalized in this rule. However, five changes were made to this section based on our further consideration of these issues: • We have added section VII.B.1. of this final rule specifically addressing information collection requirements regarding SSBCI. • Section VII.A. of this final rule reflects wage updates for 2019 as well as the differences between the 2019 and 2018 rates. The changes in Table 2 were then used to update the estimates for each of the provisions. • As discussed more fully in section VII.B.3. of this final rule regarding the impact of the ESRD provision, CMS expects a shortened enrollment form to be available starting in 2021. This enrollment form is expected to reduce the time burden for completing an enrollment form from 30 minutes to 20 minutes. This reduction affects the impacts of several provisions in this section. • As discussed in the next few paragraphs, and as further detailed in the provisions whose impact is estimated in this section, the implementation of certain provisions finalized in this rule will be delayed compared to the proposal. This has resulted in recalculations that are specific to several provisions and discussed as appropriate in the respective sections. • The implementation date for the contract limitation on existing D–SNP look-alikes finalized in § 422.514(d) has been delayed one year, as discussed in E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations section II.B of this final rule. As a result, we assume that the burden related to this provision will take place over the two years prior to the implementation rather than one year, as we assumed in the proposed rule. The details are provided later in this section. • This final rule does not finalize all provisions in the proposed rule. Given the need to focus our attention on more immediate regulatory actions, this final rule implements a subset of the provisions that were proposed in the February 2020 proposed rule. In this regard, we are limiting this rule to this set of provisions. The remaining proposals will be addressed in a separate final rule that we expect to publish later in 2020. Thus, the collection of information requirements are expected to be addressed as follows: • Rule Number 1: PRA-related Requirements/Burden Finalized in this Rule ++ Special Supplemental Benefits for the Chronically Ill (SSBCI) (§ 422.102) ++ Contracting Standards for Dual Eligible Special Needs Plan (D– SNP) Look-Alikes (§ 422.514) ++ Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110) ++ Medical Loss Ratio (MLR) (§ 422.2440) ++ Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62 and 423.38) • Rule Number 2: PRA-related Requirements to be Addressed Later in 2020 ++ Improvements to Care Management Requirements for Special Needs Plans (SNPs) (§ 422.101) ++ Mandatory Drug Management Programs (DMPs) (§ 423.153) ++ Beneficiaries with History of Opioid-Related Overdose Included in Drug Management Programs (DMPs) (§ 423.100) ++ Eligibility for Medication Therapy Management Programs (MTMPs) (§ 423.153) and Information on the Safe Disposal of Prescription Drugs ++ Beneficiaries’ Education on Opioid Risks and Alternative Treatments (§ 423.128) ++ Suspension of Pharmacy Payments Pending Investigations of Credible Allegations of Fraud and Program Integrity Transparency Measures (§§ 405.370, 422.500, 422.503, 423.4, 423.504, and 455.2) ++ Beneficiary Real Time Benefit 33875 Tool (RTBT) (§ 423.128) ++ Establishing Pharmacy Performance Measure Reporting Requirements (§ 423.514) ++ Service Delivery Request Processes under PACE (§§ 460.104 and 460.121) ++ Appeals Requirements under PACE (§§ 460.122 and 460.124) ++ Documenting and Tracking the Provision of Services under PACE (§ 460.98) ++ Documentation in Medical Records under PACE (§ 460.210) ++ PACE Participant Rights: Contact Information and Access Requirements (§ 460.112) ++ Stipulated Decisions in Part C (§ 422.562) A. Wage Data To derive average costs, we are using data from the U.S. Bureau of Labor Statistics’ (BLS’s) May 2019 National Occupational Employment and Wage Estimates for all salary estimates (https:// www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 1 presents the mean hourly wage, the cost of fringe benefits and overhead (calculated at 100 percent of salary), and the adjusted hourly wage. khammond on DSKJM1Z7X2PROD with RULES2 TABLE 1—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES Mean hourly wage ($/hr) Fringe benefits and overhead ($/hr) Adjusted hourly wage ($/hr) Occupation title Occupation code Actuaries .................................................................................. All Occupations [used for impact on enrollees filling out forms]. Business Operations Specialist, all others .............................. Compliance Officer .................................................................. Computer Programmers .......................................................... General Operations Manager .................................................. Health Technician, All Other ................................................... Office Support and Administrative Support ............................. Physician ................................................................................. 15–2011 ................................. 00–0000 ................................. 58.16 25.72 58.16 n/a 116.32 n/a 13–1198 13–1041 15–1251 11–1021 29–9098 43–9199 29–1216 38.57 35.03 44.53 59.15 28.17 18.41 96.85 38.57 35.03 44.53 59.15 28.17 18.41 96.85 77.14 70.06 89.06 118.30 56.34 36.82 193.70 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 ................................. ................................. ................................. ................................. ................................. ................................. ................................. Occupations (at $25.72/hr) since the group of individual respondents varies widely from working and nonworking individuals and by respondent age, location, years of employment, and educational attainment, etc. Unlike our private sector wage adjustment, we are not adjusting this figure for fringe benefits and overhead since the individuals’ activities will occur outside the scope of their employment. Revised Wage and Cost Estimates: While our proposed rule’s costs were based on BLS’s May 2018 wages, this PO 00000 Frm 00081 Fmt 4701 Sfmt 4700 final rule uses BLS’s May 2019 wages which are the most current as of the publication date of this rule. Changes to the adjusted wages represent shifts in average wages of occupations between 2018 and 2019 and are presented in Table 2. This table only contains wage estimates for occupations used in both the proposed rule and this final rule. However, provisions which were not estimated in the proposed rule but were estimated in the final rule require consideration of additional occupational titles beyond those in this table. E:\FR\FM\02JNR2.SGM 02JNR2 33876 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations TABLE 2—COMPARISON OF PROPOSED AND FINALIZED ADJUSTED HOURLY WAGES Occupation title Occupation code Actuaries ......................................................... All Occupations * ............................................. Business Operations Specialist, all others ..... Compliance Officer ......................................... Computer Programmers ................................. General Operations Manager ......................... Health Technician, All Other ........................... Office Support and Administrative Support .... Physician ......................................................... 15–2011 00–0000 13–1198 13–1041 15–1251 11–1021 29–9098 43–9199 29–1216 CMS–4190–P: May 2018 ($/hr) CMS–4190–F: May 2019 ($/hr) 111.78 24.98 74.00 69.72 86.14 119.12 50.90 36.04 202.86 116.32 25.72 77.14 70.06 89.06 118.30 56.34 36.82 193.70 ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... Difference ($/hr) +4.54 +0.74 +3.14 +0.34 +2.92 ¥0.82 +5.44 +0.78 ¥9.16 * Represents the mean hourly rate for individuals which, as explained above, is not adjusted for fringe benefits and overhead. B. Information Collection Requirements (ICRs) The following ICRs are listed in the order of appearance within the preamble (see sections II through VI) of this final rule. khammond on DSKJM1Z7X2PROD with RULES2 1. ICRs Regarding Special Supplemental Benefits for the Chronically Ill (SSBCI) (§ 422.102) As explained in section II.A. of this final rule, CMS is finalizing provisions for furnishing SSBCI. In section II.A. of this final rule, CMS adopts a regulation to implement section 1852(a)(3)(D) of the Act, which authorizes MA plans to furnish special supplemental benefits exclusively to chronically ill enrollees, as defined in the statute. SSBCI are currently allowed in 2020. In this final rule, we are finalizing four SSBCI provisions with paperwork burden. We are finalizing the proposed requirements at § 422.102(f)(3) requiring MA plans offering SSBCI to: (i) Develop written policies for determining enrollee eligibility and document the determination that an enrollee is a chronically ill enrollee based on the definition in statute and regulation; (ii) make information and documentation related to determining enrollee eligibility available to CMS upon request; (iii) have written policies based on objective criteria for determining a chronically ill enrollee’s eligibility to receive a particular SSBCI and document these criteria; and (iv) document each determination that an enrollee is eligible to receive an SSBCI and make this information available to CMS upon request. We address the collection of information in a reorganized fashion to address the functions that are required by the regulation as a whole rather than by how the regulation is structured and codified. We address these required MA organization functions and activities as follows: VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 In this final rule, we are finalizing four SSBCI provisions with paperwork burden. We are finalizing the proposed requirements at § 422.102(f)(3)(i) through (iv) requiring MA plans offering SSBCI to: (1) Have written policies for determining enrollee eligibility to be considered chronically ill and must have written policies based on objective criteria for determining a chronically ill enrollee’s eligibility to receive a particular SSBCI; (2) document in writing the criteria for determining enrollee eligibility for being considered chronically ill and must also document in writing the enrollee’s eligibility to receive a particular SSBCI; (3) Make information and documentation related to determining enrollee eligibility available upon request; (4) document each determination that an enrollee is eligible to receive an SSBCI, and make information concerning enrollee eligibility criteria available to CMS. In this section, we estimate the paperwork burden of each of these four functions required by the final regulation. The following changes will be submitted to OMB for approval under control number 0938–0763 (CMS–R– 262). a. Per § 422.102(f)(3)(i), plans must have written policies for determining enrollee eligibility to be considered chronically ill and, per paragraph (f)(3)(iii), must have written policies based on objective criteria for determining a chronically ill enrollee’s eligibility to receive a particular SSBCI. Since the authority to offer and cover SSCBI is already being implemented, we assume most MA organizations already have developed the required policies since it would be difficult to score the cost in their bids without having such policies. We similarly assume that most plans have internal written memos documenting these criteria and that they PO 00000 Frm 00082 Fmt 4701 Sfmt 4700 have updated their systems to record enrollee eligibility for SSBCI (since without such documentation they would have no way of knowing when to reimburse providers for furnishing SSBCI to enrollees). Therefore, this provision codifies existing practice. However, even though we expect that the policies have already been developed, we have inadvertently neglected to account for the requirement and burden in any of our collection of information requests. We are correcting this oversight via this proposed and final rulemaking activity. We estimate that it will take a team of one compliance officer (at $70.06/hr), one physician (at $193.70/hr), and one general operations manager (at $118.30/ hr) a total of 5 hours to develop the necessary policies. The team’s hourly cost is $382.06/hr ($70.06/hr + $193.70/ hr + $118.30/hr). In aggregate, the annual burden for 234 parent organizations is 1,170 hours (234 plans * 5 hrs) at a cost of $447,010 (1,170 hr * $382.06/hr) or $1,910 ($447,010/234) per organization. This is an annual requirement/burden since plan packages renew each year and the SSBCI criteria must therefore be reevaluated, including confirmation of existing criteria, each year. b. Per § 422.102(f)(3)(i), plans must also document in writing those criteria for determining enrollee eligibility for being considered chronically ill and, per § 422.102(f)(3)(iii), must also document in writing the enrollee’s eligibility to receive a particular SSBCI. We estimate it will take 2 hours at $56.34/hr for a health technician to document in writing the objective criteria for determining an enrollee’s eligibility to be considered chronically ill and to be eligible to receive a particular SSBCI. In aggregate, we estimate an annual burden of 468 hours (234 plans * 2 hr/plan) at a cost of $26,367 (468 hrs * $56.34/hr) or $113 per plan. E:\FR\FM\02JNR2.SGM 02JNR2 33877 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations This is an annual requirement/burden since documentation must be performed each contract year. c. Per § 422.102(f)(3)(iv), plans must also document each determination that an enrollee is eligible to receive an SSBCI and make this information available to CMS upon request. To date, MA organizations have only been able to include non-primarily health related SSBCI in the plan offerings since January 1, 2020, during one contract 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. Thus, our data is not indicative of future usage. To offer SSBCI, a plan must determine, as defined in legislation, that an enrollee is chronically ill and that the items or services furnished under the SSBCI have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. This determination would require a review of the enrollee’s health records (for example, diagnosis codes, frequency of hospitalizations, and doctor’s notes) as well as a determination and review by plan medical staff that the SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. Thus the process may be partially automated with the remainder of the process requiring medical review. We accordingly must account for three contributions to total impact: (1) Initial creation of software, annualized over 3 years: Initially, software will be created to collect basic data elements (claims, diagnoses, hospitalizations, drug utilization) for physician review. We expect a team of three professionals: A compliance officer would identify categories of eligible SSBCI, the physician would identify needed data elements for review, and the computer programmer would automate this part of the process. We expect a burden of 2,808 hours (234 parent organizations times 12 hours (8 hours for a programmer plus 2 hours for a compliance officer plus 2 hours for a physician)) at an annualized cost of $96,717 ((1⁄3) times 2808 hours times a team wage of $103.33/hr ([8 hours times $89.06 (computer programmer) + (2 hours times 70.06 (compliance officer) + (2 hours times $193.70 (physician))]/12). (2) Annual physician review of cases: We expect ongoing plan physician review in all years (including the first) to ascertain if the SSBCI is expected to have the desired impact on enrollees. We assume 3 hours of review per month per parent organization, resulting in 36 hours per parent organization per year. In aggregate, we expect a burden of 8,424 hours (234 parent organization times 36 hours per parent organization) at an annual burden of $1,631,729 (8,424 hours times $193.70/hr, physician wage). (3) Annual update of software: It would clearly be overly burdensome to review each SSBCI case. Thus as cases are reviewed, we expect the continual review of new cases to generate additional criteria that can be automated. We assume half the time for updates as for the initial first-year creation. We assume a burden of 1,170 hours (234 parent organizations times 5 hours (1 hour for a compliance officer plus 4 hours for a computer programmer) at a cost of $99,754 (1170 hours times a team wage of $85.26/hr ([4 hours times $89.06 (computer programmer) plus 1 hour times $70.06 (compliance officer)]/5). Table 3 summarizes all burdens connected with SSBCI. (4) Make information concerning enrollee eligibility criteria available to CMS. We are not requiring MA plans to report or submit this information on a regular or consistent basis to CMS. We do not intend to closely monitor or regularly request this documentation and reiterate that MA plans will have discretion in designing which items and services to offer as SSBCI and for which chronically ill enrollees to cover them, so long as the statutory and regulatory standards are met. CMS intends to use this authority to collect information as necessary for program oversight, such as if there are specific, consistent, and/or severe complaints that an MA plan is violating the rules set forth in § 422.102(f). Based on our experience with serious plan complaints, we anticipate requesting no more than 5 plans per year to complete this task. Consequently, since this provision is expected to affect less than 10 entities per year, it is exempt from paperwork burden (5 CFR 1320.3(c)(4)). Table 3 summarizes the various burdens associated with SSBCI. TABLE 3—SUMMARY OF BURDEN FOR SSBCI AT § 422.102 khammond on DSKJM1Z7X2PROD with RULES2 Time per response (hr) Regulatory citation OMB Control No. Subject SSBCI ......... 422.102(f)(3)(i) .. ........................ 234 1 12 2808 103.33 96,717 SSBCI ......... 422.102(f)(3)(i) .. ........................ 234 1 36 8424 193.7 1,631,729 SSBCI ......... 422.102(f)(3)(i) .. ........................ 234 1 5 1170 85.26 99,754 SSBCI ......... SSBCI ......... 422.102(f)(3)(ii) 422.102(f)(3)(iii) ........................ ........................ SSBCI: Criteria (Initial Software). SSBCI: Criteria (Physician review). SSBCI: Criteria (Software updates). Written criteria .............. Enrollee eligibility .......... 234 234 1 1 2 9 468 2106 56.34 86.95 26,367 179,465 ........................... ........................ ....................................... 234 .................... Varies 14,976 .................... 2,034,032 Total ..... 2. ICRs Regarding Contracting Standards for Dual Eligible Special Needs Plan (D– SNP) Look-Alikes (§ 422.514) The following changes will be submitted to OMB for approval under control numbers 0938–0753 (CMS–R– 267) and 0938–NEW (CMS–10718). The requirements under CMS–R–267 are associated with burden on MA plans VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 Number of respondents Total number of responses Provision identified as D–SNP look-alikes under § 422.514(d) and (e) (see section VII.B.1.a. of this final rule). The requirements under CMS–10718 are associated with burden on the enrollees in these MA plans (see section VII.B.1.b. of this final rule). We did not receive any comments on our proposed collection of information requirements and burden estimates; PO 00000 Frm 00083 Fmt 4701 Sfmt 4700 Total time (hr) Labor cost ($/hr) Annual cost ($) however, we are updating our proposed burden estimates to reflect the change in this final rule delaying the prohibition on the renewal of existing D–SNP lookalikes by one year. As indicated above in section VII.A. of this final rule, we have also revised our proposed cost figures based on more recent BLS wage estimates. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33878 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations As described in section II.B. of this final rule, we are establishing new contract requirements that we believe are necessary to fully implement federal D–SNP requirements, especially those related to Medicare-Medicaid integration codified at §§ 422.2, 422.107, and 422.629 through 422.634 pursuant to the BBA of 2018. We are finalizing a prohibition on CMS entering into a new contract for plan year 2022 and future years for any non-SNP MA plan that projects in its bid submitted under § 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. Additionally, we are finalizing a prohibition for plan year 2023 and future years on CMS renewing an existing contract for any non-SNP MA plan that an MA organization offers that 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 dually eligible enrollment threshold at § 422.514(d) will apply to any plan that is not a SNP as defined in § 422.2. We are applying this requirement only to non-SNP plans to allow for the disproportionate dually eligible enrollment that characterizes D– SNPs, institutional SNPs, and some chronic or disabling condition SNPs by virtue of the populations that the statute expressly permits each type of SNP to exclusively enroll. The requirement is also limited to states where there is a D– SNP or any other plan authorized by CMS to exclusively enroll dually eligible individuals, such as a MedicareMedicaid Plan (MMP). We are establishing this limitation because it is only in such states that the implementation of D–SNP requirements necessitates our 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 lookalike does not have any material impact on the full implementation of federal D– SNP requirements. The contract requirement based on the projected enrollment in the plan bid at § 422.514(d)(1) will prevent MA organizations from designing new D– SNP look-alikes. Under at § 422.514(d)(2), we will make the determination whether an MA organization has an existing non-SNP MA plan with actual enrollment VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 exceeding the established threshold using the enrollment in January of the current year. Using data from the most recently available contract year, the 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 19 states 53 where there are D–SNPs or comparable managed care plans and will be subject to § 422.514(d). These 62 plans projected a total enrollment of 180,758 for contract year 2020. MA organizations will likely nonrenew for plan year 2022 or 2023 those plans that exceed our criteria in § 422.514(d)(1) and (2). The MA organization has the opportunity to make an informed business decision to transition enrollees into another MA–PD plan (offered by it or by its parent organization) by: (1) Identifying, or applying and contracting for, a qualified MA–PD plan, including a D–SNP, in the same service area; or (2) creating a new D–SNP through the annual bid submission process. We expect the vast majority of D–SNP look-alike enrollees to be transitioned into a plan offered by the same parent organization as the D– SNP look-alike, and we expect in rare instances that the non-renewing plan may choose to not transition enrollees. The changes required of MA organizations based on this final rule impact D–SNP look-alikes (see section VII.B.1.a. of this final rule) and their enrollees (see section VII.B.1.b. of this final rule). While we cannot predict the actions of each affected MA organization with 100 percent certainty, we base our burden estimates on the current landscape of D–SNP look-alikes, the availability of D–SNPs or MA–PD plans under the same parent organization in the same service area, and the size and resources of the MA organization. a. MA Plan Requirements and Burden As indicated, the following 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. At § 422.514(e), we are finalizing a process for an MA organization with a D–SNP look-alike to transition individuals who are enrolled in its D– SNP look-alike to another MA–PD plan offered by the MA organization, or by 53 These 62 plans are located in Arizona, Arkansas, California, Hawaii, Idaho, Illinois, Indiana, Louisiana, Michigan, Mississippi, New Jersey, New Mexico, North Carolina, Ohio, Oregon, South Carolina, Tennessee, Utah, and Washington. PO 00000 Frm 00084 Fmt 4701 Sfmt 4700 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 this final rule, an MA organization with a non-SNP MA plan determined to meet the enrollment threshold in § 422.514(d)(2) could transition enrollees into another MA–PD 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 receiving MA–PD plan meets certain criteria specified in § 422.514(e)(1)(i)–(iv). The process finalized at § 422.514(e) allows, but does not require, the MA organization to transition dually eligible enrollees from D–SNP look-alikes into D–SNPs and other qualifying MA–PD plans for which the enrollees are eligible without the transitioned enrollees having to complete an election form. This transition process is conceptually similar with the proposed ‘‘crosswalk exception’’ procedures at § 422.530(a) and (b) as described in the proposed rule; however, this final rule allows the transition process to apply across contracts or legal entities and from nonSNP to SNPs provided that the receiving plan is otherwise be of the same plan type (for example, HMO or PPO) as the D–SNP look-alike. While the contract limitation for existing D–SNP look-alikes begins in the 2023 plan year, we intend for the transition process to take effect in time for D–SNP look-alikes operating in 2020 and 2021 to utilize the transition process for enrollments effective January 1, 2021 or January 1, 2022, respectively. Based on the current landscape for D–SNP look-alikes, we believe the vast majority of D–SNP lookalikes are able to move current enrollees into another MA–PD plan using the transition process we are finalizing in this rule. We expect many of these plans will choose to transition membership for the 2022 and 2023 plan years. Therefore, we are assuming the burden of the 62 plans transitioning enrollees will happen for half the plans in 2021 (for a 2022 effective date) and half the plans in 2022 (for a 2023 effective date). We estimate each plan will take a onetime amount of 2 hours at $77.14/hr for a business operations specialist to submit all enrollment changes to CMS necessary to complete the transition process. D–SNP look-alikes that transition enrollees into another nonSNP plan will take less time than D– SNP look-alikes that transition eligible beneficiaries into a D–SNP because they will not need to verify enrollees’ E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Medicaid eligibility. 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. The burden for MA organizations to transition enrollees to other MA–PD plans during the 2021 and 2022 plan years is 124 hours (62 D–SNP lookalikes * 2 hr/plan) at a cost of $9,565 (124 hr * $77.14/hr). We averaged this burden for the 62 plans over the 2021 and 2022 plan years, resulting in an annual burden of 62 hours (124 hr/2 yr) at a cost of $4,783 ($9,565/2 yr). The vast majority of MA organizations with existing D–SNP look-alikes also have an MA–PD plan with a premium of $0 or a D–SNP in the same service area as the D–SNP look-alike. Consequently, we do not believe many MA organizations will choose to create a new D–SNP as a result of this final rule. The prevalence of existing MA–PD plans and D–SNPs also makes it unlikely that an MA organization will need to expand a service area for an existing MA–PD plan or D–SNP. Therefore, we do not expect this provision to have further impact beyond the currently burden approved under control number 0938–0935 (CMS– 10237) for creating a new MA–PD plan or D–SNP and expanding a service area. As finalized in § 422.514(e)(2)(ii), the MA organization will be required to describe changes to MA–PD plan benefits and provide information about the MA–PD plan into which the individual is enrolled in the Annual Notice of Change (ANOC) that the MA organization must send, consistent with § 422.111(a), (d), and (e). Consistent with § 422.111(d)(2), enrollees will receive this 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 (AEP). As each MA plan must send out the ANOC to all enrollees annually, we do not estimate that MA organizations will incur additional burden for transitioned enrollees. The current burden for the ANOC is approved under control number 0938–1051 (CMS–10260). Additionally, we do not expect any plans will be required to send affected enrollees a written notice consistent with the non-renewal notice requirements at § 422.506(a)(2) and described at § 422.514(e)(4), as we anticipate all MA organizations with D– SNP look-alikes will be able to VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 transition their enrollees into another MA–PD plan (or plans). However, we are finalizing the requirement to ensure protection of enrollees if the situation does occur. In subsequent years (2023 and beyond), we estimate that at most five plans per year will be identified as D– SNP look-alikes under § 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 nonrenew and transition their membership into another MA–PD plan or a D–SNP. Therefore, the annual burden for the 2023 plan year and subsequent years is estimated at 10 hours (5 plans * 2 hr/ plan) at a cost of $771 (10 hr * $77.14/ hr) for a business operations specialist to transition enrollees into a new MA– PD plan. The average annual burden for MA plans over three years is 45 hours ([62 hr + 62 hr + 10 hr]/3 yr) at a cost of $3,446 ([$4,783 + $4,783 +$771]/3 yr). The impact is summarized in Table 4. b. MA Plan Enrollee Requirements and Burden The following changes will be submitted to OMB for approval under control number 0938–NEW (CMS– 10718). The control number for CMS– 10718 has yet to be issued. The status of OMB’s review/approval can be monitored at https://www.reginfo.gov/ public/do/PRAViewICR?ref_ nbr=202003-0938-002. Section 422.514(e)(2) allows any individual transitioned from a D–SNP look-alike to another MA–PD plan to stay in the MA–PD 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–PD plan or receiving services through the original Medicare fee-for-service program option and enrollment in a stand-alone Prescription Drug Plan (PDP). Because the enrollment transition process will be effective on January 1 and notices would be provided during the AEP, affected individuals have opportunities to make different plan selections through the AEP (prior to January 1) or the Medicare Advantage Open Enrollment Period (after January 1). Affected individuals may also qualify for a Special Election Period (SEP), such as the SEP for plan non-renewals at § 422.62(b)(1) or the SEP for dually PO 00000 Frm 00085 Fmt 4701 Sfmt 4700 33879 eligible/LIS beneficiaries at § 423.38(c)(4). Based on our experience 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 one percent of the 180,758 transitioning D–SNP look-alike enrollees will select a new plan or the original Medicare fee-for-service program and PDP option rather than accepting the transition into a different MA–PD plan or D–SNP under the same MA organization as the D–SNP lookalike in which they are currently enrolled. We estimate that 1,808 enrollees (180,758 transitioning D–SNP look-alike enrollees * 0.01), will opt out of the new plan into which the D–SNP look-alike transitioned them. Consistent with the burden estimates under the aforementioned control number, the enrollment process requires 20 minutes (0.3333 hours) and remains unchanged. For this final rule, the total added burden for enrollees will be 603 hours (1,808 enrollees * 0.3333 hr/response) at a cost of $15,509 (603 hr * $25.72/hr). We are averaging this burden over the 2021 and 2022 plan years, resulting in an annual burden of 302 hours (603 hr/ 2 yr) at a cost of $7,755 ($15,509/2 yr). As stated previously, we believe that in subsequent years (2023 and beyond), at most five plans will be identified as D–SNP look-alikes and therefore this final regulation would have a much smaller impact on MA enrollees after the initial period of implementation. Since the current 62 D–SNP look-alike plans have 180,758 enrollees in 62 plans, we estimate 14,577 enrollees (180,758 enrollees * 5/62 plans) in 5 plans. Therefore, the maximum number of enrollees affected per year is estimated to be 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 49 hours (146 enrollees * 0.3333 hr) at a cost of $1,260 (49 hr * $25.72/hr). The average annual enrollee burden over three years is therefore 218 hours ([302 hr + 302 hr + 49 hr]/3 yr) at a cost of $5,590 ([$7,755 + $7,755 + $1,260]/ 3yr). The estimates are summarized in Table 4. c. Burden Summary The burden for the provisions are summarized in Table 4. E:\FR\FM\02JNR2.SGM 02JNR2 33880 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations TABLE 4—SUMMARY OF BURDEN ESTIMATES FOR CONTRACT REQUIREMENTS AT § 422.514 OMB Control No. (CMS ID No.) 2021 2022 2023 3-year average Transition enrollees (§ 422.514(e)). Enrollment request (§ 422.514(e)). 0938–0753 (CMS–R– 267). 0938–NEW (CMS–10718) $4,783 (62 hr). $7,755 (302 hr). $4,783 (62 hr). $7,755 (302 hr). $771 (10 hr) $1,260 (49 hr). $3,446 (45 hr) $5,590 (218 hr) .......................................... .......................................... $12,538 (364 hr). $12,538 (364 hr. $2,031 (59 hr). $9,036 (263 hr) Respondents MA organization ................ Beneficiaries ..................... khammond on DSKJM1Z7X2PROD with RULES2 Total ........................... Subject 3. ICRs Regarding Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110) As discussed in section III.A. of this final rule, we are revising §§ 422.50(a)(2), 422.52(c), and 422.110(b) to allow ESRD beneficiaries, without any limitation not otherwise applicable for enrollment in the MA program to enroll in an MA plan. In estimating the impact of this provision, we are required to separately estimate impact on beneficiaries and plans. Enrollment processing and notification requirements codified at § 422.60, are not being revised as part of this rulemaking, and no new or additional information collection requirements are being imposed. Additionally, as explained in section VIII.D.1 of this final rule, OACT has already incorporated an increase in ESRD enrollment in the Medicare Trust Fund baseline due to the legislation. Therefore, there is no need to estimate plan burden. However, the burden to enrollees for completing enrollment forms has not been incorporated into the OACT baseline and therefore is estimated later in this section. We did not receive any public comments on our proposed requirements. In the proposed rule, beneficiary burden was estimated using the ‘‘long’’ enrollment form that is currently approved by OMB under control number 0938–0753 (CMS–R– 267). Based on internal review, in this final rule, the beneficiaries will instead, be completing a new, ‘‘shortened’’ form (OMB control number 0938–NEW (CMS–10718)) for enrollment into MA plans beginning with the 2020 AEP, for a January 1, 2021 effective date. The new ‘‘shortened’’ enrollment form, which is three pages in length, (compared to the current model form which is seven pages), limits the data collection to the minimum that is lawfully required to process the enrollment and other limited information that the sponsor is required to, or chooses to, provide to the beneficiary. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 As indicated in the beginning of this section, the shortened form has been subject to the standard non-rule PRA process (see 84 FR 63655 (November 18, 2019), 84 FR 64319 (November 21, 2019), and 85 FR 13163 (March 6, 2020)) and is currently under OMB review. In this final rule, we are correcting our proposed beneficiary burden estimates by considering the completion of the shortened enrollment form (CMS– 10718) in lieu of (CMS–R–267). As indicated in section VII.A. of this final rule, we have also revised our proposed cost figures based on more recent BLS wage estimates. To elect a MA plan, an individual must complete and sign an election form, complete another CMS-approved election method offered by the MA plan, or call 1–800–MEDICARE, and provide information required for enrollment. Regardless of the enrollment mechanism, similar identifying information is collected by the MA plan to process the enrollment. Although not effective until January 1, 2021, section 17006 of the Cures Act amends the Act by allowing ESRD beneficiaries, without any limitation not otherwise applicable for enrollment in the MA program, to enroll in an MA plan. The burden is associated with the effort for an ESRD beneficiary seeking to enroll in a MA plan 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 number of beneficiaries who are expected to initiate an enrollment action will increase. However, the erroneous per response time estimate of 30 minutes (0.5 hr) (CMS–R–267) that was set out in our proposed rule will decrease to 20 minutes (0.3333 hr) per response based on beneficiary completion of the new, shortened enrollment form (CMS–10718)). As detailed in section VIII.D.1. of this final rule, OACT estimates an average increase of 59,000 ESRD beneficiaries to enroll in MA plans per year in 2021 through 2023. Therefore, we expect an average annual burden of 19,665 hours PO 00000 Frm 00086 Fmt 4701 Sfmt 4700 (59,000 new ESRD enrollees * 0.3333 hr) at a cost of $505,784 (19,665 hr * $25.72/hr). 4. ICRs Regarding Medical Loss Ratio (MLR) (§ 422.2440) MSA Enrollment The anticipated 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. We did not receive any comments pertaining to our proposed requirements or burden estimates. However, based on internal review, we have updated our proposed time to complete the enrollment form and adjusted (increased) our enrollment figures to better reflect implementation in 2022– 2024. As indicated above in section VII.A. of this final rule, we have also revised our proposed cost figures based on more recent BLS wage estimates. As discussed in section IV.D.4. of this rule, we are finalizing our proposal to amend § 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 deductible factor would serve as a multiplier on the credibility factor. The application of the deductible factor would increase the MLRs of MSA contracts that receive this adjustment. We believe that the 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 because we expect more MA organizations to offer MA MSA plans based on this change in the MLR calculation. Consistent with the proposed rule, for this impact estimate, we assume the following: • Enrollment in MSAs will double over the first 3 years that the 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 E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations proposal. Our estimate is based on the largest potential change in enrollment that we could reasonably anticipate. We acknowledge that the change could have no impact on enrollment. • Relative to projections in the baseline, MSA enrollment will be 33.33 percent higher in contract year 2022 (increasing from 7,812 to 10,416), 66.67 percent higher in 2023 (increasing from 8,179 to 13,632), and 100 percent higher in contract year 2024 (increasing from 8,531 to 17,062) to contract year 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 whether 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 (or remain in) FFS Medicare if the proposal were not finalized. The cost burden of the provision is summarized in Table 5. khammond on DSKJM1Z7X2PROD with RULES2 a. Beneficiary Requirements and Burden For beneficiaries, the burden associated with the expected increase in MSA enrollment as a consequence of the addition of a deductible factor to the MSA MLR calculation is related to the effort it takes for a beneficiary to complete an enrollment request. It takes 0.5 hours at $25.72/hr for a beneficiary to complete an enrollment form. We assume no burden increase for the estimated 50 percent of additional MSA enrollees who would otherwise be enrolled in a non-MSA MA plan. For 2022, the burden for all beneficiaries is estimated at 434 hours (2,604/2 beneficiaries * 0.3333 hr) at a cost of $11,162 (651 hr * $25.72/hr). For 2023, the burden for all beneficiaries is estimated at 909 hours (5,453/2 beneficiaries * 0.3333 hr) at a cost of $23,379 (1,302 hr * $25.72/hr). For 2024, the burden for all beneficiaries is estimated at 1,422 hours (8,531/2 beneficiaries * 0.3333 hr) at a cost of $ $36,574 (1,422 hr * $25.72/hr). The average burden per year is 922 hours ([434 + 909 + 1422]/3) at a cost of $23,705 ([11,162 + 23,379 + 36,574]/ 3). VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 b. MA Organization Estimate There are currently four MA organizations offering MSA plans in 2020. We project that this number will double in 2022 as a result of the change. We therefore estimate that the change would result in approximately 2,604 total additional enrollments in MSAs in 2022, or 326 additional enrollments per organization (2,604 individuals/8 organizations); in 2023, 5,453 total additional enrollments in MSAs, or 682 additional enrollments per organization (5,453 individuals/8 organizations); and in 2024, and 8,531 total additional enrollments, or 1,066 additional enrollments per organization (8,531 individuals/8 organizations). An MA organization must give a 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 $77.14/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 2022, 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 22 hours (2,604/2 notices * 1 min/60) at a cost of $1,697 (22 hr * $77.14/hr) or $1.30 per notice ($1,697/1,302 notices) or $212 per organization ($1,697/8 MA organizations). For 2023, the burden to complete the notices for the half of new MSA enrollees who would otherwise enroll in FFS Medicare is approximately 45 hours (5,453/2 notices * 1 min/60) at a cost of $3,471 (45 hr * $77.14/hr) or $1.28 per notice ($3,471/2,727 notices) or $434 per organization ($3,471/8 MA organizations). For 2024, the burden is approximately 71 hours (8,531/2 notices * 1 min/60) at a cost of $5,477 (71 hr * $77.14/hr) or $1. 1.34 per notice ($5,470/4,090 notices) or $685 per organization ($5,246/8 MA organizations). The average burden per year is 46 hours ([22 hr + 45 hr + 71 hr]/3) at an average cost of $3,548 ([$1,697 + $3,471 + $5,477]/3). PO 00000 Frm 00087 Fmt 4701 Sfmt 4700 33881 The burden associated with electronic submission of enrollment information to CMS is estimated at 1 minute at $77.14/ hr for a business operations specialist to submit the enrollment information to CMS during the open enrollment period. For 2022, 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 22 hours (2,604/2 notices * 1 min/60) at a cost of $1,697 (22 hr * $77.14/hr) or $1.30 per notice ($1,697/1,302 notices) or $212 per organization ($1,697/8 MA organizations). For 2023, the burden to complete the notices for the half of new MSA enrollees who would otherwise enroll in FFS Medicare is approximately 45 hours (5,453/2 notices * 1 min/60) at a cost of $3,471 (45 hr * $77.14/hr) or $1.28 per notice ($3,471/2,727 notices) or $434 per organization ($3,471/8 MA organizations). For 2024, the burden is approximately 71 hours (8,531/2 notices * 1 min/60) at a cost of $5,477 (71 hr * $77.14/hr) or $1.33 per notice ($5,477/ 4,090 notices) or $685 per organization ($5,477/8 MA organizations). The average burden per year is 46 hours ([22 hr + 45 hr + 71 hr]/3) at an average cost of $3,548 ([$1,697 + $3,471 + $5,477]/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 $36.82/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 2022 of 109 hours (2,604/2 beneficiaries * 5 min/60) at a cost of approximately $4,013 (109 hr * $36.82/ hr) or $502 per organization ($4,013/8 MA organizations). For 2023, we estimate an aggregated annual burden of 227 hours (5,453/2 beneficiaries * 5 min/60) at a cost of approximately $8,358 (227 hr * $36.82/hr) or $1,634 per organization ($7,821/8 MA organizations). For 2024, we estimate an aggregated annual burden of 355 hours (8,531/2 beneficiaries * 5 min/60) at a cost of approximately $13,071 (355 hr * $36.82/hr) or $1,634 per organization ($13,071/8 MA organizations). The average burden per year is 230 hours ([109 hr + 227 hr + 355 hr]/3) at an average cost of $8,481 ([$4,013 + $8,358 + $13,071]/3). MLR Calculation The changes affecting the MLR calculation will be submitted to OMB for approval under control number 0938–1232 (CMS–10476). Subject to E:\FR\FM\02JNR2.SGM 02JNR2 33882 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations renewal, the control number is currently set to expire on December 31, 2021. We did not receive any public comments on our proposed requirements or burden estimates. We are finalizing the requirements as proposed. We are also finalizing the burden estimates, with the following revisions: (1) We updated our cost figures using more recent BLS wage estimates; (2) we reduced the hour burden for an enrollee to fill out an enrollment form; and (3) we adjusted the 3-year phase-in period for the anticipated enrollment changes from 2021 to 2023 in the proposed rule to 2022 to 2024 in this final rule. MA organizations will need to spend additional time calculating the MLRs for MSA contracts in order to apply the deductible factor. We estimate that for each of the 8 MA organizations that we anticipate will offer MSA contracts in 2022 and in each year through 2030, it will take an actuary approximately 5 minutes (0.0833 hr) at $116.32/hr to calculate the deductible factor for the contract. In aggregate, we estimate an annual burden of 0.6664 hours (0.0833 hr * 8 MA organizations) at a cost of $78 (0.6664 hr × $116.32/hr) or $10 per organization ($78/8 organizations). For 2022, we estimate a total burden for all MA organizations resulting from this provision to be 154 hours (22 hr + 22 hr + 109 hr + 0.6664 hr) at a cost of $7,485 ($1,697 + $1,697 + $4,013 + $78). Per organization, we estimate an annual burden of 19.3 hours (154 hr/8 MA organizations) at a cost of $935.63 ($7,485/8 organizations). For 2022, we estimate a total burden for all MA organizations resulting from this provision to be 154 hours (22 hr + 22 hr + 109 hr + 0.6664 hr) at a cost of $7,485 ($1,697 + $1,697 + $4,013 + $78). Per organization, we estimate an annual burden of 19.3 hours (154 hr/8 MA organizations) at a cost of $935.63 ($7,485/8 organizations). For 2023, we estimate a total burden for all MA organizations resulting from this provision to be 318 hours (45 hr + 45 hr + 227 hr + 0.6664 hr) at a cost of $15,378 ($3,471 + $3,471 + $8,358 + $78). Per organization, we estimate an annual burden of approximately 40 hours (318 hr/8 MA organizations) at a cost of $1,922.50 ($15,378/8 organizations). For 2024, we estimate a total burden for all MA organizations resulting from this provision to be 498 hours (71 hr + 71 hr + 355 hr + 0.6664 hr) at a cost of $24,103 ($5,477 + $5,477 + $13,071 + $78). Per organization, we estimate an annual burden of approximately 62 hours (498 hr/8 MA organizations) at a cost of $3,013 ($24,103/8 organizations). The burden for beneficiaries is a single burden for each year and has been estimated above. d. Summary The figures in Table 5 associated with beneficiaries’ enrollment requests, MA organizations providing beneficiaries with notice of acceptance or denial of the enrollment request, MA organizations’ submission of enrollment information to CMS, and MA organizations’ retention of a copy of the notice in beneficiaries’ records will be submitted to OMB for approval under control number 0938–0753 (CMS–R– 267). The figures associated with the calculation of the deductible factor for MA MSA contracts will be submitted to OMB for approval under control number 0938–1232 (CMS–10476). TABLE 5—IMPACT OF MSA/MLR BY SUBJECT Respondents Subject OMB Control No. (CMS ID No.) 2022 2023 2024 Beneficiaries ..................... Enrollment request .......... (§ 422.2440) .................... Notice to beneficiaries ..... (§ 422.2440) .................... Submission to CMS ........ (§ 422.2440) .................... Record retention .............. (§ 422.2440) .................... Calculation of deductible factor. (§ 422.2440) .................... 0938–0753 ...................... (CMS–R–267) ................. 0938–0753 ...................... (CMS–R–267) ................. 0938–0753 ...................... (CMS–R–267) ................. 0938–0753 ...................... (CMS–R–267) ................. 0938–1232 ...................... (CMS–10476) .................. $11,162 ...... (434 hr) ....... $1,697 ........ (22 hr) ......... $1,697 ........ (22 hr) ......... $4,013 ........ (109 hr) ....... $78 ............. (0.6664 hr) .. $23,379 ...... (909 hr) ....... $3,471 ........ (45 hr) ......... $3,471 ........ (45 hr) ......... $8,358 ........ (227 hr) ....... $78 ............. (0.6664 hr) .. $36,574 ...... (1,422 hr) .... $5,477 ........ (71 hr) ......... $5,477 ........ (71 hours) ... $13,071 ...... (355 hr) ....... $78 ............. (0.6664 hr) .. $23,705 (922 hr) $3,548 (46 hr) $3,548 (46 hrs) $8,481 (230 hr) $78 (0.6664 hr) .......................................... .......................................... $7,485 ........ (154 hr) $15,378 ...... (318 hr) $24,103 ...... (498 hr) $15,655 (322 hr) MA organizations .............. MA organizations .............. MA organizations .............. MA organizations .............. Total ........................... khammond on DSKJM1Z7X2PROD with RULES2 5. ICRs Regarding Special Election Periods (SEPs) for Exceptional Conditions (§§ 422.62 and 423.38) The following 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. As discussed in section V.B. of this final rule, we are finalizing all SEPs as proposed, with the exception of the SEP for Government Entity—Declared Disaster or Other Emergency at §§ 422.68(b)(18) and 423.38(c)(23), which we are finalizing, with modification. We are also codifying the SEP for Individuals Involuntarily VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 Disenrolled from an MA–PD plan due to loss of Part B, which was inadvertently omitted from the proposed rule. We did not receive any comments on our proposed requirements and are finalizing them without change. As indicated in section VII.A. of this final rule, we have revised our proposed cost figures based on more recent BLS wage estimates. We are not making any changes to our proposed time estimates. We are codifying certain Part C (at § 422.62(b)(4) through (25)) and Part D (at § 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 PO 00000 Frm 00088 Fmt 4701 Sfmt 4700 Average following. We are also establishing 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 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 changes would have any impact on the Medicare Trust Fund. MA organizations and Part D plan sponsors are currently assessing applicants’ eligibility for election E:\FR\FM\02JNR2.SGM 02JNR2 33883 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations periods as part of existing enrollment processes; therefore, no additional burden is anticipated from this change. However, because the burden 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. The following changes will be submitted to OMB for approval under control number 0938–0753 (CMS–R– 267). We estimate it would take 5 minutes (0.0833 hr) at $77.14/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 $10,992,219 (142,497 hr * $77.14/hr) or $60,731 per parent organization ($10,992,219/181 MA parent organizations). The following changes will be submitted to OMB for approval under control number 0938–0964 (CMS– 10141). 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 $12,000,207 (155,564 hr * $77.14/hr) or $226,419 per Part D parent organization ($12,000,207/53 Part D parent organizations). As discussed in section V.B. of this final rule, we are finalizing all SEPs as proposed, with the exception of the SEP for Government Entity—Declared Disaster or Other Emergency at §§ 422.68(b)(18) and 423.38(c)(23). We are also codifying the SEP for Individuals Involuntarily Disenrolled from an MA–PD plan due to loss of Part B, which was inadvertently omitted from the proposed rule. C. Summary of Information Collection Requirements and Associated Burden Estimate TABLE 6—ANNUAL INFORMATION COLLECTION REQUIREMENTS Provision Regulatory citation OMB Control No. Respondent type Response summary D–SNP LookAlikes. § 422.514(e) .... 0938– NEW. Enrollees ESRD ........... §§ 422.50 and 0938– 422.52. NEW. §§ 422.2420, 0938– 422.2440, 0753. and 422.2430. Enrollees Varies .. Enrollees SSCBI .......... Subtotal Enrollees. 422.102(f)(3)(i) D–SNP LookAlikes: Enrollment. ESRD: Enrollment. MSA MLR: Filling out enrollment forms. Varies .......... 0938– 0763. MA Plans SSCBI .......... 422.102(f)(3)(i) 0938– 0763. MA Plans SSCBI .......... 422.102(f)(3)(i) 0938– 0763. MA Plans SSCBI .......... 422.102(f)(3)(ii) MA Plans SSCBI .......... 422.102(f)(3)(iii) 0938– 0763. 0938– 0763. D–SNP LookAlikes. § 422.514 (e) ... 0938– 0753. MA Plans MSA MLR ..... §§ 422.2420, 422.2440, and 422.2430. §§ 422.2420, 422.2440, and 422.2430. §§ 422.2420, 422.2440, and 422.2430. §§ 422.2420, 422.2440, and 422.2430. 0938– 0753. MA Plans 0938– 0753. MA Plans 0938– 0753. MA Plans 0938– 1252. MA Plans § 422.62 ........... 0938– 0753. MA Plans MSA MLR ..... MSA MLR ..... MSA MLR ..... khammond on DSKJM1Z7X2PROD with RULES2 MSA MLR ..... Part C Election Period. VerDate Sep<11>2014 21:28 Jun 01, 2020 Enrollees MA Plans Jkt 250001 Total number of respondents Total number of responses Time per response (hr) Total annual time (hr) Labor cost ($/hr) Total annual cost ($) 1,954 1,954 0.3333 218 25.72 5,590 59,000 59,000 0.3333 19,665 25.72 505,784 16,588 16,588 0.3333 922 25.72 23,705 77,542 77,542 Varies 20,805 Varies 535,079 SSBCI: Criteria (initial software update). SSBCI: Criteria (Annual physician review). SSBCI: Criteria (Software updates). SSBCI: Documentation. SSBCI: Enrollee records. D–SNP LookAlikes: Transition. MSA MLR: Notify enrollees. MSA MLR: Submit to CMS. MSA MLR: Archive. 234 1 12 2,808 103.33 96,717 234 1 36 8,424 193.7 1,631,729 234 1 5 1,170 85.26 99,754 234 1 2 468 56.34 26,367 234 1 9 702 86.95 61,039 67 67 2 45 77.14 3,446 8 8 0.0167 46 77.14 3,548 8 8 0.0167 46 77.14 3,548 8 8 0.0833 230 36.82 8,481 MSA MLR: Calculation of the deductible factor. Part C Election Period: Determine eligibility. 8 8 0.0833 0.6664 116.32 78 181 1,710,650 0.0833 142,497 77.14 10,992,219 PO 00000 Frm 00089 Fmt 4701 Sfmt 4700 E:\FR\FM\02JNR2.SGM 02JNR2 33884 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations TABLE 6—ANNUAL INFORMATION COLLECTION REQUIREMENTS—Continued Provision Regulatory citation OMB Control No. Respondent type Part D Election Period. § 422.38 ........... 0938– 0964. Part D Plans. Subtotal MA Plans. Grand Total All Varies .. Varies .. khammond on DSKJM1Z7X2PROD with RULES2 Total number of responses Time per response (hr) Total annual time (hr) Labor cost ($/hr) Total annual cost ($) 53 1,867,519 0.0833 155,564 77.14 12,000,207 MA Plans 309 Varies Varies 312,001 Varies 24,927,133 Varies ..... Varies .......... 77,851 .................... .................... 332,806 .................... 25,462,212 A. Statement of Need This final rule implements a subset of the proposals from the proposed rule. We took a measured approach to review each provision proposed and focused finalizing in this first final rule those most helpful for bidding, those that address the COVID–19 pandemic and public health emergency, as well as those topics on which issuing a final rule now would advance the MA program. Summaries of the public comments that are within the scope of the provisions’ proposed regulatory impact analyses implemented in this final rule are included in this section with our responses under the appropriate headings. The provisions in this final rule implement specific provisions of the BBA of 2018 and the 21st Century Cures Act. The statutory need for these policies is clear. However, this rule also contains discretionary policies, hence we provide economic justification 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 changes that may impact a contract’s Star Rating: (1) We proposed to increase measure weights for patient experience/ complaints and access measures from two to four to further emphasize the patient voice, and (2) we proposed the use of Tukey outlier deletion, which is a standard statistical methodology for removing outliers, to increase the stability and predictability of the nonCAHPS measure cut points. The 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 00:36 Jun 02, 2020 Total number of respondents Part D Election Period: Determine eligibility. Varies .......... VIII. Regulatory Impact Analysis VerDate Sep<11>2014 Response summary Jkt 250001 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 after the first year since directly removing outliers results in a shift downward in ratings. The aggregate savings to the Medicare Trust Fund over 2024–2030 is $4.1 billion. B. Overall Impact We examined the impact of this final rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96– 354), 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). This rule, under Executive Order 12866, is economically significant with over $100 million in costs, benefits, or transfers annually. Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of Information and Regulatory Affairs designated this rule as a major rule as defined by 5 U.S.C. 804(2). A regulatory impact analysis must be made for major rules with economically significant effects ($100 million or more in any one year). We estimate that this final rule is economically significant as measured by the $100 million threshold and hence, it is also a major rule under the Congressional Review Act. Accordingly, we have prepared a regulatory impact analysis that to the best of our ability presents the costs and benefits of this rulemaking. Section 202 of UMRA also requires that agencies assess anticipated costs PO 00000 Frm 00090 Fmt 4701 Sfmt 4700 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 2020, that threshold is approximately $156 million. This final rule is not 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 final rule that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has federalism implications. Since this final 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 final 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). We expect that each organization will designate one person to review the rule. A reasonable maximal number is 2,000 total reviewers. We note that other assumptions are possible. Using the BLS wage information for medical and health service managers (code 11–9111), we estimate that the cost of reviewing this final rule is $110.74 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 final rule. For each entity that reviews the rule, the estimated cost is therefore $11,074 (100 hours * $110.74). Therefore, we estimate that the E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 maximum total cost of reviewing this final rule is $22 million ($11,074 * 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 $2.2 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 final rule. In accordance with the provisions of Executive Order 12866, this rule was reviewed by OMB. C. Impact on Small Businesses— Regulatory Flexibility Analysis (RFA) The RFA, as amended, requires agencies to analyze options for regulatory relief of small businesses if a rule has a significant economic 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 final rule has several provisions. Although some provisions are technical or codify existing guidance, and therefore are not expected to have economic impact beyond current operating expenses, there are other provisions with paperwork or other costs. These provisions are analyzed in both this section and in section VII of this final rule. A compact summary of burdens by year and provision are summarized in Tables 6 and 16 of this final rule. This rule has several affected stakeholders. They include (1) insurance companies, including the five types of Medicare health plans, MA organizations, PDPs, cost plans, Medical Savings Account plans (MSA), PACE organizations, and demonstration projects, (2) providers, including institutional providers, outpatient providers, clinical laboratories, and pharmacies, and (3) enrollees. Some descriptive data on these stakeholders are as follows: • Pharmacies and Drug Stores, NAICS 446110, have a $30 million threshold for ‘‘small size’’ with 88 percent of pharmacies, those with less than 20 employees, considered small. • Direct Health and Medical Insurance Carriers, NAICS 524114, have a $41.5 million threshold for ‘‘small VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 size,’’ with 75 percent of insurers having under 500 employees meeting the definition of small business. • Ambulatory Health Care Services, NAICS 621, including about 2 dozen sub-specialties, including Physician Offices, Dentists, Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic Imaging Centers, have a threshold ranging from $8 to $35 million (Dialysis Centers, NAICD 621492, have a $41.5 million threshold). Almost all firms are big, and this also applies to sub-specialties. For example, for Physician Offices, NAICS 621111, receipts for offices with under 9 employees exceed $34 million. • Hospitals, NAICS 622, including General Medical and Surgical Hospitals, Psychiatric and Substance Abuse Hospitals, and Specialty Hospitals have a $41.5 million threshold for small size, with half of the hospitals (those with between 20–500 employees) considered small. • Skilled Nursing Facilities (SNFs), NAICS 623110, have a $30 million threshold for small size, with half of the SNFs (those with under 100 employees) considered small. We are certifying that this final rule does not have a significant economic impact on a substantial number of small entities. To defend our position, we first describe at a high level the cash flows related to the Medicare program. We then provide more specific details. The high-level underlying idea in creating the MA, Medicare Cost-plan, and MA–PD Medicare health insurance programs, is to allow private insurers to coordinate care, resulting in efficiencies of cost. The high-level underlying idea in creating the non-governmentmanaged Prescription Drug program (PDPs and drug portion of MA–PDs) is to allow beneficiaries to obtain prescription drugs in a competitive market to reduce costs. For MA, MA–PD and Cost plans, enrollees obtain the same Original Medicare Part A and Part B services they would otherwise obtain in the original Medicare program, albeit at reduced cost (however, for the small percentage of plans bidding above the benchmark, enrollees pay more, but this percentage of plans is not ‘‘significant’’ as defined by the RFA and as justified below). The savings achieved by the MA and the MA–PD plans, the amount of reduced cost, can then be used by the private insurers in a variety of ways, including providing benefits supplemental to original Medicare. Some examples of these supplemental benefits include vision, dental, and hearing. The cost for furnishing these supplemental benefits comes from a PO 00000 Frm 00091 Fmt 4701 Sfmt 4700 33885 combination of the Trust Fund and enrollee premiums. Part D plans submit bids and are paid by the Medicare Trust Fund for their projected costs in the form of direct premium subsidy and reinsurance. For any enrolled low-income beneficiaries, they receive low-income premium subsidy and low-income cost-sharing subsidy in addition. The national average monthly bid amount, or NAMBA, determines the base premium. A plan’s premium is the sum of the base premium and the difference between its bid amount and the NAMBA. Thus the cost of providing services by these insurers is met by a variety of government funding and in some cases by enrollee premiums. In order to achieve these goals, the government pays the MA health plans a portion of the funds that would have been paid had plan enrollees remained in original Medicare. These funds are then used to provide additional benefits on behalf of the health plans’ enrollees. Thus, by the initial design of the Medicare health plan programs, the various insurance programs were not expected to suffer burden or losses since, in this very unique insurance relationship, the private companies are being supported by the government who, in turn, is saving money because health plans, by virtue of coordinating care, are furnishing the same services, albeit at reduced cost. This lack of expected burden applies to both large and small health plans. The unique MA regulations, such as those in this final rule, are defined so that small entities are not expected to incur additional burden since the cost of complying with any final rule is passed on to the government. We next examine in detail each of the stakeholders and explain how they can bear cost. (1) For Pharmacies and Drug Stores, NAICS 446110; (2) for Ambulatory Health Care Services, NAICS 621, including about two dozen sub-specialties, including Physician Offices, Dentists, Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic Imaging Centers, and Dialysis Centers, NAICD 621492; (3) for Hospitals, NAICS 622, including General Medical and Surgical Hospitals, Psychiatric and Substance Abuse Hospitals, and Specialty Hospitals; and (4) for SNFs, NAICS 623110: Each of these are providers (inpatient, outpatient, or pharmacy) that furnish plan-covered services to plan enrollees. Whether these providers are contracted or, in the case of PPOs, PFFS, and MSA, non-contracted with the MA plan, their aggregate payment for services is the sum of the enrollee cost sharing and E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33886 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations plan payments. For non-contracted providers, § 422.214 requires that a noncontracted provider accept payment that is least what they would have been paid had the services been furnished in a feefor-service setting. For contracted providers, § 422.520 requires that the payment is governed by a contract which the provider and plan mutually agree to. Consequently, for these providers, there is no additional cost burden above the already existing burden in original Medicare. For Direct Health and Medical Insurance Carriers, NAICS 524114, plans estimate their costs for the coming year and submit bids and proposed plan benefit packages. Upon approval, the plan commits to providing the proposed benefits, and CMS commits to paying the plan either (1) the full amount of the bid, if the bid is below the benchmark, which is a ceiling on bid payments annually calculated from original Medicare data; or (2) the benchmark, if the bid amount is greater than the benchmark. Theoretically, there is additional burden if plans bid above the benchmark. However, consistent with the RFA, the number of these plans is not substantial. Historically, only two percent of plans bid above the benchmark, and they contain roughly one percent of all plan enrollees. Since the CMS criteria for a substantial number of small entities is 3 to 5 percent, the number of plans bidding above the benchmark is not substantial. The preceding analysis shows that meeting the direct cost of this final rule does not have a significant economic impact on a substantial number of small entities, as required by the RFA. There are certain indirect consequences of these provisions which also create impact. We have already explained that 98 percent of the plans bid below the benchmark. Thus, their estimated costs for the coming year are fully paid by the government. However, the government additionally pays the plan a ‘‘beneficiary rebate’’ amount that is an amount equal to a percentage (between 50 and 70 percent depending on a plan’s quality rating) multiplied by the amount by which the benchmark exceeds the bid. The rebate is used to provide additional benefits to enrollees in the form of reduced cost sharing, lower Part B or Part D premiums, or supplemental benefits. (Supplemental benefits may also partially be paid by enrollee premiums if the plan choses to use premiums.) It would follow that if the provisions of this final rule cause the bid to increase and if the benchmark remains unchanged or increases by less than the bid does, the result would be VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 a reduced rebate and possibly fewer supplemental benefits for the health plans’ enrollees. However, supplemental benefits are only one approach to using the rebate. The experience of OACT at CMS is that from year to year plans prefer to reduce their administrative costs, including profit margins, rather than substantially change their benefit package. This is true due to marketing forces; a plan lowering supplemental benefits even one year may lose its enrollees to competing plans that offer these supplemental benefits. Thus, it is advantageous to the plan to temporarily reduce administrative costs, including margins, rather than reduce benefits. We note that we do not have definitive data on this. That is, we can at most note the way administrative costs and supplemental benefits vary from year to year. The thought processes behind the plan are not reported. More specifically, when supplemental benefits are reduced, we have no way of knowing the cause for this reduction, whether it be new provisions, market forces, or other causes.54 Based on the above, we certify that this final rule does not have a significant economic impact on a substantial number of small entities. Finally, we note that this rule has an impact on enrollees. While enrollees as a group do not constitute a ‘‘small business’’ as defined by the RFA, and hence the impact of this final rule on enrollees is not discussed in this section, throughout this final rule we have carefully noted the impact on enrollees. One major impact on enrollees as presented in section VII of this final rule is the estimated half hour burden at a cost of $13 per enrollee for filling out enrollment forms. While the aggregate amount for all enrollees is several million, the per enrollee burden is not significant. D. Anticipated Effects Some provisions of this final rule have negligible 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 VII of this final rule and in this Regulatory 54 https://www.ncbi.nlm.nih.gov/pmc/articles/ PMC3893317/. PO 00000 Frm 00092 Fmt 4701 Sfmt 4700 Impact Analysis. Where appropriate, when a group of provisions have both paperwork and non-paperwork impact, this Regulatory Impact Analysis crossreferences impacts from section VII of this final 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 experienced as a direct result of the statute. For further discussion of what is estimated in this Regulatory Impact Analysis, see Table 16 and the discussion afterwards. 1. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110) We are codifying requirements under section 17006 of the Cures Act that, effective for the plan year beginning January 1, 2021, would remove the prohibition on beneficiaries with ESRD enrolling in an MA plan. Since we are codifying existing statute, there is 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 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, with half of the beneficiaries (41,500) enrolling during 2021. Next, we determine the cost differential of the projected ESRD E:\FR\FM\02JNR2.SGM 02JNR2 33887 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 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 7 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 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 contract year 2021 to $440 million in contract year 2030. TABLE 7—ESTIMATED COST PER YEAR (MILLIONS) TO THE MEDICARE TRUST FUND FOR REMOVING THE PROHIBITION FOR ESRD BENEFICIARIES TO ENROLL IN MA PLANS Contract year khammond on DSKJM1Z7X2PROD with RULES2 Additional MA ESRD Enrollment: ............ USPCC Pt A FFS ($): ........................ USPCC Pt B FFS ($): ........................ USPCC FFS ($): ...... Coding Intensity (Annual) (%): .............. Coding Intensity (Composite) (%): .. Gross Cost ($ millions): .................... Net of Part B Premium (%): ............. Net Cost ($ millions): 2021 2022 2023 2025 2026 2027 2028 2029 2030 41,500 62,250 73,317 78,850 81,617 83,000 83,000 83,000 83,000 83,000 3,206 3,328 3,447 3,562 3,681 3,801 3,924 4,052 4,184 4,320 4,900 8,106 5,109 8,437 5,329 8,776 5,573 9,136 6,383 10,063 6,662 10,462 6,953 10,877 7,257 11,309 7,574 11,758 7,905 12,225 0.65 0.80 0.79 0.63 0.46 0.30 0.14 0.14 0.13 0.13 0.65 1.46 2.26 2.90 3.38 3.69 3.84 3.98 4.12 4.25 26 92 174 251 333 384 416 448 482 518 85.60 23 85.60 79 85.50 149 85.40 214 85.30 284 85.20 327 85.00 353 84.90 381 84.90 410 84.90 440 Because these increases are already included in the baseline, they are not included in Table 15, nor do they contribute to the monetized table calculations (Table 15). However, notes to Table 15 and observations in the conclusion do mention this impact. Comment: A commenter thanked CMS for sharing its projection of the magnitude of ESRD migration from Original Medicare to Medicare Advantage in 2021 and in future years; however, the commenter expressed several concerns with the methods and assumptions used. For example, the commenter requested CMS (i) produce a range of impacts, (ii) produce an alternative methodology based on adjustment to MOOP limits, and (iii–iv) reconsider certain assumptions about MLR and migration patterns. The commenter also asked if CMS, in considering migration patterns, took note that many ESRD retirees are already in EGWPs or that migration to MA plans will likely be higher in the under-65 ESRD population due to the lack of alternatives. Response: A range of impacts for the estimated costs to the Medicare Trust Funds for removing the prohibition for ESRD beneficiaries to enroll in MA VerDate Sep<11>2014 2024 21:28 Jun 01, 2020 Jkt 250001 plans is described in section VIII.E.1. of this final rule. CMS does not have the information readily available to produce an alternative adjustment to MOOPs; the proposal related to the MOOP limits for MA plans will be addressed in a future final rule. The cost to the plan sponsor of having a MOOP is captured as a supplemental benefit in the bid pricing. The plan sponsor bid pricing models and methodologies are proprietary health plan information and are not readily available to CMS. Furthermore, the MOOP for 2021 applies to all MA enrollees (ESRD and non-ESRD) and we do not believe it is reasonable to project alternative ESRD enrollment projections based on a MOOP that applies to all MA enrollees. We did consider the migration patterns for EGWP ESRD beneficiaries versus Individual ESRD beneficiaries. We surmised that the costs differences between EGWP and Individual ESRD coverages are not significant enough to display the migration patterns separately. Displaying projections at that coverage level would not provide further understanding of the financial projections since the cost differences are not too different. PO 00000 Frm 00093 Fmt 4701 Sfmt 4700 We did consider the migration patterns for younger versus older ESRD beneficiaries. In response to the commenter on page G24, we noted that the higher average age of the MA ESRD enrollee versus the lower average age of the FFS ESRD enrollee is a main reason that there are fewer kidney transplants in the MA population. Our expectation is that younger ESRD beneficiaries will begin to enroll in MA starting in 2021 and that the kidney transplant incidence rate for the two programs will begin to merge. After review and consideration of the comments, we are finalizing this provision without modification. 2. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney Acquisitions for Medicare Advantage (MA) Beneficiaries (§ 422.322) and Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) Benchmarks (§§ 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, we will codify these requirements so that, effective for the contract year beginning January 1, 2021, MA E:\FR\FM\02JNR2.SGM 02JNR2 33888 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations organizations will no longer be responsible for costs for organ acquisitions for kidney transplants for 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, Medicare FFS will cover the kidney acquisition costs for MA beneficiaries, effective 2021. Since the budget baseline has reflected this change from 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 15 or Table 14, 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. • The MA penetration rate for ESRD enrollees is lower than for the nonESRD 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. • 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 8, the FFS kidney transplant incidence rate has historically often been more than three times the MA rate. TABLE 8—MEDICARE FFS AND MA KIDNEY TRANSPLANTS (2013–2017) 2013 Number of Kidney Transplants FFS: ................................... ESRD Enrollment FFS (000’s): ............................................ Transplant Incidence FFS (%): ............................................ Number of Kidney Transplants MA: .................................... ESRD Enrollment MA (000’s): ............................................. Transplant Incidence MA (%): ............................................. 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 2014 13,964 385 3.6 929 69 1.3 2015 13,866 390 3.6 1,015 78 1.3 9. 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 2016 14,400 394 3.7 957 89 1.1 2017 15,191 401 3.8 1,137 96 1.2 15,346 402 3.8 1,382 108 1.3 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. TABLE 9—MEDICARE FFS AND MA KIDNEY TRANSPLANTS (2018–2030) 2018 khammond on DSKJM1Z7X2PROD with RULES2 Number of Kidney Transplants MA & FFS: ......................... Kidney Transplant Incidence FFS (%): ................................ Kidney Transplant Incidence MA (%): ................................. ESRD Enrollment FFS (000’s): ............................................ ESRD Enrollment MA (000’s): ............................................. Number of Kidney Transplants MA & FFS: ......................... Kidney Transplant Incidence FFS (%): ................................ Kidney Transplant Incidence MA (%): ................................. ESRD Enrollment FFS (000’s): ............................................ ESRD Enrollment MA (000’s): ............................................. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 PO 00000 Frm 00094 2019 2020 2021 2022 2023 17,230 3.9 1.4 401 120 17,747 4.0 1.4 401 131 18,279 4.0 1.4 408 137 18,828 4.2 1.6 373 186 19,392 4.3 1.8 358 213 19,974 4.4 2.0 353 231 2025 2026 2027 2028 2029 2030 21,191 4.3 2.4 354 250 21,826 4.2 2.6 358 256 22,481 4.2 2.8 364 261 23,155 4.1 3.0 369 266 23,850 4.1 3.2 374 270 24,566 4.0 3.4 379 274 Fmt 4701 Sfmt 4700 E:\FR\FM\02JNR2.SGM 02JNR2 2024 20,573 4.3 2.2 352 242 33889 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations Then we 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 10, 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 $981 million in 2030. TABLE 10—COSTS TO THE FFS PROGRAM FOR COVERING MA KIDNEY ACQUISITION COSTS 2021 Kidney Transplant Incidence MA (%): .............................. ESRD Enrollment .................. MA ......................................... (000’s): .................................. Avg Kidney Acq Costs .......... ($’s): ...................................... Gross Costs .......................... ($Millions): ............................. Avg Gov’t Share of Gross Savings (%): ...................... Net of Part B Premium (%): .. Net Costs ($Millions): ............ 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021– 2030 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 ................ 186 213 231 242 250 256 261 266 270 274 ................ 99,146 103,804 108,680 113,786 119,131 124,728 130,587 136,722 143,145 149,870 ................ 297.9 401.3 503.0 605.7 713.5 828.7 950.2 1,082.5 1,226.1 1,383.7 7,992.6 83.0 85.6 211.7 83.0 85.6 284.9 83.0 85.5 357.0 83.1 85.4 429.5 83.2 85.3 506.0 83.2 85.2 587.1 83.2 85.0 672.3 83.4 84.9 766.5 83.4 84.9 869.1 83.4 84.9 980.8 ................ ................ 5,664.9 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: • 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. • 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 11. The net savings due to excluding kidney acquisition costs from MA benchmarks is estimated to range from $594 million in 2021 to $1,346 million in 2030. TABLE 11—PER-YEAR CALCULATIONS, REPRESENTING THE PRE-STATUTE BASELINE BASED ON MEDICARE FFS COVERAGE OF KIDNEY ACQUISITION COST khammond on DSKJM1Z7X2PROD with RULES2 2013 Kidney Acq ............................ Costs ..................................... (PMPM): ................................ Kidney Acq Costs (PMPM): .. Medicare Advantage Enrollment Projection (000’s): .... Gross Savings ($Millions): .... VerDate Sep<11>2014 22:55 Jun 01, 2020 2014 2015 2016 2017 2018 2019 2020 1.72 1.82 1.95 2.08 2.20 2.34 2.49 2.65 ................ ................ ................ 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021– 2030 2.82 3.00 3.20 3.40 3.62 3.85 4.10 4.36 4.64 4.94 ................ 24,690 836.2 25,624 923.5 26,508 1,016.6 27,380 1,117.4 28,237 1,226.3 29,070 1,343.4 29,861 1,468.4 30,607 1,601.7 31,313 1,743.7 32,035 1,898.4 ................ 13,175.6 Sfmt 4700 E:\FR\FM\02JNR2.SGM Jkt 250001 PO 00000 Frm 00095 Fmt 4701 02JNR2 33890 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations TABLE 11—PER-YEAR CALCULATIONS, REPRESENTING THE PRE-STATUTE BASELINE BASED ON MEDICARE FFS COVERAGE OF KIDNEY ACQUISITION COST—Continued 2013 khammond on DSKJM1Z7X2PROD with RULES2 Average government share of Gross Savings (%): ........... Net of Part B Premium (%): .. Net Savings ($Millions): ........ 2014 83.0 85.6 594.1 83.0 85.6 655.7 Comment: A commenter expressed concern about the estimates in the regulatory impact analysis that concluded the net savings attributable to the exclusion of kidney acquisition costs from MA benchmarks exceed the net costs attributable to FFS coverage of kidney acquisition costs. The commenter also pointed to the Congressional Budget Office’s November 2016 cost estimate of the Cures Act, which reported no change in federal spending, to underscore the notion that the net savings estimated in the proposed rule were not intended by the change in law. Response: We thank the commenter for this feedback. Total MA kidney acquisition costs have historically been lower than total FFS kidney acquisition costs for two main reasons: (1) MA transplant incidence has been lower than FFS transplant incidence; and (2) MA ESRD enrollment (as a percent of total MA enrollment) has been lower than FFS ESRD enrollment (as a percent of total FFS enrollment). These factors result in a lower number of MA kidney transplants per capita versus FFS kidney transplants per capita. We expect savings from the exclusion of kidney acquisition costs from the MA benchmarks since MA plans have historically been reimbursed for these costs based on the higher rate of transplantation in FFS. We believe our impact analysis sufficiently outlined why the shift in responsibility from MA to FFS is not budget neutral. Comment: Some commenters requested that we explain why the estimates in the 2021 Advance Notice appear to diverge from the estimates included in the proposed rule. The commenters indicated that the FFS cost of kidney acquisition would be an estimated $2.82 PMPM while the Advance Notice indicated that the carve-out impact estimate would be $4 PMPM. Response: The Medicare FFS cost of kidney acquisitions estimate provided in the proposed rule is a national estimate of the impact on the Medicare Trust Funds. In contrast, the preliminary estimate provided in the calendar year 2021 Advance Notice represents a county-level average impact VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 2015 83.0 85.5 721.5 2016 83.1 85.4 792.3 2017 83.2 85.3 869.5 2018 83.2 85.2 951.7 2019 2020 83.2 85.0 1,038.9 83.4 84.9 1,134.1 of excluding kidney acquisition costs from FFS experience on the MA nonESRD county rates. Additionally, the estimates provided in the proposed rule and the Advance Notice were calculated using different trending assumptions and underlying data. The updated estimate of the impact figure that was provided in the calendar year 2021 Advance Notice is $3. Comment: A few commenters questioned the credibility of county level data in determining the kidney acquisition cost carve-out amounts and requested that CMS release the supporting data and analyses. A commenter specifically pointed to Tables 26 and 27 in the proposed rule, noting that there were approximately 75,000 kidney transplants paid by FFS during 2014–2018 (the data period used to compute the kidney acquisition carve-out amounts). The commenter expressed concern regarding the credibility of using 75,000 events to develop 3,225 county specific carve-out factors, and requested that the kidney acquisition cost factors be developed across broader geographic areas than counties in order to mitigate variability and potential credibility issues that may exist when forecasting county level carve-out amounts. Response: CMS provided a step-bystep description of the methodology for calculating the kidney acquisition costs to be excluded from the MA benchmarks on pages 25 and 26 of the calendar year 2021 Advance Notice.55 Consistent with the statutory requirement to exclude the cost of kidney acquisitions for organ transplants from the primary components of the MA capitation rates, CMS finalized the kidney acquisition carve-out methodology after considering all public comments received. Organ acquisition costs for transplants are paid on a reasonable cost basis, separately from the MS–DRG (Medicare Severity Diagnosis Related Group) payment. Hospitals are paid the estimated amount for these costs 55 The Advance Notice and Rate Announcement for each year are available online at: https:// www.cms.gov/Medicare/Health-Plans/Medicare AdvtgSpecRateStats/Announcements-andDocuments. PO 00000 Frm 00096 Fmt 4701 Sfmt 4700 83.4 84.9 1,235.9 83.4 84.9 1,345.6 ................ ................ 9,339.3 through interim biweekly payments throughout the year, referred to as ‘‘pass-through amounts’’ (pass-through amounts include other costs as well). For MA rate calculations to date, these FFS pass-through amounts are estimated and specifically added to the inpatient claim records to account for the eventual payment in the FFS program on a reasonable cost basis. The kidney acquisition costs included in the passthrough amounts are added to all discharges from kidney transplant centers by the county of the beneficiary’s residence. Since the number of these discharges greatly exceeds the number of transplants, there is sufficient data to calculate credible kidney carve out factors and there is no need to adjust for credibility. Kidney acquisition costs are not allocated by the number of transplants. Since the passthrough KAC amounts are calculated and included at the county level, the carve-out factors must be developed at the county level to be consistent. Comment: A commenter expressed concern about potential barriers to access to transplantation in MA, citing language in the proposed rule that stated that the transplant incidence rate for ESRD beneficiaries has historically been higher in FFS than in MA. Response: Our data indicated that MA ESRD enrollees have been in dialysis status for a shorter duration and are typically older than FFS ESRD enrollees. We have observed that in the Medicare program, the incidence of kidney transplants is typically inversely correlated with age; the younger the ESRD enrollee, the more likely that a kidney transplant will occur. Historically, MA enrollees are less likely than FFS enrollees to receive a kidney transplant since the average age of MA ESRD enrollees is higher than the average age of FFS ESRD enrollees. It is our interpretation of this data that on average, older ESRD enrollees are not as likely to be eligible for a kidney transplant due to other underlying health conditions that typically occur as these enrollees age. The 2020 Kidney Disease: Improving Global Outcomes (KDIGO) Clinical Practice Guideline on the Evaluation and Management of Candidates for Kidney Transplantation E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations outlines a comprehensive, evidencebased set of guidelines and recommendations designed to assist health care professionals assess suitability for candidacy for kidney transplantation. While clinicians are advised against excluding patients because of age alone, the guidelines recommend that they consider age in the context of other comorbidities, including frailty, which may affect outcomes. As MA enrollees have typically become eligible for Medicare due to age and disability and are, on average, older than FFS enrollees, MA ESRD enrollees may, on average, be more likely to have comorbidities that make them less suitable for kidney transplantation. As more ESRD beneficiaries enroll in MA plans, we anticipate that the profile of these beneficiaries will change and the difference in the transplant incidence rate for ESRD beneficiaries enrolled in MA and those in FFS will decrease. After careful consideration of all comments received, we are finalizing the exclusion of kidney acquisition costs from MA benchmarks and coverage under FFS Medicare as proposed. khammond on DSKJM1Z7X2PROD with RULES2 3. Reinsurance Exceptions (§ 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. Therefore, we are unable to quantitatively estimate the impacts of this provision. We solicited stakeholder comment on (i) how this provision may be used, (ii) likely costs and savings, and (iii) other related impacts. We received no comments on this regulatory impact analysis for this proposal and therefore are finalizing this provision without modification. 4. Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.166, 423.182, and 423.186) We proposed measure updates as well as the methodology changes (concerning outliers and the weight of patient experience/complaints and access measures). These measure updates are routine and do not have an impact on the highest ratings of contracts (that is, VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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. 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 final rule and without the final rule. There are two ways that our final rule could cause a contract’s Star Rating to change: (1) To increase measure weights for patient experience/complaints and access measures from two to four; and (2) 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 after the first year, 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 final rule. There are two ways that Star Ratings changes will impact the Medicare Trust Fund: • 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). • 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 final rule. The MA baseline is completed using a complicated, internal PO 00000 Frm 00097 Fmt 4701 Sfmt 4700 33891 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 the following: • 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 12. The last column of Table 12 presents net savings to the Medicare Trust Fund once both provisions are in place; in 2024 the costs are $345.1 million; the net savings will grow over time reaching $999.4 million by 2030. The first year only includes the implementation of the weight change, while future years include both the weight change and Tukey outlier deletion resulting in a change from the first year as a cost to the Medicare Trust Fund to a net savings in future years. The aggregate savings over 2024 to 2030 are $4.1 billion. Ordinary inflation is carved out of these estimates. The source for ordinary inflation is Table II.D.1. of the 2019 Medicare Trustees report. It should be noted that there are inflationary factors that are used in the projected Star Ratings and are used in these estimates. The Star Ratings are assumed to inflate at a higher rate for the lower rated contracts than for the higher rated contracts. MA organizations with low Star Ratings have a better chance of improving their quality ratings than MA organizations that have already achieved a high Star Rating. For instance, a contract with a Star Rating of 4.5 has less room to increase its Star Rating than a contract with a Star Rating of 3.0. There is a large projected reduction in the costs associated with the increase in the weight of measures classified as E:\FR\FM\02JNR2.SGM 02JNR2 33892 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations patient experience/complaints and access measures in 2029. This is due to several contracts that are projected to achieve a 4.0 Star Rating in 2029 and are eligible for the QBP at that time, even after this final rule is applied. This narrows the difference in costs between the final rule and the original baseline. impacts the 2023 Star Ratings which determines the MA QBPs for the 2024 contract year. Similarly, a change for the 2022 measurement year impacts the 2024 Star Ratings which determines the MA QBPs for the 2025 contract year. The impact on costs is not seen until 2024 for the increase in weights and 2025 for the Tukey outlier deletion since these policies are being implemented for the 2021 and 2022 measurement years (meaning performance periods), respectively. A change for the 2021 measurement year TABLE 12—CALCULATIONS OF NET SAVINGS PER YEAR TO THE MEDICARE TRUST FUND FOR STAR RATINGS UPDATES Calendar year Ordinary inflation (%) Increased cost (weight) in patient access and experience/complaints ($ millions) Increased cost (weight) in patient access and experience/complaints ($ millions) with ordinary inflation carved out Savings from Tukey outlier deletion ($ millions) Savings from Tukey outlier deletion ($ millions) with ordinary inflation carved out 2024 ......................................................... 2025 ......................................................... 2026 ......................................................... 2027 ......................................................... 2028 ......................................................... 2029 ......................................................... 2030 ......................................................... Totals with inflation carved out ......... 3.20 3.20 3.20 3.20 3.20 2.60 2.60 ........................ 391.4 305.4 296.1 343.4 301.1 93.9 95.7 ........................ 345.1 260.9 245.1 275.4 234.0 71.1 70.7 1502.3 0 935 1,029.00 1,110.50 1,296.50 1,356.90 1,449.20 ........................ 0.0 798.8 851.8 890.8 1007.7 1027.9 1070.0 5647.0 Net savings with ordinary inflation carved out ($ millions) –345.1 537.9 606.7 615.3 773.7 956.8 999.4 4144.6 khammond on DSKJM1Z7X2PROD with RULES2 Note: In all but the last column both costs and savings are expressed as positive numbers. Positive numbers in the last column indicate savings while negative numbers indicate net cost. We received the following comments on our estimates of cost impacts, and our responses follow. Comment: A couple of commenters wanted more information on the modeling related to the financial impacts. Response: The modeling is based on taking the difference of the MA baseline with the Star Ratings changes (Tukey outlier deletion and the weight increase for patient experience/complaints and access measures) and the original MA baseline which is described in the Medicare Trustees Report available at https://www.cms.gov/ResearchStatistics-Data-and-Systems/StatisticsTrends-and-Reports/ReportsTrust Funds/Downloads/TR2019.pdf. CMS assumptions related to enrollment and revenue growth are available in the Medicare Trustees Report. Some commenters referenced analyses that Wakely 56 conducted that suggested a higher impact for deletion of outliers. As we are implementing these changes on top of guardrails, which will already limit significant movements of cut points from year-to-year, we do not believe that the estimates should be higher than what was included in the notice of proposed rulemaking. 56 Wakely Consulting Group. Star Rating Variability of Patient Experience and Access Measures: Analyzing the Impact of Variable Star Rating Cut Points and Measure Level Results. March 2020. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 As many commenters noted, the COVID–19 public health emergency does create more uncertainly in terms of how performance and quality metrics will change following the pandemic. At this time there is too much uncertainty to revise these estimates to reflect the impact of the pandemic on quality measure scores. CMS will continue to monitor the impact for additional changes. Comment: A few commenters mentioned the analysis by Wakely referenced in the prior comment which suggests that CMS may have overestimated the weight impact on Star Ratings for plans. The report also found there is significant year-over-year volatility in average Star Ratings for patient experience/complaints and access measures, despite consistent trends in plan performance over time and that increasing the weight of these measures could impact the stability of the Star Ratings program. Response: The Wakely report claims that the volatility in cut points over time is primarily driven by the clustering methodology. CMS disagrees with this conclusion. The majority of measures included in the patient experience/ complaints and access categories do not use the clustering methodology. CAHPS measure Star Ratings are calculated using relative distribution and significance testing, per §§ 422.166(a)(3) and 423.186(a)(3). CMS has seen over time that changes in measure cut points PO 00000 Frm 00098 Fmt 4701 Sfmt 4700 are primarily driven by differences in the distribution of scores over time and changes in industry performance. It is also not clear whether Wakely took into consideration other changes to the Star Ratings methodology over time, including the retirement of the Part D appeals and BMI measures. In the proposed rule, CMS proposed outlier deletion using the Tukey outer fence outlier removal. The main objective of removing outliers is to stabilize cut points and prevent large year-to-year fluctuations in cut points. Even for skewed distributions, Tukey outlier removal works to stabilize cut points to avoid substantial year-to-year fluctuations in cut points that can be caused by extreme outliers. Comment: A couple of commenters questioned the budget estimates for the new policies. They mentioned the Wakely report noting that the report estimated that increasing the weights of patient experience/complaints and access measures in the 2023 Star Ratings would only increase MA plan payments by $83 million—nearly 5 times less than what CMS estimated. A commenter stated that when combined with the proposal to exclude outliers, more MA enrollees would be in plans negatively impacted than those who would see positive results. The commenter requested CMS to first provide more details on its methodology to allow plans to run similar simulations to better understand the impact of the E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations proposed change to the weighting for these measures and plan ratings Response: It is unclear to CMS how Wakely did their simulations. For example, it appears that Wakely did not understand that the CAHPS measures are not calculated using the clustering methodology, and consequently, Tukey outlier deletion would not be applied to that group of measures. CMS simulations were conducted assuming the implementation of guardrails which limits the fluctuation in cut points and assuming the retirement of the Part D appeals and BMI measures. Wakely stated they applied mean resampling and guardrails to the Star Rating cut points prior to applying Tukey outlier deletion; therefore, the estimated impact of Tukey outlier deletion does not include the impact of mean resampling and guardrails. We specifically proposed that prior to applying mean resampling with hierarchal clustering, Tukey outer fence outliers are removed and this is how CMS conducted the simulations. This may be causing some of the discrepancies. As described above, CMS estimated the change in the ratings of MA contracts and then modeled the cost impact using that information and 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 the USPCC growth rates, adjustment to MA risk scores, quality bonuses (county-specific), and phase-out of indirect medical education (countyspecific). After careful consideration of all comments received, and for the reasons set forth in our responses to the related comments summarized earlier, we are finalizing our impact analysis for the Star Ratings updates to include delayed implementation of Tukey outlier deletion by one year. khammond on DSKJM1Z7X2PROD with RULES2 5. Medical Loss Ratio (MLR) (§§ 422.2420, 422.2440, and 423.2440) Regulatory Changes to Incurred Claims (§ 422.2420) As discussed in section IV.D.2 of this final rule, we are finalizing our proposal to amend the regulation at § 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 (including under capitation contracts) for covered services for all enrollees under the contract. Prior to this regulatory change, § 422.2420(b)(2)(i) specified that incurred claims include direct claims that an MA organization pays to providers as defined in § 422.2 (including under capitation contracts with physicians) for covered services provided to all enrollees under the contract. We proposed this amendment so that incurred claims in the MLR numerator will include expenditures for certain supplemental benefits that MA organizations are newly authorized to offer to MA enrollees as a result of recent policy and legislative changes. As explained in greater detail in section II.A. of this final rule and sections II.A. and VI.F. of the proposed rule, recent subregulatory guidance and statutory changes have expanded the types of supplemental benefits that MA organizations may offer to enrollees. 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’ interpretation of ‘‘primarily health related benefits,’’ which is used as a criterion 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 amendments to § 422.2420(b)(2)(i) would not impact MA enrollee benefits. In other words, the analysis assumes the 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. The requirements pertaining to the calculation and reporting of MA contracts’ MLRs are presented in 42 CFR part 422, subpart X. MA organizations that do not meet the 85 percent minimum MLR requirement for a contract year are required to remit funds PO 00000 Frm 00099 Fmt 4701 Sfmt 4700 33893 to us (§ 422.2410(b)). We collect remittances by deducting the amounts owed from MA organizations’ monthly payments (§ 422.2470(c)). In the absence of statutory language directing us to return remitted funds to the Medicare Trust Fund, we transfer 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 MLRrelated 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 meet 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 the amendments to § 422.2420(b)(2)(i), which we are finalizing in this final rule, 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 amendments to § 422.2420(b)(2)(i) that we are finalizing, incurred claims would include amounts 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 § 422.2. We expect that this will cause some MA contracts which formerly would not have satisfied the 85 percent minimum MLR requirement 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, we anticipate that the amendments to § 422.2420(b)(2)(i) that we are finalizing will effectively result in a transfer of funds from the Treasury E:\FR\FM\02JNR2.SGM 02JNR2 33894 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations to the MA organizations through the Medicare Trust Fund. Amounts that MA organizations would remit and which the Treasury would receive under the regulations prior to their amendment by this final rule will instead remain with the MA organizations, implying that MA organizations will enjoy cost savings while the Treasury has a cost impact. The net impact on the Medicare Trust Fund is expected to be zero, since there will be no additional transfers from or to the Medicare Trust Fund; the only issue will be 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 amendments to § 422.2420(b)(2)(i) that we are finalizing, 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 amendments to § 422.2420(b)(2)(i), some types of supplemental benefits that MA organizations could offer starting in 2019 could potentially meet the requirements at § 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 our reinterpretation of the ‘‘primarily health related’’ definition, and the likelihood that some of these benefits would meet the requirements at § 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 § 422.2420(b)(2)(i), as defined prior to the amendment that we are finalizing in this final rule, or as QIA under § 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 13, which shows that for the first year of the finalized provision, 2021, there will effectively be a transfer from the Treasury through the Medicare Trust Fund of $35.3 million to MA organizations. (For computational transparency, the table also shows the amounts that would have been transferred to MA organizations for 2017—2020 if the change we are finalizing in this final rule had been in place in those years.) This transfer is in 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 under the finalized provision) 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. TABLE 13—TRANSFER OF REMITTANCES FROM THE TREASURY TO MA ORGANIZATIONS Medicare Advantage enrollment increase Average annual per capita increase % Ordinary inflation .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. .................................................................................................................................................. ........................ 7.7 6.7 5.0 3.6 3.8 3.5 3.3 3.1 3.0 2.7 2.5 2.3 2.0 ........................ 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 ........................ 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 2.6 2.6 25.8 28.4 31.0 33.3 35.3 37.5 39.7 41.9 44.2 46.5 48.8 51.1 53.8 56.4 Total 2021–2030 ........................................................................................................................ ........................ ........................ ........................ 455.2 khammond on DSKJM1Z7X2PROD with RULES2 Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 VerDate Sep<11>2014 22:55 Jun 01, 2020 Jkt 250001 PO 00000 Frm 00100 Fmt 4701 Sfmt 4700 E:\FR\FM\02JNR2.SGM 02JNR2 Net costs ($ millions) 33895 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations We received no comments on our impact analysis and are finalizing the proposal without modification. Deductible Factor for MA Medical Savings Account (MSA) Contracts (§ 422.2440) As discussed in section IV.D.4. of this final rule, we are finalizing our proposal to amend § 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 deductible factor will serve as a multiplier on the credibility factor. We are also finalizing our proposal to adopt and codify in new paragraph (g) of § 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 will 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. In section IV.D.4. of this final rule, we explain that we proposed 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 deductible factors would 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 uncertain 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 change to the MLR calculation for MA MSAs will be as low as $0 or as high as $40 million over 10 years (2021–2030). We do not anticipate that applying a deductible factor to the MLR calculation for MA MSA contracts will have an impact on remittances to the federal government. For contract years 2014– 2018 (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 deductible factor had applied to the MLR calculation for MA MSAs for contract years 2014–2018, 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 after the deductible factor is applied to the MLR calculation, starting in contract year 2021. We anticipate that new MA MSA contracts that MA organizations may choose to offer as a result of this regulatory 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 deductible factor. We believe that the cost impact of this regulatory 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 change to the MLR calculation. To develop the upper limit of the cost estimate for this impact analysis ($40 million over 10 years), we assumed that the change to the MLR calculation for MSAs would cause MA MSA enrollment to double over the first 3 years that the change is in effect. We estimated that, relative to previous enrollment projections that did not account for the amendments that we are finalizing in this final rule, this regulatory change MSA enrollment will be 33.33 percent higher in 2022, 66.67 percent higher in 2023, and 100 percent higher in 2024 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 did consider the migration patterns for EGWP ESRD beneficiaries versus Individual ESRD beneficiaries. We surmised that the costs differences between EGWP and Individual ESRD coverages are not significant enough to display the migration patterns separately. Displaying projections at that coverage level would not provide further understanding of the financial projections since the cost differences are not too different. Furthermore, EGWP plans have not submitted bids since 2017 and their payments are based on aggregated Individual bids so the cost differences would not be expected to be too different. We then determined the difference between the amount we pay for each MA MSA plan enrollee and the amount we pay for each enrollee in a non-MSA MA plan or FFS Medicare. We generally incur 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 nonMSA MA plans that bid under the benchmark, we retain between 30 percent and 50 percent of the amount by which the benchmark exceeds the bid. FFS spending per enrollee is approximately 100 percent of the amount we pay 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 14. This estimate takes into account the projected growth in MSA enrollment in the part C baseline projection supporting the MidSession 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. khammond on DSKJM1Z7X2PROD with RULES2 TABLE 14—ESTIMATED COST PER YEAR TO THE MEDICARE TRUST FUND FOR CHANGES TO MLR CALCULATION FOR MA MSA CONTRACTS Contract year 2021 Annual cost (millions) ............ Proposed Annual Increase in MA MSA Enrollment .......... VerDate Sep<11>2014 21:28 Jun 01, 2020 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021– 2030 $0.0 $1.2 $2.4 $4.0 $4.4 $4.8 $5.2 $5.6 $6.0 $6.4 $40.0 0 2,604 5,453 8,531 8,876 9,213 9,531 9,833 10,118 10,354 ................ Frm 00101 Fmt 4701 Jkt 250001 PO 00000 Sfmt 4700 E:\FR\FM\02JNR2.SGM 02JNR2 33896 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 We received no comments on our impact analysis and are finalizing the proposal without modification. 6. Medicare Advantage (MA) and Cost Plan Network Adequacy (§§ 417.416 and 422.116) Our final rule codifies the standards and methodology used currently, with some modifications, to evaluate network adequacy for MA plans and section 1876 cost plans; the final rule 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 final rule 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 PRAapproved 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 final rule 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 are finalizing three modifications to current network adequacy policy that may have qualitative impacts on MA organizations. In Micro, Rural, and CEAC county designation types, we are reducing the percentage of beneficiaries residing within maximum time and distance standards from 90 percent to 85 percent. We will allow for a 10percentage point credit towards the percentage of beneficiaries residing within maximum time and distance when MA organizations contract with one or more telehealth providers in the specialties of Dermatology, Psychiatry, Neurology, Otolaryngology, Cardiology, Ophthalmology, Allergy and Immunology, Nephrology, Primary Care, Gynecology/OB/GYN, Endocrinology, and Infectious Diseases. Similarly, MA organizations may receive a 10- VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 anticompetitive restrictions, if the laws 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 10percentage 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 PO 00000 Frm 00102 Fmt 4701 Sfmt 4700 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. We received no comments on the regulatory impact of this proposal, and therefore, we are finalizing this provision without modification. E. Alternatives Considered We intend to address the proposals that had Alternatives Considered sections from the February 2020 proposed rule in subsequent rulemaking. CMS did not develop Alternatives Considered sections for most of the provisions in this final rule as they generally are direct implementations of federal laws or codifications of existing policy for the Part C and D programs. In this section, CMS includes discussions of Alternatives Considered for the provisions to which they are applicable. 1. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries (§§ 422.50, 422.52, and 422.110) We have considered alternatives to estimated costs to the Medicare Trust Funds for removing the prohibition for ESRD beneficiaries to enroll in MA plans. Table 7 above displays the baseline scenario that 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, with half of the beneficiaries (41,500) enrolling during 2021. Table 7 shows the net cost to range from $23 million in CY 2021 to $440 million in CY 2030 which sums to $2.66 billion cost for those 10 years. The upper scenario uses the assumption that the entire ESRD enrollment increase in MA plans of 83,000 will occur in 2021. All other assumptions are expected to remain the same as those in the baseline. Under this upper scenario, net costs are expected to range from $45 million in CY 2021 to $440 million in CY2030 E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations which sums to $2.73 billion cost for the 10 year projection period. The lower scenario uses a slower ESRD enrollment increase assumption. Under this scenario, the ESRD enrollment will linearly increase from 8,300 in 2021 to 83,000 in 2030. All other assumptions are expected to remain the same as those in the baseline. Under this lower scenario, net costs are expected to range from $5 million in CY 2021 to $440 million in CY2030 which sums to $1.87 billion cost for the 10 year projection period. 2. Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.164, 422.166, 422.252, 423.182, 423.184, and 423.186) We have considered alternative methodologies for deleting outliers prior to clustering for determining cut points for non-CAHPS measures for the Star Ratings program. For example, we have considered trimming, which removes scores below and above a certain percentile. As stated in the NPRM, this methodology would remove scores regardless of whether they are true outliers; thus, this methodology would not meet the policy goal of removing outliers as well as the approach we proposed and might not have a negligible impact on the cost estimates. For the Tukey outlier deletion provision as described in section VIII.D.5. of this final rule, we considered which year it should begin. In the NPRM we proposed for it to begin for the 2021 measurement year, which impacts the 2023 Star Ratings and 2024 Quality Bonus Payment ratings. To provide more time for the healthcare delivery system to adapt to changes from the COVID–19 pandemic, we are finalizing a delay until the 2022 measurement year, which impacts the 2024 Star Ratings and the 2025 Quality Bonus Payment ratings. The cost impact of this change is $713 million (that is, this amount will not be saved from the Medicare Trust Fund in 2024). We have also considered alternatives to the doubling of the weight from 2 to 4 for patient experience/complaints measures and access measures for the Star Ratings program as described in section VIII.D.5. of this final rule. For example, we considered a weight increase to 3 or 5 for these measures. With a weight increase to 3, there are very small changes in the number of contracts that would increase their highest Star Rating, resulting in negligible impacts on Quality Bonus Payments and costs to the Medicare Trust Fund relative to a weight of 4. Similarly, if we were to increase the weight even further to 5, we anticipate even greater impacts on the Quality Bonus Payments and, consequently, costs to the Medicare Trust Fund. Finally, we considered delaying any weight increase given the uncertainty about how COVID–19 will impact the healthcare system; however, we decided to proceed to further emphasize the importance of patient experience/ complaints measures and access measures. 3. Medical Loss Ratio (MLR) (§§ 422.2420, 422.2440, and 423.2440) We considered finalizing the proposal to add a deductible factor to the MLR calculation for MA MSA contracts (section VIII.D.6. of this final rule) with an applicability date of January 1, 2022, rather than January 1, 2021, since this rule is not being finalized until after the deadline for MA organizations to apply to offer MSA plans in 2021. However, as discussed in greater detail in section IV.D.4. of this final rule, we believe that the credibility factors used to adjust the MLRs of low enrollment contracts do not adequately account for the impact of claims variability on the MLRs of high deductible MSA contracts. We therefore believe it is appropriate that we finalize 33897 the provision to add a deductible factor to the MLR calculation for MA MSA contracts with an applicability date of January 1, 2021, as this will allow the deductible factor to be applied when calculating the contract year 2021 MLRs for current MA MSA contracts. However, as no current MA MSA contract has failed to meet the minimum MLR requirement for a previous contract year, we do not anticipate that applying a deductible factor to those contracts’ contract year 2021 MLRs will have an impact on remittances. F. 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 15, we have prepared an accounting statement showing the savings, costs, and transfers associated with the provisions of this final rule for calendar years 2021 through 2030. Table 15 is based on Tables 16A, 16B, and 16C which lists savings, costs, and transfers by provision. Table 15 is expressed in millions of dollars with both costs and savings listed as positive numbers; aggregate impact is expressed as a negative number (cost versus savings). The sign of the transfers follow the convention of Table 16 with positive 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 impact of this rule is a cost of about $1.9 million per year. The raw aggregate cost over 10 years is $18.5 million. Due to transfers, there is net annualized reduced spending by government agencies (the Medicare Trust Fund and Treasury) of $290–$335 million. A breakdown of these savings from various perspectives may be found in Table 16. TABLE 15—ACCOUNTING TABLE khammond on DSKJM1Z7X2PROD with RULES2 (millions $) * Item Annualized at 7% Annualized at 3% Period Who is impacted Net Annualized Monetized Savings. (1.9) ................................... (1.9) ................................... Contract Years 2021–2030 Federal government, MA organizations and Part D Sponsors. Annualized Monetized Savings. Annualized Monetized Cost ........................................... ........................................... Contract Years 2021–2030 1.9 ..................................... 1.9 ..................................... Contract Years 2021–2030 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 PO 00000 Frm 00103 Fmt 4701 Sfmt 4700 E:\FR\FM\02JNR2.SGM 02JNR2 Federal government, MA organizations and Part D Sponsors. 33898 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations TABLE 15—ACCOUNTING TABLE—Continued (millions $) * Item Annualized at 7% Annualized at 3% Period Who is impacted Transfers ........................... (293.7) ............................... (334.5) ............................... Contract Years 2021–2030 Transfers between the 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 $421.99 and $447.65 savings at 7 percent and 3 percent respectively. Note: Negative numbers indicate a net reduction in dollar spending by the government. khammond on DSKJM1Z7X2PROD with RULES2 The following Table 16 summarizes savings, costs, and transfers by provision and forms a basis for the accounting table. For reasons of space, Table 16 is broken into Table 16A (2021 through 2024), Table 16B (2025 through VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 2028), and Table 16C (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 PO 00000 Frm 00104 Fmt 4701 Sfmt 4700 dollars spent; the aggregate row indicates savings less costs and does not include transfers. All numbers are in millions. Tables 16A, B, and C form the basis for Table 15. E:\FR\FM\02JNR2.SGM 02JNR2 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 PO 00000 Frm 00105 Fmt 4701 Sfmt 4725 E:\FR\FM\02JNR2.SGM 02JNR2 33899 ER02JN20.001</GPH> khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 33900 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations TABLE 16C—AGGREGATE SAVINGS, COST, AND TRANSFERS IN MILLIONS BY PROVISION AND YEAR FROM 2029 THROUGH 2030 AND RAW TOTALS khammond on DSKJM1Z7X2PROD with RULES2 Total Savings ............................ Total Costs ................................ Aggregate Total ......................... Total Transfers .......................... Health Plan Quality Rating system ......................................... Medical Loss Ratio Regulation MSA MLR .................................. SSBCI ........................................ 2029 Savings 2029 Cost 2029 Transfers 2030 Savings 2030 Costs 2030 Transfers Raw 10 year totals (savings) Raw 10 year totals (costs) Raw 10 year totals (transfers) .................... .................... (1.8) .................... .................... 1.8 .................... .................... .................... .................... .................... (900.0) .................... .................... (1.8) .................... .................... 1.8 .................... .................... .................... .................... .................... (939.8) .................... .................... (18.5) .................... .................... 18.5 .................... .................... .................... .................... .................... (3,669.4) .................... .................... .................... .................... .................... .................... .................... 1.8 (956.8) 53.8 3.0 .................... .................... .................... .................... .................... .................... .................... .................... 1.8 (999.4) 56.4 3.2 .................... .................... .................... .................... .................... .................... .................... .................... 18.5 (4,144.6) 455.2 20.0 .................... The following information supplements Table 16 and also identifies how impacts calculated in section VII of this final rule affect the calculations of this section and the tables. • Table 16 includes a row for the paperwork burden of the SSBCI provision, whose impact is about $1 million a year. • For the transfer rows, positive numbers indicate transfers that result in increased dollar spending by the government, while negative numbers indicate transfers that result in reduced dollar spending by the government. Costs are expressed as positive numbers; however, net savings are expressed as negative numbers to reflect that the net impact is a cost, not a savings. • For two provisions, Parts C and D SEPs, and ESRD enrollment, calculations of impact, either paperwork impact or Medicare Trust Fund impact, 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 16. Similarly, as explained the section VII, since the SSBCI paperwork burden is already being spent (similar to SEP), the burden is not included in the summary table. • Besides the enrollment burden for the SEP provision, there is an additional cost of $0.5 million arising from burden to beneficiaries for filling out enrollment forms in several provisions. These costs have been duly noted in section VII of this final rule but were not included in Table 16 since Table 16 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 VII of this final rule is $0.0 million and hence these amounts are not included in Table 16. VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 They are however included in Table 6 of section VII of this final rule. We received comments on impacts in certain individual provisions. These comments as well as our responses have been addressed in the appropriate provision sections above. However, none of these comments led to changes in impacts. Additionally, we did not receive any comments on the summary or monetized table and are therefore finalizing these numbers as is with appropriate adjustments for provisions not included in this first final rule. G. Conclusion As indicated in Table 16, while the SSBCI provision has a paperwork burden of about $1 million per year, the other provisions of this final rule are all classified as transfers because consumption of goods or usage of services is neither increased nor decreased. However, we note that the provisions of this part 1 of this final rule will reduce dollar spending of the government by about $300 million a year. The primary driver of this is the Tukey outlier provision. As indicated in Table 16, the government agencies have a net reduction in spending of $3.65 billion over 10 years. The driver of reduction is the use of the Tukey outlier deletion for Star Ratings after the first year of implementation. Other provisions also affect government spending: (1) The MLR provisions will reduce civil penalties to the Treasury by about 0.46 billion; (2) the MLA MSR provisions will cost the government an extra $40 million due to increased spending on benefits arising from expected increased MSA enrollment; (3) the increased weight in patient experience/complaints and access measures and Tukey outlier deletion in the health plan quality rating system (Star Ratings) will reduce Medicare Trust Fund spending by about $1.5 billion. PO 00000 Frm 00106 Fmt 4701 Sfmt 4700 H. Reducing Regulation and Controlling Regulatory Costs Executive Order 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017, and requires that the costs associated with significant new regulations ‘‘shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.’’ This rule has an aggregate cost of $1 million a year arising from paperwork burden associated with the SSBCI provision, and consequently, this rule is classified as a regulatory action for the purposes of Executive Order 13771. At a 7 percent rate, this rule is estimated to cost $1.2 million a year in 2016 dollars over an infinite horizon. List of Subjects 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. For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as set forth below: E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations PART 417—HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL PLANS, AND HEALTH CARE PREPAYMENT PLANS 1. The authority citation for part 417 continues 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. 2. Section 417.416 is amended by adding paragraph (e)(3) to read as follows: ■ * * * * * (e) * * * (3) The HMO or CMP must meet network adequacy standards specified in § 422.116 of this chapter. PART 422—MEDICARE ADVANTAGE PROGRAM 3. The authority citation for part 422 continues to read as follows: ■ Authority: 42 U.S.C. 1302 and 1395hh. 4. Section 422.3 is added to read as follows: ■ khammond on DSKJM1Z7X2PROD with RULES2 § 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 in either of the following ways— (1) The MA organization must retain risk for at least the first $10,000 in costs per individual enrollee for providing basic benefits during a contract year; or (2) If the MA organization uses insurance or makes other arrangements for sharing such costs proportionately on a per member per year first dollar basis, the MA organization must retain risk based on the following: (i) The actuarially equivalent value of the retained risk is greater than or equal to the value of risk retained in paragraph (a)(1) of this section. (ii) The MA organization makes a determination of actuarial equivalence based on reasonable actuarial methods. For example, a reasonable method for determining actuarial equivalence would be to equate the percentage of net claim costs that the MA organization would retain under paragraphs (a)(1) and (a)(2)(i) of this section. (b) In evaluating compliance with section 1855(b) of the Act and with paragraph (a) of this section, CMS will consider a parent organization and any of its subsidiaries to be part of the MA organization. (c) The type of payment arrangement used between an MA organization and 21:28 Jun 01, 2020 Jkt 250001 § 422.50 [Amended] 5. 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’’. ■ § 417.416 Qualifying condition: Furnishing of services. VerDate Sep<11>2014 contracting physicians, other health professionals or institutions for the financial risk specified in section 1855(b)(4) of the Act (that is, the financial risk on a prospective basis for the provision of basic benefit by those physicians or other health professionals or through those institutions) is not limited by paragraph (a) of this section. § 422.52 [Amended] 6. Section 422.52 is amended in paragraph (c) by removing the phrase ‘‘CMS may waive § 422.50(a)(2)’’ and adding in its place the phrase ‘‘For plan years beginning before January 1, 2021, CMS may waive § 422.50(a)(2)’’. ■ 7. Section 422.62 is amended by— ■ a. Revising paragraphs (b) introductory text and (b)(3) introductory text; ■ b. Redesignating paragraph (b)(4) as paragraph (b)(26); and ■ c. Adding a new paragraph (b)(4) and paragraphs (b)(5) through (25). The revisions and additions read as follows: ■ § 422.62 plan. Election of coverage under an MA * * * * * (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 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 PO 00000 Frm 00107 Fmt 4701 Sfmt 4700 33901 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 § 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 E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33902 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 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 PO 00000 Frm 00108 Fmt 4701 Sfmt 4700 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 an emergency or major disaster declared by a Federal, state or local government entity are eligible for a SEP to make a MA enrollment or disenrollment election. The SEP starts as of the date the declaration is made, the incident start date or, if different, the start date identified in the declaration, whichever is earlier, and ends 2 full calendar months following the end date identified in the declaration or, if different, the date the end of the incident is announced, whichever is later. The individual is eligible for this SEP provided the individual— (i)(A) Resides, or resided at the start of the SEP eligibility period described in this paragraph (b)(18), in an area for which a federal, state or local government entity has declared an emergency or major disaster; or (B) Does not reside in an affected area but relies on help making healthcare decisions from one or more individuals who reside in an affected area; and (ii) Was eligible for another election period at the time of the SEP eligibility period described in this paragraph (b)(18); and (iii) Did not make an election during that other election period due to the 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. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations (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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 § 422.166(h)(1)(ii). This SEP exists while the individual is enrolled in the low performing MA plan. * * * * * ■ 8. Section 422.68 is amended by revising paragraph (d) to read as follows: § 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 § 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. * * * * * ■ 10. Section 422.102 is amended by adding paragraph (f) to read as follows: § 422.102 Supplemental benefits. * * * * * (f) Special supplemental benefits for the chronically ill (SSBCI)—(1) PO 00000 Frm 00109 Fmt 4701 Sfmt 4700 33903 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 nonexhaustive 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 the standard in this paragraph (f)(1)(ii) may also include a benefit that is not primarily health related. (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 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 these criteria. (iv) Document each determination that an enrollee is eligible to receive an SSBCI and make this information available to CMS upon request. E:\FR\FM\02JNR2.SGM 02JNR2 33904 § 422.110 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations [Amended] 11. 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’’. ■ 12. Section 422.116 is added to read as follows: ■ khammond on DSKJM1Z7X2PROD with RULES2 § 422.116 Network adequacy. (a) General rules—(1) Access. (i) A network-based MA plan, as described in § 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 §§ 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. (ii) CMS does not require information, other than an attestation, regarding compliance with § 422.116 as part of an application for a new or expanding service area and will not deny application on the basis of an evaluation of the applicant’s network for the new or expanding service area. (2) Standards. An MA plan must meet maximum time and distance standards and contract with a specified minimum number of each provider and facilityspecialty type. (i) Each contract provider type must be within maximum time and distance of at least one beneficiary (in the MA Medicare Sample Census) 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) [Reserved] (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: VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 (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 facilityspecialty 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) Surgical Services (Outpatient or ASC). (vi) Skilled Nursing Facilities. PO 00000 Frm 00110 Fmt 4701 Sfmt 4700 (vii) Diagnostic Radiology. (viii) Mammography. (ix) Physical Therapy. (x) Occupational Therapy. (xi) Speech Therapy. (xii) Inpatient Psychiatric Facility Services. (xiii) Outpatient Infusion/ Chemotherapy. (3) Removal of a provider or facilityspecialty 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 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 E:\FR\FM\02JNR2.SGM 02JNR2 33905 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations (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. (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. 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. TABLE 1 TO PARAGRAPH (d)(2) Large metro Metro Provider/Facility type khammond on DSKJM1Z7X2PROD with RULES2 Max time Primary Care ......................... Allergy and Immunology ....... Cardiology ............................. Chiropractor ........................... Dermatology .......................... Endocrinology ........................ ENT/Otolaryngology .............. Gastroenterology ................... General Surgery .................... Gynecology, OB/GYN ........... Infectious Diseases ............... Nephrology ............................ Neurology .............................. Neurosurgery ......................... Oncology—Medical, Surgical Oncology—Radiation/Radiation Oncology ................... Ophthalmology ...................... Orthopedic Surgery ............... Physiatry, Rehabilitative Medicine ................................... Plastic Surgery ...................... Podiatry ................................. Psychiatry .............................. Pulmonology .......................... Rheumatology ....................... Urology .................................. Vascular Surgery ................... Cardiothoracic Surgery ......... Acute Inpatient Hospitals ...... Cardiac Surgery Program ..... Cardiac Catheterization Services .................................... Critical Care Services—Intensive Care Units (ICU) ........ Surgical Services (Outpatient or ASC) .............................. Skilled Nursing Facilities ....... Diagnostic Radiology ............ Mammography ...................... Physical Therapy ................... Occupational Therapy ........... Speech Therapy .................... Inpatient Psychiatric Facility Services ............................. Outpatient Infusion/Chemotherapy ............................... VerDate Sep<11>2014 23:00 Jun 01, 2020 Max distance Max time Micro Max distance Max time Rural Max distance Max time CEAC Max distance Max time Max distance 10 30 20 30 20 30 30 20 20 30 30 30 20 30 20 5 15 10 15 10 15 15 10 10 15 15 15 10 15 10 15 45 30 45 45 60 45 45 30 45 60 45 45 60 45 10 30 20 30 30 40 30 30 20 30 40 30 30 40 30 30 80 50 80 60 100 80 60 50 80 100 80 60 100 60 20 60 35 60 45 75 60 45 35 60 75 60 45 75 45 40 90 75 90 75 110 90 75 75 90 110 90 75 110 75 30 75 60 75 60 90 75 60 60 75 90 75 60 90 60 70 125 95 125 110 145 125 110 95 125 145 125 110 145 110 60 110 85 110 100 130 110 100 85 110 130 110 100 130 100 30 20 20 15 10 10 60 30 30 40 20 20 100 50 50 75 35 35 110 75 75 90 60 60 145 95 95 130 85 85 30 30 20 20 20 30 20 30 30 20 30 15 15 10 10 10 15 10 15 15 10 15 45 60 45 45 45 60 45 60 60 45 60 30 40 30 30 30 40 30 40 40 30 40 80 100 60 60 60 100 60 100 100 80 160 60 75 45 45 45 75 45 75 75 60 120 90 110 75 75 75 110 75 110 110 75 145 75 90 60 60 60 90 60 90 90 60 120 125 145 110 110 110 145 110 145 145 110 155 110 130 100 100 100 130 100 130 130 100 140 30 15 60 40 160 120 145 120 155 140 20 10 45 30 160 120 145 120 155 140 20 20 20 20 20 20 20 10 10 10 10 10 10 10 45 45 45 45 45 45 45 30 30 30 30 30 30 30 80 80 80 80 80 80 80 60 60 60 60 60 60 60 75 75 75 75 75 75 75 60 60 60 60 60 60 60 110 95 110 110 110 110 110 100 85 100 100 100 100 100 30 15 70 45 100 75 90 75 155 140 20 10 45 30 80 60 75 60 110 100 Jkt 250001 PO 00000 Frm 00111 Fmt 4701 Sfmt 4700 E:\FR\FM\02JNR2.SGM 02JNR2 33906 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations (3) By customization. When necessary due to utilization or supply patterns, 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 § 422.135, in its contracted networks for the following provider specialty types: (i) Dermatology. (ii) Psychiatry. (iii) Cardiology. (iv) Neurology. (v) Otolaryngology. (vi) Ophthalmology. (vii) Allergy and Immunology. (viii) Nephrology. (ix) Primary Care. (x) Gynecology/OB/GYN. (xi) Endocrinology. (xii) Infectious Diseases. (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 will 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, when necessary due to utilization or supply patterns, customize the base time and distance standards. (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: TABLE 2 TO PARAGRAPH (E)(3)(i)(C) khammond on DSKJM1Z7X2PROD with RULES2 Minimum ratio Large metro Primary Care ........................................................................ Allergy and Immunology ...................................................... Cardiology ............................................................................ Chiropractor ......................................................................... Dermatology ......................................................................... Endocrinology ...................................................................... ENT/Otolaryngology ............................................................. Gastroenterology .................................................................. General Surgery ................................................................... Gynecology, OB/GYN .......................................................... Infectious Diseases .............................................................. Nephrology ........................................................................... Neurology ............................................................................. Neurosurgery ....................................................................... Oncology—Medical, Surgical ............................................... Oncology—Radiation/Radiation Oncology ........................... Ophthalmology ..................................................................... Orthopedic Surgery .............................................................. Physiatry, Rehabilitative Medicine ....................................... Plastic Surgery ..................................................................... Podiatry ................................................................................ VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 PO 00000 Frm 00112 1.67 0.05 0.27 0.10 0.16 0.04 0.06 0.12 0.28 0.04 0.03 0.09 0.12 0.01 0.19 0.06 0.24 0.20 0.04 0.01 0.19 Fmt 4701 Sfmt 4700 Metro Micro 1.67 0.05 0.27 0.10 0.16 0.04 0.06 0.12 0.28 0.04 0.03 0.09 0.12 0.01 0.19 0.06 0.24 0.20 0.04 0.01 0.19 E:\FR\FM\02JNR2.SGM Rural 1.42 0.04 0.23 0.09 0.14 0.03 0.05 0.10 0.24 0.03 0.03 0.08 0.10 0.01 0.16 0.05 0.20 0.17 0.03 0.01 0.16 02JNR2 CEAC 1.42 0.04 0.23 0.09 0.14 0.03 0.05 0.10 0.24 0.03 0.03 0.08 0.10 0.01 0.16 0.05 0.20 0.17 0.03 0.01 0.16 1.42 0.04 0.23 0.09 0.14 0.03 0.05 0.10 0.24 0.03 0.03 0.08 0.10 0.01 0.16 0.05 0.20 0.17 0.03 0.01 0.16 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 33907 TABLE 2 TO PARAGRAPH (E)(3)(i)(C)—Continued Minimum ratio Large metro khammond on DSKJM1Z7X2PROD with RULES2 Psychiatry ............................................................................. Pulmonology ........................................................................ Rheumatology ...................................................................... Urology ................................................................................. Vascular Surgery ................................................................. Cardiothoracic Surgery ........................................................ Acute Inpatient Hospitals ..................................................... (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 number of 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 private-fee-for-service (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 regional preferred provider organization (RPPO), local preferred provider organization (LPPO), HMO, HMO/provider sponsored organization (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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 0.14 0.13 0.07 0.12 0.02 0.01 12.2 Metro Micro 0.14 0.13 0.07 0.12 0.02 0.01 12.2 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 § 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. ■ 13. Section 422.162 is amended in paragraph (a) by adding a definition for ‘‘Tukey outer fence outliers’’ in alphabetical order to read as follows: § 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 × (third quartile¥first quartile)) or above a certain point (third quartile + 3.0 × (third quartile¥first quartile)). * * * * * ■ 14. Section 422.166 is amended— ■ a. By revising paragraph (a)(2)(i); and ■ b. In paragraphs (e)(1)(iii) and (iv) by removing the phrase ‘‘weight of 2’’ and adding in its place ‘‘weight of 4’’. The revision reads as follows: § 422.166 Calculation of Star Ratings. (a) * * * (2) * * * (i) The method maximizes differences across the star categories and minimizes the differences within star categories PO 00000 Frm 00113 Fmt 4701 Sfmt 4700 Rural 0.12 0.11 0.06 0.10 0.02 0.01 12.2 CEAC 0.12 0.11 0.06 0.10 0.02 0.01 12.2 0.12 0.11 0.06 0.10 0.02 0.01 12.2 using mean resampling with the hierarchal clustering of the current year’s data. Effective for the Star Ratings issued in October 2022 and subsequent years, CMS will add 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. Effective for the Star Ratings issued in October 2023 and subsequent years, 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. * * * * * § 422.258 [Amended] 15. 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 ‘‘§ 422.306(c)’’ and adding in its place the reference ’’ § 422.306(c) and (d)’’. 165. Section 422.306 is amended— ■ a. In the introductory text by: ■ i. Removing ‘‘§§ 422.308(b) and 422.308(g)’’ and adding in its place ‘‘§ 422.308(b) and (g)’’; and ■ 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 ■ b. By adding paragraph (d). The addition reads as follows: ■ § 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 E:\FR\FM\02JNR2.SGM 02JNR2 33908 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations 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. § 422.312 [Amended] 17. Section 422.312 is amended— a. In paragraph (b)(1) by removing the phrase ‘‘45 days’’ and adding in its place the phrase ‘‘60 days’’; and ■ b. In paragraph (b)(2) by removing the phrase ‘‘15 days’’ and adding in its place the phrase ‘‘30 days’’. ■ 18. Section 422.322 is amended by adding paragraph (d) to read as follows: ■ ■ § 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. ■ 19. Section 422.514 is amended by— ■ a. Revising the section heading and the heading for paragraph (a). ■ b. Adding paragraphs (d), (e), and (f). The revisions and additions read as follows: khammond on DSKJM1Z7X2PROD with RULES2 § 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: (1) Enter into a contract under this subpart, for plan year 2022 and subsequent years, for a new MA plan that— (i) Is not a specialized MA plan for special needs individuals as defined in § 422.2; and (ii) Projects enrollment in its bid submitted under § 422.254 that 80 percent or more enrollees of the plan’s total enrollment are enrollees entitled to medical assistance under a state plan under title XIX. (2) Renew a contract under this subpart, for plan year 2023 and subsequent years, for an MA plan that— (i) Is not a specialized MA plan for special needs individuals as defined in § 422.2; and (ii) Has actual enrollment, as determined by CMS using the January VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 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 §§ 422.50 through 422.53 if the MA plan or plans receiving such enrollment— (i) Would not meet the criteria in paragraph (d)(2)(ii) 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 § 422.2); (ii) Is an MA–PD plan described at § 422.2; (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 § 423.780(a) of this chapter; and (iv) Is of the same plan type (for example, HMO or PPO) as the plan specified in paragraph (d)(2) of this section. (2) An MA organization may transition individuals under paragraph (e)(1) of this section without requiring the individual to file the election form under § 422.66(a) if— (i) The enrolled individual is eligible to enroll in the MA plan; and (ii) The MA–PD plan into which individuals are transitioned describes changes to MA–PD benefits and provides information about the MA–PD plan in the Annual Notice of Change, which must be sent consistent with § 422.111(a), (d), and (e). (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 PO 00000 Frm 00114 Fmt 4701 Sfmt 4700 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 a written notice to enrollees who are not transitioned, consistent with § 422.506(a)(2). (f) Special considerations. Actions taken pursuant to paragraph (d) of this section warrant special consideration to exempt affected MA organizations from the denial of an application for a new contract or service area expansion in accordance with §§ 422.502(b)(3) and (4), 422.503(b)(6) and (7), 422.506(a)(3) and (4), 422.508(c) and (d), and 422.512(e)(1) and (2). ■ 20. Section 422.2420 is amended by revising paragraph (b)(2)(i) to read as follows: § 422.2420 ratio. Calculation of the medical loss * * * * * (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. * * * * * ■ 21. Section 422.2440 is revised to read as follows: § 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 § 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 noncredible 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 E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 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 2 TO § 422.2440—DEDUCTIBLE sponsor that has been sanctioned by FACTORS FOR MA MSA CON- CMS and elects to disenroll from that plan in connection with the matter(s) TRACTS—Continued Weighted average deductible $5,000 ................................... ≥$10,000 ............................... Deductible factor 1.402 1.736 PART 423—VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT 22. The authority citation for part 423 continues to read as follows: ■ Authority: 42 U.S.C. 1302, 1306, 1395w– 101 through 1395w–152, and 1395hh. 23. Section 423.38 is amended by revising paragraph (c)(8) and adding paragraphs (c)(11) through (34) to read as follows: ■ § 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 any of 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. (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. * * * * TABLE 1 TO § 422.2440—BASE CREDI- * (11) The individual is making an BILITY FACTORS FOR MA CONenrollment request into or out of an TRACTS employer sponsored Part D plan, is Base credibility factor disenrolling from a Part D plan to take employer sponsored coverage of any Member months (additional percentage points) kind, or is disenrolling from employer sponsored coverage (including <2,400 ....................... N/A (Non-credible). Consolidated Omnibus Budget 2,400 ......................... 8.4%. Reconciliation Act (COBRA) coverage) 6,000 ......................... 5.3%. to elect a Part D plan. 12,000 ....................... 3.7%. (i) This special election period (SEP) 24,000 ....................... 2.6%. is available to individuals who have (or 60,000 ....................... 1.7%. are enrolling in) an employer or union 120,000 ..................... 1.2%. 180,000 ..................... 1.0%. sponsored Part D plan and ends 2 >180,000 ................... 0.0% (Fully credible). months after the month the employer or union coverage of any type ends. (ii) The individual may choose an TABLE 2 TO § 422.2440—DEDUCTIBLE effective date that is not earlier than the FACTORS FOR MA MSA CONTRACTS first of the month following the month in which the election is made and no Deductible Weighted average deductible later than up to 3 months after the factor month in which the election is made. (12) The individual is enrolled in a <$2,500 ................................. 1.000 $2,500 ................................... 1.164 Part D plan offered by a Part D plan VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 33909 * PO 00000 Frm 00115 Fmt 4701 Sfmt 4700 that gave rise to that sanction. (i) Consistent with the disclosure requirements at § 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 nonrenewing 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 Allinclusive 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. E:\FR\FM\02JNR2.SGM 02JNR2 khammond on DSKJM1Z7X2PROD with RULES2 33910 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations (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 5star 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 an emergency or major disaster declared by a federal, state or local government VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 entity are eligible for a SEP to make a Part D enrollment or disenrollment election. The SEP starts as of the date the declaration is made, the incident start date or, if different, the start date identified in the declaration, whichever is earlier, and ends 2 full calendar months following the end date identified in the declaration or, if different, the date the end of the incident is announced, whichever is later. The individual is eligible for this SEP provided the individual— (i)(A) Resides, or resided at the start of the SEP eligibility period described in this paragraph (c)(23), in an area for which a Federal, state or local government entity has declared an emergency or major disaster; or (B) Does not reside in an affected area but relies on help making healthcare decisions from one or more individuals who reside in an affected area; (ii) Was eligible for another election period at the time of SEP eligibility period described in this paragraph (c)(23); and (iii) Did not make an election during that other election period due to the emergency or major disaster. (24) The individual is using the SEP at § 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. PO 00000 Frm 00116 Fmt 4701 Sfmt 4700 (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 § 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 § 422.62(b)(15) of this chapter and continues for 2 additional months. (ii) [Reserved] (30) An individual who uses the SEP at § 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 § 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 § 423.186(h)(1)(ii). This SEP exists while E:\FR\FM\02JNR2.SGM 02JNR2 Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules and Regulations the individual is enrolled in the low performing Part D plan. (33) The individual was involuntarily disenrolled from an MA–PD plan due to loss of Part B but continues to be entitled to Part A. This SEP begins when the individual is advised of the loss of Part B and continues for 2 additional months. (34) The individual meets other exceptional circumstances as CMS may provide. * * * * * ■ 24. Section 423.40 is amended by revising paragraph (c) to read as follows: § 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 § 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. * * * * * ■ 25. Section 423.182 is amended in paragraph (a) by adding a definition for ‘‘Tukey outer fence outliers’’ in alphabetical order to read as follows: § 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 × (third quartile¥first quartile)) or above a certain point (third quartile + 3.0 × (third quartile¥first quartile)). * * * * * ■ 26. Section 423.186 is amended— ■ a. By revising paragraph (a)(2)(i); and ■ b. In paragraphs (e)(1)(iii) and (iv) by removing the phrase ‘‘weight of 2’’ and adding in its place ‘‘weight of 4’’. The revision reads as follows: § 423.186 Calculation of Star Ratings. khammond on DSKJM1Z7X2PROD with RULES2 (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 VerDate Sep<11>2014 21:28 Jun 01, 2020 Jkt 250001 year’s data. Effective for the Star Ratings issued in October 2022 and subsequent years, CMS will add 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 one year to the next. Effective for the Star Ratings issued in October 2023 and subsequent years, 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. * * * * * ■ 27. Section 423.329 is amended by revising paragraph (b)(4) to read as follows: § 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 § 422.312 of this chapter. * * * * * ■ 28. Section 423.2440 is revised to read as follows: § 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 PO 00000 Frm 00117 Fmt 4701 Sfmt 9990 33911 section, sanctions under § 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 noncredible 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 § 423.2440—CREDIBILITY ADJUSTMENTS FOR PART D CONTRACTS Member months Credibility adjustment (additional percentage points) <4,800 ....................... 4,800 ......................... 12,000 ....................... 24,000 ....................... 48,000 ....................... 120,000 ..................... 240,000 ..................... 360,000 ..................... >360,000 ................... N/A (Non-credible). 8.4%. 5.3%. 3.7%. 2.6%. 1.7%. 1.2%. 1.0%. 0.0% (Fully credible). Dated: May 7, 2020. Seema Verma, Administrator, Centers for Medicare & Medicaid Services. Dated: May 20, 2020. Alex M. Azar II, Secretary, Department of Health and Human Services. [FR Doc. 2020–11342 Filed 5–22–20; 8:45 am] BILLING CODE 4120–01–P E:\FR\FM\02JNR2.SGM 02JNR2

Agencies

[Federal Register Volume 85, Number 106 (Tuesday, June 2, 2020)]
[Rules and Regulations]
[Pages 33796-33911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11342]

[[Page 33795]]

Vol. 85

Tuesday,

No. 106

June 2, 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 417, 422, and 423

Medicare Program; Contract Year 2021 Policy and Technical Changes to
the Medicare Advantage Program; Final Rule

Federal Register / Vol. 85, No. 106 / Tuesday, June 2, 2020 / Rules
and Regulations

[[Page 33796]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 417, 422, and 423

[CMS-4190-F]
RIN 0938-AT97

Medicare Program; Contract Year 2021 Policy and Technical Changes
to the Medicare Advantage Program, Medicare Prescription Drug Benefit
Program, and Medicare Cost Plan Program

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

ACTION: Final rule.

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SUMMARY: This final rule will revise regulations for the Medicare
Advantage (MA or Part C) program, Medicare Prescription Drug Benefit
(Part D) program, and Medicare Cost Plan program to implement certain
sections of the Bipartisan Budget Act of 2018 and the 21st Century
Cures Act. In addition, it will enhance the Part C and D programs,
codify several existing CMS policies, and implement other technical
changes.

DATES: Effective Date: These regulations are effective August 3, 2020.
Applicability Dates: Except for Sec. Sec. 422.166(a)(2)(i),
423.186(a)(2)(i), and 422.514(d)(1) and (2), the provisions in this
rule are applicable beginning January 1, 2021. The changes to
Sec. Sec. 422.166(a)(2)(i) and 423.186(a)(2)(i) are applicable
beginning January 1, 2022. The provisions of Sec. 422.514(d)(1), are
applicable beginning January 1, 2022. The provisions of Sec.
422.514(d)(2) are applicable beginning January 1, 2023.

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.
Melissa Seeley, (212) 616-2329--D-SNP Issues.

SUPPLEMENTARY INFORMATION: CMS intends to address all of the remaining
proposals from the February 2020 proposed rule in subsequent
rulemaking. Therefore, CMS plans to make any provisions adopted in the
subsequent, second final rule, although effective on or before January
1, 2021, applicable no earlier than January 1, 2022. Notwithstanding
the foregoing, for proposals from the February 2020 proposed rule that
would codify statutory requirements that are already in effect, CMS
reminds readers and plan sponsors that the statutory provisions apply
and will continue to be enforced. Similarly, for the proposals from the
February 2020 proposed rule that would implement the statutory
requirements in sections 2007 and 2008 of the Substance Use-Disorder
Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for
Patients and Communities Act (hereinafter referred to as the SUPPORT
Act), CMS intends to implement these statutes consistent with their
effective provisions.

I. Executive Summary and Background

A. Executive Summary

1. Purpose
The primary purpose of this final 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 before the contract year 2021 MA plan bids (due by statute on
the first Monday in June):
The Bipartisan Budget Act of 2018 (hereinafter referred to
as the BBA of 2018)
The 21st Century Cures Act (hereinafter referred to as the
Cures Act)
The rule also includes a number of changes to strengthen and
improve the Part C and D programs, codifies in regulation several CMS
interpretive policies previously adopted through the annual Call Letter
and other guidance documents, and implements other technical changes.
We took a measured approach to review each provision proposed and
focused finalizing in this first final rule those most helpful for
bidding, those that address the Coronavirus Disease (COVID-19) pandemic
and public health emergency, as well as those topics on which issuing a
final rule now would advance the MA program.
While we intend to address the remaining proposals from the
February 18, 2020, proposed rule (85 FR 9002) not included in this
final rule in subsequent rulemaking, we are focusing in this final rule
on more immediate regulatory actions. CMS plans to make any provisions
adopted in the subsequent, second final rule, although effective on or
before January 1, 2021, applicable no earlier than January 1, 2022.
Notwithstanding the foregoing, for proposals from the February 2020
proposed rule that would codify statutory requirements that are already
in effect,\1\ CMS reminds readers and plan sponsors that the statutory
provisions apply and will continue to be enforced. Similarly, for the
proposals from the February 2020 proposed rule that would implement the
statutory requirements in sections 2007 and 2008 of the SUPPORT Act,
CMS intends to implement the statute consistent with its effective
provisions.
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\1\ These include the following BBA of 2018 provisions:
Improvements to Care Management Requirements for Special Needs Plans
(SNPs); Coverage Gap Discount Program Updates; and Part D Income
Related Monthly Adjustment Amount (IRMAA) Calculation Update for
Part D Premium Amounts.
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2. Summary of the Major Provisions
a. 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 codifying this
change with revisions to Sec. Sec. 422.50(a)(2), 422.52, and 422.110.
b. 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 coverage for organ acquisitions for kidney transplants from
the Medicare benefits an MA plan is required to cover for an MA
enrollee, 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

[[Page 33797]]

acquisitions for kidney transplants described in section
1852(a)(1)(B)(i) of the Act. We are finalizing changes to our
regulation at Sec. 422.322 in accordance with these new statutory
requirements.
c. Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA)
Benchmarks (Sec. Sec. 422.258 and 422.306)
Consistent with how 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 are finalizing changes to our
regulations at Sec. Sec. 422.258(d) and 422.306 in accordance with
these new statutory requirements.
d. Medicare Advantage (MA) and Part D Prescription Drug Program Quality
Rating System (Sec. Sec. 422.162, 422.166, 423.182, 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 (CMS-4182-F) (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 have stated 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, we are finalizing the increased weight of patient
experience/complaints and access measures from 2 to 4. We are also
finalizing our proposal to directly remove outliers prior to
calculating the cut points to further increase the predictability and
stability of the Star Ratings system, but we are delaying the
application of outlier deletion until the 2022 measurement year which
coincides with the 2024 Star Ratings produced in October 2023. We are
also finalizing removal of the Rheumatoid Arthritis Management measure.
Finally, we are finalizing the update to the Part D Statin Use in
Persons with Diabetes measure weighting category. Unless otherwise
stated, data will be collected and performance measured using these
rules and regulations for the 2021 measurement period and the 2023 Star
Ratings. The remaining Star Ratings provisions of the proposed rule
will be addressed later and, therefore, are not being finalized in this
rule. Those provisions include codifying additional existing rules for
calculating MA Quality Bonus Payments ratings, implementing updates to
the Health Outcomes Survey measures, adding new Part C measures,
clarifying the rules around consolidations when data are missing due to
data integrity concerns, modifying the extreme and uncontrollable
circumstance policy for multiple year-affected contracts and to clarify
rules when data are missing due to data integrity concerns, and
additional technical clarifications.
e. Medical Loss Ratio (MLR) (Sec. Sec. 422.2420, 422.2440, and
423.2440)
We are finalizing our proposal 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 (including under capitation contracts with physicians) for
covered services furnished to all enrollees under an MA contract. This
amendment will also 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 finalizing our proposal to codify in our 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
May 2013 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). 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 codify these
definitions and factors in the applicable regulations.
Additionally, we are finalizing our proposal to amend Sec.
422.2440 to provide for the application of a deductible factor to the
MLR calculation for MA medical savings account (MSA) contracts that
receive a credibility adjustment. The deductible factor serves as a
multiplier on the applicable credibility adjustment. This additional
adjustment for MA MSAs is appropriate because 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. This is the case because
high-deductible health plan enrollees' medical expenses must exceed a
higher threshold before the plan begins to incur claims costs that can
be included in the MLR numerator. The deductible factor reduces the
risk that an MSA contract will fail to meet the MLR requirement as a
result of random variations in claims experience. We are finalizing our
proposal to adopt the same deductible factors that apply under the
commercial MLR regulations at 45 CFR part 158.
f. Medicare Advantage (MA) and Cost Plan Network Adequacy (Sec. Sec.
417.416 and 422.116)
We are strengthening network adequacy rules for MA plans by
codifying our existing network adequacy methodology and finalizing
policies that address maximum time and distance standards in rural
areas, telehealth, and Certificate of Need (CON) laws. The
authorization of additional telehealth benefits pursuant to the BBA of
2018 incentivizes new ways for MA plans to cover beneficiary access to
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. In order to expand access to MA plans where
network development can be challenging, we are reducing 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) from 90
percent to 85 percent in order for an MA plan to comply with network
adequacy standards. Also, MA plans will be eligible to receive a 10-
percentage point 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, Neurology,
Ophthalmology, Allergy and Immunology, Nephrology, Primary Care,

[[Page 33798]]

Gynecology/OB/GYN, Endocrinology, and Infectious Diseases.
Additionally, MA organizations may also 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. We solicited comments from
stakeholders on various aspects of our proposal, which informed the
network adequacy methodology adopted in this final rule.
g. Special Election Periods (SEPs) for Exceptional Conditions
(Sec. Sec. 422.62, 422.68, 423.38, and 423.40)
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 codifying a
number of SEPs that we have adopted and implemented through
subregulatory guidance as exceptional circumstances SEPs. Codifying our
current policy for these SEPs provides transparency and stability to
the MA and Part D programs by ensuring that these SEPs are known and
changed only through additional rulemaking. Among the finalized SEPs
are the SEP for Government Entity-Declared Disaster or Other Emergency,
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 establishing 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.
3. Summary of Costs and Benefits

------------------------------------------------------------------------
Provision Description Impact
------------------------------------------------------------------------
Medicare Advantage (MA) Plan CMS is codifying To estimate the
Options for End-Stage Renal requirements under impact, we used a
Disease (ESRD) section 17006 of pre-statute
Beneficiaries (Sec. Sec. the Cures Act. baseline. The
422.50, 422.52, and Effective for the analysis shows that
422.110). plan year beginning removing the
January 1, 2021, prohibition for
CMS is removing the ESRD beneficiaries
prohibition on to enroll in MA
beneficiaries with plans results in
ESRD enrolling in net costs to the
an MA plan. Medicare Trust
Funds ranging from
$23 million in 2021
to $440 million in
2030.
Medicare Fee-for-Service CMS is codifying To estimate the
(FFS) Coverage of Costs for requirements under impact, we used a
Kidney Acquisitions for section 17006 of pre-statute
Medicare Advantage (MA) the Cures Act. baseline. This
Beneficiaries (Sec. Effective for the analysis shows that
422.322). plan year beginning FFS coverage of
January 1, 2021, kidney acquisition
CMS is finalizing costs for MA
that MA beneficiaries
organizations will results in net
no longer be costs to the
responsible for Medicare Trust
costs for organ Funds ranging from
acquisitions for $212 million in
kidney transplants 2021 to $981
for their million in 2030.
beneficiaries.
Instead, Medicare
FFS will cover the
kidney acquisition
costs for MA
beneficiaries,
effective 2021.
Exclusion of Kidney CMS is codifying To estimate the
Acquisition Costs from requirements under impact, we used a
Medicare Advantage (MA) section 17006 of pre-statute
Benchmarks (Sec. Sec. the Cures Act. baseline. This
422.258 and 422.306). Effective for the analysis shows that
plan year beginning excluding kidney
January 1, 2021, acquisition costs
CMS is removing from MA benchmarks
costs for organ results in net
acquisitions for savings estimated
kidney transplants to range from $594
from the million in 2021 to
calculation of MA $1,346 million in
benchmarks and 2030.
annual capitation
rates.
Medicare Advantage (MA) and CMS is finalizing an Updating the patient
Part D Prescription Drug increase in the experience/
Program Quality Rating weight of patient complaints and
System (Sec. Sec. experience/ access measures
422.162, 422.166, 423.182, complaints and weight creates a
and 423.186). access measures. cost which is
CMS is also offset after the
finalizing the use first year by using
of Tukey outlier the Tukey outlier
deletion, which is deletion. The net
a standard cost to the
statistical Medicare Trust Fund
methodology for from the increased
removing outliers, weight is $345.1
to increase the million in 2024;
stability and the net savings
predictability of from both the
the star measure increased weight
cut points. and Tukey outlier
However, the deletion will grow
application of over time reaching
Tukey outlier $999.4 million by
deletion will be 2030. The net
delayed until the reduction in
2024 Star Ratings. spending to the
Medicare Trust Fund
through and
including 2030 is
$4.1 billion.

[[Page 33799]]

Medical Loss Ratio (MLR) CMS is finalizing (1) Our change to
(Sec. Sec. 422.2420, our three proposed the type of
422.2440, and 423.2440). amendments to the expenditures that
Medicare MLR can be included in
regulations. (1) We ``incurred claims''
will allow MA will have neutral
organizations to dollar impact on
include in the MLR the Medicare Trust
numerator as Fund. These
``incurred claims'' provisions will
all amounts paid result in a
for covered transfer of funds
services, including from the Treasury,
amounts paid to through the
individuals or Medicare Trust
entities that do Fund, to MA
not meet the organizations. This
definition of transfer will take
``provider'' at the form of a
Sec. 422.2. (2) reduction in the
We also are remittance amounts
codifying our withheld from MA
definitions of capitated payments.
partial, full, and The amount of this
non-credibility and transfer is $35 to
credibility factors $55 million a year,
that CMS published resulting in plans
in the May 2013 obtaining $455
Medicare MLR final million over 10
rule (78 FR 31296) years.
for MA and Part D (2) Codifying the
MLRs. (3) We are definitions of
finalizing our partial, full, and
proposal to apply a non-credibility and
deductible factor the credibility
to the MLR factors is unlikely
calculation for MA to have any impact
MSA contracts on the Medicare
receiving a Trust Fund.
credibility (3) The deductible
adjustment. The factor to the MLR
deductible factor, calculation for MA
which functions as MSA contracts is
a multiplier on the estimated to result
credibility in a gradually
adjustment factor, increasing cost to
is calibrated so the Medicare Trust
that the Fund of $1 to $6
probability that a million per year,
contract will fail arising from the
to meet the MLR Trust Fund paying
requirement is the for benefits due to
same for all expected increased
contracts that enrollment, and
receive a will result in a
credibility $40 million cost
adjustment, through, and
regardless of the including, 2030.
deductible level.
Medicare Advantage (MA) and CMS is--(1) Changes to network
Cost Plan Network Adequacy strengthening standards are
(Sec. Sec. 417.416 and network adequacy unlikely to have
422.116). rules for MA and any impact on the
cost plans and to Medicare Trust
make them more Fund.
transparent to
plans by codifying
our existing
network adequacy
methodology and
standards, with
some modifications;
(2) allowing MA
plans to receive a
10-percentage point
credit towards the
percentage of
beneficiaries
residing within
published time and
distance standards
when they contract
with certain
telehealth
providers; (3)
allowing MA
organizations to
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
where CMS has not
already customized
the standards for
that area; and (4)
reducing the
required percentage
of beneficiaries
residing within
maximum time and
distance standards
in certain county
types (Micro,
Rural, and CEAC).
Special Election Periods CMS is codifying a This provision
(SEPs) for Exceptional number of SEPs codifies existing
Conditions (Sec. Sec. adopted and practice since MA
422.62, 422.68, 423.38, and implemented through organizations and
423.40). subregulatory Part D plan
guidance as sponsors are
exceptional currently assessing
circumstances SEPs. applicants'
CMS is also eligibility for
establishing two election periods as
new SEPs for part of existing
exceptional enrollment
circumstances: The processes.
SEP for Individuals Consequently, the
Enrolled in a Plan provision will not
Placed in have added impact.
Receivership and
the SEP for
Individuals
Enrolled in a Plan
that has been
identified by CMS
as a Consistent
Poor Performer.
------------------------------------------------------------------------

B. Background

We received approximately 490 timely pieces of correspondence
containing multiple comments on the provisions implemented within this
final rule from the proposed rule titled ``Medicare and Medicaid
Programs; Contract Year 2021 and 2022 Policy and Technical Changes to
the Medicare Advantage Program, Medicare Prescription Drug Benefit
Program, Medicaid Program, Medicare Cost Plan Program, and Programs of
All-Inclusive Care for the Elderly'' which published February 18, 2020,
in the Federal Register (85 FR 9002). Comments were submitted by MA
health plans, Part D sponsors, MA and beneficiary advocacy groups,
trade associations, providers, pharmacies and drug companies, states,
telehealth and health technology organizations, policy research
organizations, actuarial and law firms, MACPAC, MedPAC, and other
vendor and professional associations.
The proposals we are finalizing in this final rule range from minor
clarifications to more significant modifications based the comments
received. As noted previously, we intend to address the proposals from
the February 2020 proposed rule that are not included in this final
rule in subsequent rulemaking. Summaries of the public comments
received and our responses to those public comments are set forth in
the various sections of this final rule under the appropriate headings.
We also note that some of the public comments received for the
provisions implemented in this final rule were outside of the scope of
the proposed rule. For example, we received comments about how much MA
organizations pay network providers, and comments that recommend CMS
adopt completely new Star Ratings measures or change HEDIS

[[Page 33800]]

measures during the COVID-19 pandemic. CMS did not make any proposals
in the February 2020 proposed rule on these topics, and as such, those
out-of-scope public comments are not addressed in this final rule.
However, we note that in this final rule we are not addressing comments
received with respect to the other provisions of the February 2020
proposed rule that we are not finalizing at this time. Rather, we will
address these comments in subsequent rulemaking, as appropriate.

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 proposed 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 providing these benefits to 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, we interpret
the intent of this new category of supplemental benefits as enabling MA
plans to better tailor benefit offerings, address gaps in care, and
improve health outcomes for the chronically ill enrollee 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, at Sec. 422.102(f)(1)(i), we
proposed to codify this definition of a chronically ill enrollee.
Section 1859(f)(9) of the Act requires us to convene a panel of
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 enrollment in 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. We proposed that 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. We explained that our proposal was
based on our policy goal of allowing MA plans the flexibility to
continue to innovate around providing care for their specific plan
populations. This includes targeted chronic conditions. We stated that
we recognize that there may be some conditions or a subset of
conditions in a plan population that may meet the statutory definition
of a chronic condition (for purposes of the statutory definition of a
chronically ill enrollee), but may not be present on the list. To
encourage plans to identify needs within their unique plan population
and to avoid preventing a plan from addressing a condition or need in
their population that may not be on the list, we proposed regulation
text permitting us 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. This was
proposed at Sec. 422.102(f)(1)(i)(B).
As we explained in the proposed rule, we did not propose that MA
plans be required to submit to CMS the processes used to identify
chronically ill enrollees that meet the three pronged definition of
chronically ill enrollee.
However, plans should describe the chronic conditions for which
they will offer SSBCI in the notes field in the plan benefit package
submitted to CMS. We emphasized that 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 proposed to codify this as a
requirement at Sec. 422.102(f)(3)(ii). In addition, we also proposed
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 proposed a definition of SSBCI at paragraph (f)(1)(ii). 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 proposed to codify this statutory requirement as part of
the definition of SSBCI. Because SSBCI are supplemental benefits, they
must also comply with the criteria for supplemental benefits that we
proposed to codify at Sec. 422.100(c)(2)(ii), which was discussed in
detail in section VI.F. of the proposed rule. We are not addressing
that proposal in this final rule and intend to address it in a future
final rule. We considered whether the regulation for SSBCI should
explicitly reference those requirements for supplemental benefits
(proposed in Sec. 422.100(c)(2)(ii)) to make this clear

[[Page 33801]]

and solicited comment on this point. Traditionally, CMS has required
supplemental benefits to be 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 modified
some aspects of this longstanding policy to address SSBCI. First, as
the statute provides that SSBCI may be not primarily health related, we
proposed specific text on this point in both Sec. Sec.
422.100(c)(2)(ii) and 422.102(f)(1)(ii). Second, we proposed regulation
text at Sec. 422.100(c)(2)(ii)(B) that the requirement that the MA
organization incur a non-zero direct medical cost for all supplemental
benefits would mean, in the context of SSBCI that are not primarily
health related, the MA organization must incur a non-zero direct non-
administrative cost for the SSBCI. In all other respects not
specifically addressed as part of our proposal, SSBCI would be treated
like and subject to the same standards as other supplemental benefits.
Although we are not finalizing the requirements for supplemental
benefits proposed to be codified at Sec. 422.100(c)(2) in this final
rule, we are clarifying that our final rule for SSBCI at Sec.
422.102(f) incorporates these concepts.
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 the 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 proposed to codify, as part of the definition,
that SSBCI benefits may be non-primarily health related SSBCI benefits.
Our proposed regulation text included a cross-reference to the
regulation text we proposed at Sec. 422.100(c)(2)(ii) to codify the
definition of primarily health related. In the proposed rule, we made
clear that 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 proposed to implement the statutory
authority for MA plans to offer both primarily health and non-primarily
health related SSBCI. We summarized in the proposed rule how the 2019
HPMS memo provided examples of what could be non-primarily health
related SSBCI benefits, depending on the needs and health or overall
function of the chronically ill enrollee. 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, 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 stated in the proposed
rule that the 2019 HPMS memo this guidance was equally applicable to
our proposed regulation and part of how we intended our proposed
regulation to be implemented and enforced.
We explained in the proposed rule another way that the statutory
authority for SSBCI to be not primarily health related would be part of
our proposed regulation. Unlike with traditional supplemental benefits,
MA plans might not incur direct medical costs in furnishing or covering
SSBCI. In the CY 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 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, we stated in the
proposed rule that 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 proposed to
codify (at Sec. 422.102(f)(2)(iii)) 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,
We also explained how our proposal addressed the statutory
authority to waive uniformity for an MA plan to offer SSBCI. 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 proposed 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: (i) 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; (ii) document these criteria; and (iii) make

[[Page 33802]]

this information available to CMS upon request. We also proposed 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 to make this information
available to CMS upon request. We explained in the proposed rule that
objective criteria are necessary to address potential beneficiary
appeals, complaints, and/or general oversight activities performed by
CMS. We also proposed, at Sec. 422.102(f)(3)(i), to require plans to
have written policies for determining enrollee eligibility and to
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. We proposed 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 explained in the proposed rule 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.
We also explained how the proposal on SSBCI would codify already
existing guidance and practices and therefore was not expected to have
additional impact above current operating expenses. We also stated our
belief that our proposal would not impose any collection of information
requirements.
We thank commenters for helping inform CMS' SSBCI policy. We
received approximately 62 comments on this proposal; we summarize these
comments and our responses as follows:
Comment: A number of commenters supported CMS' proposal to allow MA
plans to consider any chronic condition not identified on chronic
condition list if that condition is life threatening or significantly
limits the overall health or function of the enrollee. A commenter
encouraged CMS to continue requiring MA plans to consider any enrollee
with a condition identified on 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.
Response: We thank commenters for their feedback. In the April 24,
2019 HPMS memo and 2020 Call Letter, CMS indicated that it would
consider any enrollee with a condition identified as a chronic
condition in section 20.1.2 of Chapter 16b of the Medicare Managed Care
Manual 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.
This was done in an effort to maintain a consistent standard in CMS
policy for what is a chronic condition (for purposes of eligibility for
SSBCI and for special needs plans for individuals with a severe or
disabling chronic condition).
In this rule, we proposed that MA plans may consider any enrollee
with a condition identified on the list of chronic conditions as
determined by the panel as described in section 1859(b)(6)(B)(iii) 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 in
an effort to also maintain this consistency. However, 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 the chronic condition may not be present on the list of
medically complex chronic conditions. Therefore, we also proposed that
a plan may identify an enrollee as meeting this first criterion of the
definition of chronically ill enrollee--that the enrollee have one or
more comorbid and medically complex chronic conditions that is life
threatening or significantly limits the overall health or function of
the enrollee--using a condition that is not on that list so long as the
statutory (and proposed regulatory) standards are met. As stated in the
proposed rule, we want to allow plans the flexibility to identify needs
within their unique plan population and do not want to inadvertently
prevent a plan from addressing a condition or need in their population
that may not be on the list. We wish to allow plans the flexibility to
continue to innovate around providing care for their specific plan
populations. Thus, we are finalizing this aspect of our proposal, which
is reflected in how Sec. 422.102(f)(1)(i)(B) provides that the list
published by CMS is a non-exhaustive list. We reiterate that, as we
proposed, we intend this list to be the list of severe or disabling
chronic conditions developed by the panel of technical advisors
convened in accordance with section 1859(f)(9)(A)(i) of the Act. In
addition to having one or more comorbid and medically complex
conditions that is life threatening or significantly limits overall
health and function, an enrollee must also have a high risk of
hospitalization and require intensive care coordination to be
considered chronically ill. Additionally, the covered item or service
must have a reasonable expectation of improving or maintaining the
health or overall function of the chronically ill enrollee.
Comment: Some commenters requested CMS provide additional guidance
concerning the definition of the phrase ``intensive care coordination''
as it is used in the regulation.
Response: We expect MA plans to develop objective criteria (for
example, health risk assessments, review of claims data, etc.) in
determining SSBCI eligibility. We are not adopting a specific
definition or standard for the statutory requirement that the
chronically ill enrollee require intensive care coordination as the
phrase is sufficiently clear for MA organizations to develop reasonable
approaches in determining when it is met. We believe that objective
criteria for determining what constitutes intensive care coordination
are present in the medical community and readily accessible to the
plan, such as the expertise of the plan medical director and plan
physicians. We believe MA plans should have flexibility to determine
what objective criteria to use when determining what meets the
intensive care coordination criterion in their plan populations.
However, we will keep this recommendation under advisement as we gain
experience with SSBCI offerings.
Comment: A few commenters requested CMS allow plans to use
functional status, rather than medical diagnoses, to determine whether
an enrollee is eligible for SSBCI. A commenter stated that individuals
with the same diagnosis may have different functional limitations and
therefore different needs.
Response: We thank commenters for their feedback. We note that for
the purposes of SSBCI, the statute requires the enrollee to have a
chronic condition(s) that is life threatening or limits the overall
health and function of an enrollee; this is in addition to the
requirements that the enrollee have a high risk of hospitalization or
other adverse health outcomes and require intensive care coordination
to be eligible for SSBCI. Two of the required criteria refer to the
function of the enrollee, so we believe it is sufficiently clear that
this is something that can be considered when determining if an
enrollee is a chronically ill enrollee.

[[Page 33803]]

Once meeting the criteria to be a chronically ill enrollee, and
therefore eligible for SSBCI, the statute and our implementing
regulation permit SSBCI that are designed to address the functional
status of the enrollee. As discussed in the proposed rule, SSBCI must
have a reasonable expectation of improving or maintaining the health or
overall function of the enrollee. Thus, a plan may choose to provide an
SSBCI that improves or maintains overall function of an enrollee who is
eligible for SSBCI per the three-pronged definition.
Comment: Some commenters expressed concern that the new SSBCI
policies could potentially undermine the role of SNPs in the Medicare
Advantage program.
Response: SNPs are specifically designed to provide targeted care
to special needs individuals. SNPs offer a wider array of specific
interventions regarding their targeted population. Additionally, SNPs
are required to develop and implement an evidence based model of care
that provides structure for care management processes and systems that
enables the plan to provide coordinated care for special needs
individuals. We do not believe that the availability of SSBCI as
permissible supplemental benefits undermines the specialized care model
that SNPs provide. We believe that the MA program and the diverse needs
of Medicare population have room for MA plans that are designed, as a
whole, to address special needs populations and for specific benefits
designed to improve or maintain the health or overall function of a
specific chronically ill enrollee.
Comment: Some commenters expressed concern that the new benefit
flexibilities, including the different eligibility requirements, could
confuse enrollees.
Response: MA plans are required to provide enrollees with
information on covered benefits, including SSBCI if the MA plan offers
them, each year through the Annual Notice of Change (ANOC) and Evidence
of Coverage (EOC) documents. In addition, MA organizations must comply
with the marketing and communications regulations in part 422, subpart
V, when issuing any information regarding SSBCI to enrollees; these
include prohibitions on MA organizations misleading beneficiaries,
providing information that inaccurate, or engaging in activities that
confuse beneficiaries. Consistent with MCMG requirements, it is our
expectation that plans communicate information on SSBCI to enrollees in
a clear manner about the scope of SSBCI that the MA plan covers and who
is eligible for those benefits.
Comment: Several commenters requested that CMS ensure that these
new benefit flexibilities for the chronically ill do not lead to
discrimination against high-need beneficiaries.
Response: We thank commenters for sharing their concerns. We note
that section 1852(b)(1)(A) of the Act prohibits an MA plan from
denying, limiting, or conditioning the coverage or provision of a
service or benefit based on health-status related factors. MA
regulations (for example, Sec. Sec. 422.100(f)(2) and 422.110(a))
reiterate and implement this non-discrimination requirement. In
interpreting these obligations to protect against discrimination, we
have historically indicated that the purpose of the requirements is to
protect high-acuity enrollees from adverse treatment on the basis of
their higher cost health conditions (79 FR 29843; 76 FR 21432; and 74
FR 54634). As MA plans implement these benefit flexibilities for SSBCI,
they must be mindful of ensuring compliance with non-discrimination
responsibilities and obligations.\5\ Additionally, CMS reviews 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. Additionally, we believe it is
important to note that in order to be eligible for SSBCI an enrollee
must as stated above (1) have one or more comorbid and medically
complex chronic conditions that is life threatening or significantly
limits the overall health or function of the enrollee; (2) have a high
risk of hospitalization or other adverse health outcomes; and (3)
require intensive care coordination. It is only enrollees with chronic
conditions, as described by the three pronged definition above, that
are eligible for these benefits. Thus, it is these individuals who are
intended to receive these special benefits.
---------------------------------------------------------------------------

\5\ Among these responsibilities and obligations are compliance
with Title VI of the Civil Rights Act, section 504 of the
Rehabilitation Act, the Age Discrimination Act, section 1557 of the
Affordable Care Act, and conscience and religious freedom laws.
---------------------------------------------------------------------------

Comment: Commenters also requested CMS provide additional
subregulatory guidance on SSBCI and supplemental benefits in general,
including updating Managed Care Manuals. Although characterized as
being in response to the proposal to change the costs that may be
included in the definition of ``incurred costs'' for MLR purposes
(addressed in section V.I. of the proposed rule and section IV.D of
this final rule), other commenters noted how SSBCI are not always
delivered by medical providers.
Response: We believe that our discussion in the proposed rule
explaining the proposal we are finalizing provides extensive guidance
for MA organizations on this topic. The April 2019 HPMS Memo and CY
2020 Call Letter address SSBCI and that guidance is still applicable as
Sec. 422.102(f), as proposed and as finalized, codifies significant
portions of that guidance. CMS will consider additional subregulatory
guidance, including manual updates, as the program develops.
Additionally, as discussed in the 2020 Call Letter, we note that MA
plans may contract with community-based organizations such as those
providing other home and community-based services (HCBS) to provide
supplemental benefits, including SSBCI, that are compliant with the
statutory and regulatory requirements. For example, an MA plan could
elect to offer, as a SSBCI, the provision of meals or food/produce and
pay a community-based organization for furnishing the covered benefit.
Community-based organizations can also help determine whether an
individual meets the eligibility requirements for SSBCI. These
organizations may already be providing services in the community and,
in some cases, have contractual arrangements with Medicaid managed care
or MA plans. We note that some community services programs are funded
by the HHS Administration for Community Living (ACL) and utilizing ACL
programs would also be permissible in delivering these supplemental
benefits. This is consistent with the amendment to Sec. 422.2420,
discussed in section III.D.1 of this final rule, to include amounts
paid for SSBCI to providers that are not necessarily healthcare
professionals as incurred claims in the calculation of the MLR.
Comment: Some commenters requested CMS provide greater detail on
allowable SSBCI including meals, transportation, and durable medical
equipment (DME).
Response: A non-exhaustive list of examples of non-primarily health
related, which includes meals (beyond a limited basis) and non-medical
transportation SSBCI can be found in the April 2019 HPMS Memo and this
preamble. However, we note the requirements around the SSBCI, which
include the statutory authority for the Secretary to waive uniformity
requirements and the statutory requirement that SSBCI have a reasonable
expectation of improving or

[[Page 33804]]

maintaining the health or overall function of the chronically ill
enrollee, allow significant of flexibility for MA plans to consider the
needs of enrollees who meet the high standards in the definition of
chronically ill enrollee and to design benefits to assist enrollees at
an individualized level. We encourage MA plans to continue to consider
the unique needs of their plan populations when proposing items or
services that meet SSBCI conditions in their bid and submitted plan
benefit package. As explained in the referenced April 2019 HPMS memo,
MA plans have broad discretion in developing items and services they
may offer as SSBCI provided that the item or service has a reasonable
expectation of improving or maintaining the health or overall function
of the chronically ill enrollee. Under our current guidance and this
final rule, MA plans also have broad discretion in determining what may
be considered `a reasonable expectation' when choosing to offer
specific items and services as SSBCI so long as the statutory standard
is met.
Concerning DME, MA plans are required to ``provide coverage of, by
furnishing, arranging for, or making payment for, all services that are
covered by Medicare Part A and Part B'' (see 42 CFR 422.101(a)), which
includes coverage of durable medical equipment, prosthetics and
supplies. As discussed in the referenced HPMS memo, non-Medicare-
covered safety devices to prevent injuries in the home or bathroom are
considered primarily health related and may be offered as a
supplemental benefit to all enrollees for whom the item is medically
necessary. We remind MA organizations of our long-standing guidance in
Chapter 4 of the Medicare Managed Care Manual about medical necessity
in the context of supplemental benefits and how MA plans may develop
their own medical necessity policies and procedures, so long as access
to and coverage of Part A and Part B benefits is not more restrictive
than Original Medicare. Other equipment that is not primarily health
related may be considered as an SSBCI if it has a reasonable
expectation of improving or maintaining the health or overall function
of the chronically ill enrollee.
Comment: A few commenters suggested CMS allow plans to target some
services to address social risk factors. A commenter suggested CMS test
ways to provide more flexibility in targeting supplemental benefits to
address social risk factors like homelessness.
Response: The statute does not authorize MA plans to offer and
cover supplemental benefits, even SSBCI, based solely on social risk
factors; the statute explicitly provides that eligibility for SSBCI is
based on whether an enrollee meets the definition to be a chronically
ill enrollee, which does not include a reference to social risk
factors. As discussed in this preamble, MA plans can provide non-
primarily health related supplemental benefits that address chronically
ill enrollees' social determinants of health so long as the benefits
have a reasonable expectation of maintaining or improving the health or
function of that chronically ill enrollee. MA plans may consider social
determinants of health as a factor to help identify chronically ill
enrollees whose health could be improved or maintained with SSBCI.
However, they may not use social risk factors as the sole basis for
determining eligibility for SSBCI. Please note that the current CMS
Innovation Center Medicare Advantage Value-Based Insurance Design
(VBID) model allows participants to vary supplemental benefits based on
chronic condition or socioeconomic status or a combination of the two.
MA organizations have the option of participating in this model if they
choose.
Comment: Some commenters suggested that information and
documentation concerning SSBCI eligibility determinations should be
reported more broadly, rather than only made available upon request. A
commenter stated that this information would be necessary to better
understand the efficacy of offered benefits.
Response: We thank commenters for their suggestions. At this time,
we do not wish to place additional reporting burden on plans. However,
we will take this comment under advisement as we continue to develop
and refine SSBCI policy. Concerning the written policy requirements at
Sec. 422.102(f)(3)(i) and (iii), we clarify that these requirements
concern the existence of such policies and that we do not intend to
regularly review the content for compliance with the substantive
standards of the regulation. We are implementing the statutory
authority for SSBCI in a way to provide discretion and flexibility for
MA plans, consistent with our approach to supplemental benefits design,
within the statutory and regulatory limits. Per Sec. 422.102(f)(3)(i),
plans are required to have written policies for determining enrollee
eligibility. As we explained in the CY 2020 Call Letter, maintaining
detailed internal documentation is, at a minimum, necessary to address
potential beneficiary appeals and complaints. However, MA organizations
will have discretion in developing these policies. Additionally, per
Sec. 422.102(f)(3)(iii), plans are required have written policies
based on objective criteria for determining a chronically ill
enrollee's eligibility to receive a particular SSBCI and must document
the criteria. We do not intend to closely monitor or regularly request
these documentation and reiterate that MA plans will have discretion in
designing which items and services to offer as SSBCI and for which
chronically ill enrollees to cover them, so long as the statutory and
regulatory standards are met.
Comment: Some commenters expressed concern that SSBCI are not
available to individuals enrolled in Original Medicare. Other
commenters suggested CMS test a model that includes original Medicare
enrollees.
Response: The Balanced Budget Act of 1997 (BBA) authorized CMS to
contract with public or private organizations to offer a variety of
health plan options for beneficiaries. Under section 1852(a)(3)(D), MA
plans are authorized to offer supplemental benefits, including SSBCI.
The MA program has historically authorized MA plans to offer some form
of additional or supplemental benefits to MA enrollees. Medicare
beneficiaries choose to elect either original Medicare or an MA health
plan that may have supplemental benefits. Concerning additional models,
CMS appreciates this suggestion and will take it under consideration as
we consider new Innovation Center models.
Comment: Several commenters suggested CMS study how many
beneficiaries actually receive these benefits and not just how many are
eligible for them in order to understand the actual impact of these new
benefits.
Response: We appreciate this comment and will take this comment
under consideration as we monitor how MA plans offer these benefits and
continue to develop these policies.
We thank commenters for their feedback.
As discussed in this preamble, because SSBCI are supplemental
benefits, they must also comply with our longstanding interpretation of
the criteria for supplemental benefits; we also proposed to codify
those criteria at Sec. 422.100(c)(2)(ii), which was discussed in
detail in section VI.F. of the 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 solicited comment on
this point. We received no comments on this specific subject.
After consideration of the comments received and for the reasons
outlined in

[[Page 33805]]

the proposed rule and our responses to comments, we are finalizing
Sec. 422.102(f) largely as proposed. We are finalizing slight
revisions to the regulation text, to eliminate a reference to Sec.
422.100(c)(2)(i) in paragraph (f)(1)(ii) which was tied to the proposal
regarding Sec. 422.100(c)(2) that is not being addressed in this final
rule. We are also correcting a typographical error in paragraph
(f)(2)(iii).

B. 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
individuals with special needs. 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).\6\
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\6\ 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.
---------------------------------------------------------------------------

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.\7\
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\7\ 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.
As summarized in our proposed rule, federal statute and
implementing regulations have established several requirements for D-
SNPs in addition to those that apply to all MA plans to promote
coordination of care, including health risk assessment (HRA)
requirements as described in section 1859(f)(5)(A)(ii)(I) of the Act
and at Sec. 422.101(f)(1)(i), evidence-based models of care (MOCs) as
described in section 1859(f)(5)(A)(i) of the Act and at Sec.
422.101(f), and state Medicaid agency contracts as described in section
1859(f)(3)(D) of the Act and at Sec. 422.107. The state Medicaid
agency contracting requirement allows states to require greater
integration of Medicare and Medicaid benefits from the D-SNPs in their
markets.
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,
including minimum integration standards, coordination of the delivery
of Medicare and Medicaid benefits, and unified appeals and grievance
procedures for integrated D-SNPs, the last of which we implemented
through regulation to apply to D-SNPs with exclusively aligned
enrollment, termed ``applicable integrated plans.'' These requirements,
along with clarifications to existing regulations, were codified in the
April 2019 final rule (84 FR 15680 through 15844).
We discussed in the proposed rule and reiterate here 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.\8\ Participation of MA
organizations is robust, and most markets are stable and competitive.
---------------------------------------------------------------------------

\8\ 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 this final rule, we address the emergence of ``D-SNP look-
alike'' plans that are a hindrance to meaningful implementation of
statutory requirements for D-SNPs, particularly those connected with
the BBA of 2018. As the Medicare Payment Advisory Commission (MedPAC)
described in its June 2018 and 2019 reports to Congress and as
summarized in the proposed rule, 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.
As discussed in the proposed rule, 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 for Parts A and B services than most
MA plans require, which we believe dissuades most non-dually eligible

[[Page 33806]]

Medicare beneficiaries from enrolling. However, because most dually
eligible individuals are Qualified Medicare Beneficiaries (QMBs) who
are not required to pay Medicare cost sharing under sections 1848(g)(3)
and 1866(a)(1)(A) of the Act, 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.
As summarized in the proposed rule, the proliferation and growth of
D-SNP look-alikes raises concerns related to effective implementation
of the BBA of 2018 requirements; meaningful integration of Medicare-and
Medicaid programs via state Medicaid agency contracting; care
coordination through HRAs; evidence-based MOCs; and beneficiary
confusion stemming from misleading marketing practices by brokers and
agents that misrepresent to dually eligible individuals the
characteristics of D-SNP look-alikes. We direct readers to the proposed
rule, 85 FR 9018 through 9021, for a more detailed discussion of D-SNP
look-alikes and their impact on implementation of D-SNP Medicare and
Medicaid integration.
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 proposed establishing contracting standards at Sec.
422.514 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 MA plan. As discussed in the
proposed rule, 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). To prevent the undermining of the statutory and
regulatory framework for D-SNPs, we proposed 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 (85 FR 9021-9025). We also proposed that the regulation
apply in any state where there is a D-SNP or any other plan authorized
by CMS to exclusively enroll dually eligible individuals.
As described in our proposal, we would not enter into or renew MA
contracts for an MA plan for an upcoming plan year if that MA plan
exceeds specific enrollment thresholds for dually eligible individuals.
However, MA organizations with plans 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 proposed
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 proposed changes to Sec.
422.514 as follows.
We proposed changing the title of Sec. 422.514 by removing the
word ``minimum'' because the changes we proposed to Sec. 422.514
reflect an additional type of enrollment requirement beyond the minimum
enrollment requirements currently articulated in Sec. 422.514. We also
proposed changing 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 proposed adding 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 explained our rationale in depth for this approach in the
proposed rule.
We proposed to limit the requirement at paragraph (d) to states
where there is a D-SNP or any other plan authorized by CMS to
exclusively enroll dually eligible individuals, such as Medicare-
Medicaid Plans (MMPs). We proposed 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, as there are
no plans contracted with the state to implement the D-SNP requirements
or otherwise integrate Medicare and Medicaid services. 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. We also noted the limited
number of states--eight, as of July 2019--with no D-SNPs. Therefore, we
expressed our belief that it is not critical for our proposed
requirements in paragraph (d) to apply in such states. We solicited
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 final 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 proposed 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 explained that using each 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. We proposed
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. As detailed in the proposed rule, MedPAC data show
that our proposed threshold would have minimal impact on total dually
eligible enrollment in non-SNP MA plans.

[[Page 33807]]

As discussed in the proposed rule, 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 80 percent threshold. However, as explained in the
proposed rule, we proposed 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
operationally easier for CMS to implement. We solicited comment on
these alternative enrollment thresholds.
Under our proposal for paragraph (d)(2), we proposed making the
annual 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 in order to make such
evaluations and issue the necessary information to affected MA
organizations sufficiently early in the year for MA organizations to
have time to take the necessary steps to adjust other plan offerings
before the point at which CMS would decline to renew the contract for
an MA plan--which effectively (and as described later in this section)
would result in the non-renewal (that is, termination) of the D-SNP
look-alike plan benefit package. Proposed paragraph (d)(2) would also
limit the prohibition to MA plans that have been active for one or more
years and with enrollment greater than 200 individuals at the time of
CMS' determination under proposed paragraph (d)(2).
In paragraph (e), we proposed processes 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. 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. 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.
In proposed paragraph (e)(1), we specified 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 transition 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 proposed at paragraphs (e)(1)(i) through (iii) specific
criteria for any MA plan to receive enrollment through this transition
process 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 proposed paragraph (e)(1)(i), we would allow a non-
renewing 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 this proposed limit on dual eligible enrollment. As
described in the proposed rule, 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. Under 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. As discussed in the proposed
rule, we would make this calculation for each non-SNP plan into which
the MA organization proposes to transition enrollment in order to
ensure that the enrollment transitions do not result in another non-SNP
MA plan being treated as a D-SNP look-alike.
Under proposed paragraph (e)(1)(ii), we would require that
any plan receiving transitioned enrollment be an MA-PD plan as defined
in Sec. 422.2.
Under proposed paragraph (e)(1)(iii), any MA plan
receiving transitioned enrollment from a D-SNP look-alike would be
required to have a combined Part C and D beneficiary premium of $0
after application of the premium subsidy for 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 (ANOC) 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 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 (AEP).
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).
As discussed in more detail in the proposed rule preamble, this
proposed transition process is conceptually similar to ``crosswalk
exception'' procedures historically allowed by CMS and proposed at
Sec. 422.530 in the notice of proposed rulemaking. 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 between
non-SNP plans and SNPs. Because this transition process is not the same
as the crosswalk process, we proposed to codify it as part of Sec.
422.514.
In the proposed rule, we explained how we also considered an
alternative

[[Page 33808]]

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. In addition, we solicited 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 described in the proposed rule our intent 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 contracting limitations under this
proposal.
Overall, our proposed rule focused on dually eligible individuals
as a percentage of an MA 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. We explained in the
proposed rule why we did not propose those alternatives but solicited
comment on whether these alternative criteria should be used instead
of, or in addition to, the criteria for identifying D-SNP look-alikes
and applying contracting prohibition.
We received the following comments on these proposed contract
requirements and respond to them below:
Comment: Many commenters expressed strong support for our proposal
to preclude 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 a specific
threshold. Several commenters agreed with CMS that D-SNP look-alikes
are an impediment to Medicare-Medicaid integration and meaningful
implementation of federal and state requirements, including the new
statutory requirements for D-SNPs under the BBA of 2018. A commenter
appreciated that the proposal would, in most states, ensure that any
entity whose enrollment consists mainly of dually eligible individuals
follows the standards Congress established for MA plans serving dually
eligible individuals. Several commenters agreed with MedPAC's 2018 and
2019 analyses, cited by CMS in the proposed rule preamble, that the
proliferation of D-SNP look-alikes negatively impacts integrated care
programs for dually eligible individuals. Some commenters believed the
proposal would ultimately improve access to integrated care for dually
eligible individuals. Several commenters also believed that D-SNPs were
in the best position to serve the dually eligible population because of
the D-SNP MOC, including care coordination and case management, which
is not required of D-SNP look-alikes.
Several commenters also supported the proposed regulation because
of their concern about how D-SNP look-alikes operate. A number of
commenters expressed concern about D-SNP look-alikes marketing to
dually eligible individuals in ways that misrepresent the plans'
ability to integrate Medicare and Medicaid services. Several commenters
noted that while D-SNP look-alikes advertise that they integrate care,
they are not designed to serve the needs of dually eligible individuals
nor required to do so. For these reasons, many commenters believed
look-alikes confuse dually eligible individuals about their coverage
options and lead to beneficiary harm.
Response: We appreciate the widespread support we received for our
proposal. Many of the commenters' concerns about D-SNP look-alikes
mirror the comments discussed in the 2020 Final Call Letter \9\ and
summarized in the proposed rule preamble. We believe that the
contracting requirement we are finalizing in this rule will address
these concerns and ensure the meaningful implementation of the new
Medicare-Medicaid integration requirements under the BBA of 2018, along
with other state and federal requirements. As discussed in the proposed
rule and our responses to other comments, the prohibition will not
apply to D-SNP look-alikes in states where there is a D-SNP or plan
authorized by CMS to exclusively enroll dually eligible individuals.
---------------------------------------------------------------------------

\9\ Available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html.
---------------------------------------------------------------------------

Comment: A few commenters expressed support for CMS' efforts to
integrate care but had concerns about the proposed contracting
standard. Some commenters noted that the proposed rule may disrupt
services and benefits for beneficiaries enrolled in D-SNP look-alikes.
These commenters cautioned CMS to attend to continuity of care, the
nuances of state requirements, and market dynamics as this final rule
is implemented.
Response: We thank these commenters for their comments. We believe
that the requirements we are finalizing in this rule, described in more
detail later in this section, strike a balance between allowing for
continuity of care for beneficiaries and promoting integrated care. In
particular, as discussed later in this section, we are delaying
implementation of D-SNP look-alike contract limitations for one
additional year to provide sufficient time for MA organizations to
develop and seek approval for new plans, coordinate with state
integrated care efforts, and facilitate a transparent and smooth
transition of beneficiaries. With a technical clarification described
later in this section, we are finalizing our proposed transition
approach for D-SNP look-alikes to transition enrollees into an MA plan
or plans meeting certain criteria within the same parent organization
to promote continuity of care.
Comment: Several commenters opposed our proposal to limit
enrollment of dually eligible individuals in non-SNP MA plans. Some
commenters noted that D-SNP look-alikes were created in response to
states' contracting policies like those of California that restricted
D-SNPs. A commenter questioned the need to regulate D-SNP look-alikes,
citing the June 2019 MedPAC finding that only a small portion of
traditional MA plans have dual eligible enrollment that comprises 80
percent or more of total plan membership.\10\
---------------------------------------------------------------------------

\10\ See 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.
---------------------------------------------------------------------------

Some commenters believed that our proposal limited competition
between MA plans that could lead to higher

[[Page 33809]]

quality, innovative care, additional supplemental benefits, and
improved provider network access for dually eligible individuals. A
commenter stated that competition from D-SNP look-alikes targeted by
our proposal has not hurt D-SNPs, noting that total D-SNP enrollment
has more than doubled from one million in 2010 to 2.6 million in 2019.
A few commenters believed that D-SNP look-alikes fill critical gaps
in markets where D-SNPs and MMPs are not available. Some commenters
also believed that D-SNP look-alikes provide access to supplemental
benefits and increased levels of care management, particularly for
partial-benefit dually eligible individuals. These commenters were
concerned that if the proposed contracting standard was implemented, D-
SNP look-alike enrollees would lose access to these benefits and may
return to the original Medicare fee-for-service program, which does not
coordinate with Medicaid. A few commenters requested that, prior to
finalizing any rule on D-SNP look-alikes, CMS perform a more detailed
analysis of available options and impacts of the proposal on enrollees,
both full- and partial-benefit dually eligible individuals, such as
loss of benefits.
Several commenters expressed concern that CMS' proposed contracting
standard would unnecessarily limit beneficiary choice. A few commenters
requested that CMS explain how the value of choice was taken into
account for this proposal. Other commenters encouraged CMS to continue
to promote consumer choice and provide dually eligible beneficiaries
with an array of plan options that allow individuals to choose how to
best meet their health care needs. A commenter noted that the need for
beneficiary choice was supported by the June 2018 MedPAC finding that
64 percent of partial-benefit dually eligible MA enrollees were
enrolled in traditional MA plans in 2016,\11\ and that a large
percentage of full-benefit dually eligible individuals passively
enrolled in MMPs also have indicated a preference for choice by opting
out of MMP enrollment.
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\11\ See June 2018 MedPAC Report to Congress, Chapter 9 at
https://medpac.gov/docs/default-source/reports/jun18_ch9_medpacreport_sec.pdf?sfvrsn=0.
---------------------------------------------------------------------------

Response: We thank the commenters for the feedback on our proposal.
We maintain that MA plans with enrollment exclusively, or
predominantly, consisting of dually eligible individuals--the principal
criterion that distinguishes D-SNPs from other MA plans in statute--
should be subject to the federal regulatory and state contracting
requirements that are applicable to D-SNPs. We note that, despite D-SNP
regulations promulgated since 2006, MA organization participation in
the D-SNP program is robust. Most D-SNP enrollment is in markets that
feature numerous other plan choices for beneficiaries, and enrollment
in D-SNPs has continued to increase. We also note that while state
contracting policies may have been the impetus for some sponsors to
create D-SNP look-alikes, states are authorized to play a role in
coordinating Medicaid benefits with MA plans that exclusively enroll
dually eligible individuals, as described in section 164 of MIPPA,
which amended section 1859(f) of the Act. Therefore, if our proposal
leads to any change in the degree of beneficiary choice, such impact
would be marginal, and we believe the benefits from our proposal--
described here and in the proposed rule--outweigh any such impact.
We agree with the commenter that D-SNP look-alikes are currently a
small number of all MA plans; however, D-SNP look-alikes' growth--both
in terms of the number of plans offered and their total enrollment--is
concerning, especially given Congress' requirements in the BBA of 2018
to further integrate Medicare and Medicaid benefits through D-SNPs. As
noted in our proposed rule preamble, MedPAC found that D-SNP look-alike
enrollment in California markets grew from around 5,000 in 2013 to over
95,000 in 2017.\12\ MedPAC also explored enrollment trends more
broadly, identifying 31 non-SNP plans \13\ 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, 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.\14\
---------------------------------------------------------------------------

\12\ See June 2018 MedPAC Report to Congress, Chapter 9 at
https://medpac.gov/docs/default-source/reports/jun18_ch9_medpacreport_sec.pdf?sfvrsn=0.
\13\ MedPAC also excluded employer group waiver plans (EGWPs)
and a select group of medical savings account (MSA) plans.
\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 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 acknowledge the commenters' concerns about reducing access to
supplemental benefits for D-SNP look-alike members and beneficiary
choice, particularly for partial-benefit dually eligible individuals.
However, as we stated in the proposed rule, we chose not to propose
regulating benefit design to avoid inadvertently diminishing benefit
flexibility that genuinely improves competition and beneficiary choice.
We also note that most D-SNP look-alike enrollment is in markets that
feature numerous other plan choices for beneficiaries, including D-SNPs
that offer similar benefits; therefore, D-SNP look-alikes are not
generally filling gaps in most of their markets nor significantly
contributing to beneficiary choice. The majority of D-SNP look-alikes
will be able to transition enrollees into another MA plan under the
process described at Sec. 422.514(e) of this final rule; therefore, we
project that few D-SNP look-alike enrollees will be enrolled by default
in the original Medicare fee-for-service program when this regulation
limits the continued offering of a D-SNP look-alike.
We also note the contracting standard that we proposed and are
finalizing does not apply to MA plans in states without D-SNPs or other
plans authorized by CMS to exclusively enroll dually eligible
individuals, further limiting the impact of this provision on access to
supplemental benefits or beneficiary choice. Of the seven states that
do not contract with D-SNPs or other plans authorized to exclusively
enroll dually eligible individuals, only two have D-SNP look-alikes. As
discussed in response to other comments on this topic, we will continue
to engage with stakeholders to identify issues related to choice and
access to supplemental benefits.
Comment: A commenter suggested that CMS work with states to provide
multiple integrated care options for dually eligible individuals as an
alternative to limiting D-SNP look-alikes. Another commenter requested
that if CMS decides to implement the proposal, we should also require
states to contract with D-SNPs.
Response: We note that section 164(c)(4) of MIPPA does not in any
way obligate states to contract with a D-SNP; therefore, CMS does not
have the authority to mandate states to contract with D-SNPs, and
states have significant control over the availability of D-SNPs. We
generally agree that increasing the number of integrated care options
for dually eligible individuals is desirable, and CMS will continue to
work with states to identify ways to integrate Medicare and Medicaid
benefits in a way that best serves the states' dually eligible
population. We also provide technical assistance to states on
integration issues, including

[[Page 33810]]

through the Integrated Care Resource Center (see https://www.integratedcareresourcecenter.com/).
Comment: Several commenters supported our proposed approach in
paragraph (d) to limit the availability of D-SNP look-alikes only in
those states where there is a D-SNP or any other plan authorized by CMS
to exclusively enroll dually eligible individuals. These commenters
stated that look-alikes provide valuable supplemental benefits to
dually eligible individuals that would not be available in a
traditional MA benefit design in those states without D-SNP or MMP
options. Some commenters further agreed with our rationale in the
proposed rule that, in states without D-SNPs or comparable managed care
plans (like MMPs), the existence of D-SNP look-alikes is not impeding
full implementation of D-SNP integration requirements. A number of
commenters recommended that our proposal to limit availability of D-SNP
look-alikes apply only in counties where there are no D-SNPs or other
plans authorized to exclusively enroll dually eligible individuals. A
commenter agreed with CMS' observation that operating MA plans in rural
areas presents a challenge to MA plan operations, including for D-SNPs.
This commenter stated that, in those rural areas without D-SNPs or
other plans authorized by CMS to exclusively enroll dually eligible
individuals, eliminating MA plan options can harm rather than benefit
dually eligible individuals, and in the absence of integrated plan
options, access to D-SNP look-alikes should be preserved.
Response: We appreciate these commenters' support of the proposed
limit on this policy to states where there is a D-SNP or any other plan
authorized by CMS to exclusively enroll dually eligible individuals,
such as an MMP. In our proposed rule we noted that, as of July 2019,
seven states did not have D-SNPs or other plans authorized by CMS to
exclusively enroll dually eligible individuals. In these states, 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
immediate material impact on the full implementation of federal D-SNP
requirements. In such states, the existence of D-SNP look-alikes is not
impeding federal or state 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.
We disagree with the recommendation to further limit the proposed
D-SNP look-alike policy to those counties where a D-SNP or comparable
managed care plan like an MMP currently exists. From our work with
states on Medicare-Medicaid integration, we recognize that states often
proceed incrementally, contracting first for integrated managed care
plans in certain counties before incorporating more areas or going
statewide. We believe that allowing D-SNP look-alikes to precede D-SNPs
or other more integrated plans in these markets would hinder expansion
of state efforts to expand integrated managed care. In addition, we
believe it would be more complicated for CMS to administer, MA
organizations to comply with, and consumers to understand, if there was
a county-by-county limitation on D-SNP look-alike availability.
With respect to the comments about contracting in rural areas, we
understand that operating MA plans, including D-SNPs, can be a
challenge in areas where the Medicare population is sparse and
establishing networks is difficult. As discussed in section V.A. of
this preamble, we are taking steps to improve access to managed care in
rural areas through changes in network adequacy assessments. We will
continue to monitor the volume of MA plans, including D-SNPs, offered
in rural areas.
Comment: A commenter requested that CMS exempt from our proposed
dual eligible enrollment rules in paragraph (d) D-SNP look-alikes in
states that require the parent organization of the D-SNP to have a
Medicaid contract with the state. The commenter expressed concern that
implementing the rule as proposed would have an anticompetitive effect
of locking out new plan entrants in such states.
Response: We disagree with the commenter that implementing
paragraph (d) as proposed would reduce competition by not allowing new
plan entrants in those states that limit D-SNP approval to parent
organizations that have existing Medicaid contracts. As discussed in
our April 2019 final rule in implementing the BBA of 2018, we sought to
maintain existing state flexibility to promote integrated care for
dually eligible individuals. As discussed earlier in this section,
section 164 of MIPPA, which amended section 1859(f)(3)(D) of the Act,
does not mandate that states contract with D-SNPs. The ability of
states to determine the entities with which they enter into D-SNP
contracts has been a core tenet for coordinating care between Medicare
and Medicaid. We support efforts by states to further the integration
of care coordination continuum and believe that the benefit from such
coordination, in fact, increases competition to develop and win
integrated products (that is, Medicaid contracts).
Comment: Many commenters stated that the dual eligible enrollment
requirement should apply in all states to discourage the proliferation
of plans that are not truly integrated and that offer limited or no
care coordination. Several commenters noted that D-SNP look-alikes may
detract from state efforts to coordinate care for dually eligible
individuals, such as managed fee-for-service models. These commenters
believed that states that do not contract with D-SNPs or MMPs should be
able to exercise oversight and have freedom to set a broader strategy
to coordinate care for their dually eligible population without
worrying about the proliferation of D-SNP look-alike products. A
commenter stated that proliferation of D-SNP look-alikes may discourage
states from future contracting with D-SNPs and gives plans no incentive
to introduce D-SNPs. This commenter noted that CMS and states need to
work together to improve the way they serve dually eligible individuals
because such individuals include the highest need, highest cost
Medicare and Medicaid beneficiaries, and limiting D-SNP look-alike
regulation to only some states impedes progress toward that end.
Response: We appreciate the commenters' perspective on this issue.
We believe that our proposal as finalized strikes a balance between
prohibiting look-alikes and allowing them to continue in states without
D-SNPs or any other plan authorized by CMS to exclusively enroll
individuals entitled to medical assistance under a state plan under
Title XIX. We do not believe that in such states, the existence of
look-alikes is materially impeding state or federal implementation of
any requirements for enhanced care coordination and Medicaid
integration or 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. We recognize that substantial
enrollment in D-SNP look-alikes in these states can alter the landscape
if any of these states decides to begin contracting with D-SNPs.
However, we believe state policy can accommodate these changes, for
example, by contracting with MA organizations offering look-alikes to
offer D-SNPs, enabling the transition of

[[Page 33811]]

look-alike enrollees into more integrated plans. We continue to
collaborate and work with all states to strengthen integrated care, and
we will monitor the penetration of MA plans as we continue to promote
integrated care. As discussed in our proposed rule, we believe the
limitation on the states where the dual eligible enrollment requirement
applies will continue to protect states' ability to contract with
plans--including for Medicaid behavioral health services and long-term
supports and services (LTSS)--in a manner that promotes integration and
coordination of benefits and a more seamless experience for dually
eligible individuals in such plans. Therefore, in this final rule, we
decline to expand our dual eligible enrollment requirements to plans
operating in such states. However, we will continue to monitor D-SNP
look-alikes in these states and consult with state officials about
their impact on dually eligible individuals and state policy
objectives.
Comment: Many commenters requested that CMS clarify whether the
proposed 80 percent threshold for dual eligible enrollment in a non-SNP
plan included both individuals entitled to full Medicaid benefits and
individuals entitled to partial Medicaid benefits, such as state
payment of Medicare Part B premiums or payment of Medicare premiums and
cost sharing.
Response: Our proposed regulatory language in paragraph (d)
regarding ``enrollees who are entitled to medical assistance under a
state plan under title XIX'' is the same language used in section
1859(b)(6)(B)(ii) of the Act and in Sec. 422.2 to define the
population of special needs individuals D-SNPs may exclusively enroll.
This language includes both full- and partial-benefit dually eligible
individuals. Therefore, we clarify here that our proposed threshold for
dual eligible enrollment--which we are finalizing in this rule--
included both full- and partial-benefit dually eligible individuals.
Comment: A commenter recommended that our regulatory language in
paragraph (d) be modified to refer to individuals who are ``entitled to
and enrolled in medical assistance,'' since plans only know which
enrollees actually receive Medicaid benefits, not those whose income
levels might qualify them for such benefits.
Response: While we appreciate the commenter's concern, we believe
that the language in Sec. 422.514(d)(1) (individuals ``entitled to
medical assistance'' under a state plan under Title XIX) sufficiently
refers to individuals who have been determined to be entitled to
medical assistance by virtue of having been enrolled in medical
assistance under a state plan under Title XIX. That is our intent and
interpretation of this language in Sec. 422.514(d).
Comment: Some commenters recommended that the final rule not count
any partial-benefit dually eligible individuals toward the threshold,
while maintaining the threshold at 80 percent, in order to minimize the
potential disruption caused by the non-renewal of D-SNP look-alikes,
including D-SNP look-alikes in contracts with high Star Ratings. Other
commenters supported setting the threshold at 80 percent if it applied
only to full-benefit dually eligible individuals. Some commenters
recommended that the threshold consist only of the categories of dually
eligible individuals who were allowed to enroll in a D-SNP in any given
market, defined at either the state or county level.
In contrast, other commenters supported counting enrollment of
partial-benefit dually eligible individuals toward the 80 percent
threshold. A commenter wrote that exclusion of partial-benefit dually
eligible individuals while maintaining the threshold at 80 percent
would drastically reduce the number of D-SNP look-alikes captured by
the proposed regulation and potentially render the entire proposal
``meaningless.''
Response: We disagree with the recommendation to exclude partial-
benefit dually eligible individuals from the enrollment threshold and
agree with those commenters who believed such an exclusion would render
the proposal less effective. Such an exclusion would allow 32 of the 64
non-SNP MA plans with more than 80 percent enrollment by both full- and
partial-benefit dually eligible individuals to continue to operate.
These include nine D-SNP look-alikes in states that have D-SNPs or MMPs
that only enroll full-benefit dual eligible individuals. Those nine
plans would continue to operate if, as suggested by a commenter, we did
not count partial-benefit dually eligible individuals towards the
threshold only in states that exclude these individuals from D-SNPs and
other integrated plans. While partial-benefit dually eligible
individuals are not currently eligible to enroll in D-SNPs or MMPs in
those states, they have access to other MA plans that are not D-SNP
look-alikes. As discussed in the proposed rule, over 98 percent of
dually eligible individuals who are enrolled in non-SNP MA plans are in
plans that are not D-SNP look-alikes.
The data show that the exclusion of partial-benefit dually eligible
individuals would render the proposed regulation ineffective in
achieving its primary goal: Preserving the ability of CMS and states to
meaningfully implement the BBA of 2018 requirements and to use D-SNPs
and other integrated care plans to integrate Medicare and Medicaid for
dually eligible individuals.
In addition, exclusion of partial-benefit dually eligible
individuals from the threshold would allow any MA organization to
design a benefit package and target enrollment for an MA plan that
exclusively enrolled partial-benefit dually eligible individuals.
Section 1859(b)(6)(B)(ii) of the Act, however, only allows D-SNPs to
exclusively enroll dually eligible individuals.
Comment: Some commenters recommended excluding partial-benefit
dually eligible individuals from the threshold and put forward a number
of rationales for their recommendation. Some commenters stated that
partial-benefit dually eligible individuals did not benefit from the
coordination of Medicaid benefits provided by D-SNPs or other
integrated plans because they were not entitled to receive such
benefits. A few commenters also noted that many states exclude partial-
benefit dually eligible individuals from D-SNPs or other integrated
plans, and therefore excluding partial-benefit dually eligible
individuals from the enrollment threshold would ensure the availability
of another meaningful plan option to such individuals. A few commenters
noted that partial-benefit dually eligible individuals have greater
social, functional, and health needs than the broader Medicare
population and could benefit from the enhanced care coordination
provided by MA plans, including the D-SNP look-alike in which they
enrolled. Another commenter requested that CMS provide an analysis of
how the proposed regulation would impact areas where partial-benefit
dually eligible individuals are not allowed to enroll in D-SNPs or
other integrated care options. A commenter that supported inclusion of
partial-benefit dually eligible individuals in the 80 percent threshold
stated that any CMS decision to exclude such individuals should be
accompanied by a reduction in the threshold to capture roughly the same
number of D-SNP look-alikes.
Response: We do not find these commenters' arguments persuasive.
First, partial-benefit dually eligible individuals benefit from the
requirements that SNPs, including D-SNPs, have a MOC that addresses
enrollees' needs and perform periodic HRAs precisely because these

[[Page 33812]]

individuals have greater social, functional, and health needs. States,
through their contracts with D-SNPs, can enhance these care
coordination requirements, including for partial-benefit dually
eligible individuals. Second, QMBs without full Medicaid benefits, who
constitute roughly half of partial-benefit dually eligible individuals
nationally, can benefit when D-SNPs, or the Medicaid managed care plans
offered under the same parent company in which these individuals are
enrolled, pay providers for Medicare cost sharing under a capitation
agreement with the state. Such direct and seamless payment of cost
sharing can result in an improved experience for providers serving
these individuals, which itself may improve access to care for
beneficiaries.
Of course, partial-benefit dually eligible individuals cannot
benefit from these features of the D-SNP program if the state D-SNP
contract excludes these individuals from enrollment, and we recognize
that some states using managed care as a platform for integration
exclude partial-benefit dually eligible individuals from D-SNPs and
other managed care plans. While some states that are using the D-SNP
platform for integration only allow full-benefit dually eligible
individuals to enroll in D-SNPs, others allow partial-benefit dually
eligible individuals to enroll in separate D-SNP plan benefit packages,
facilitating integrated care and seamless provision of benefits for
both categories of dually eligible individuals. We think that allowing
D-SNP look-alikes to continue to enroll partial-benefit dually eligible
individuals with no limit would discourage states from taking this
approach.
Comment: A number of commenters recommended that we set a lower
threshold for the percentage of dually eligible enrollees a non-SNP MA
plan could have, either in actual or projected enrollment. These
commenters expressed concern that a threshold of 80 percent could be
``gamed'' by MA organizations to keep their dual eligible enrollment
just under the ceiling. Some commenters recommended that CMS set the
ceiling for dual eligible enrollment at 50 percent, with a commenter
citing MACPAC analysis showing faster growth in projected enrollment
among MA plans with dual eligible enrollment greater than 50 percent
than among those greater than 80 percent. Another commenter recommended
a threshold of 60 percent.
Response: We appreciate the concern that CMS establish a threshold
that is effective at curtailing D-SNP look-alikes, which we believe
threaten to undermine our ability and that of our state partners to
implement the higher integration standards under the BBA of 2018.
However, as described in the proposed rule, we believe our proposed 80
percent threshold is reasonable because it far exceeds the share of
dually eligible individuals in any given market--no market has more
than 50 percent dually eligible beneficiaries \15\--and, therefore,
would not be the result for any plan that had not intended to achieve
high dually eligible enrollment. The 80 percent threshold also captures
almost three-quarters of enrollment in non-SNP plans with more than 50
percent dually eligible enrollees. We will monitor for potential gaming
after implementation of this final rule by reviewing plan enrollment
data, including the Monthly Membership Report, and consider future
rulemaking as needed.
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\15\ 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.
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Comment: A range of commenters, including MACPAC and MedPAC,
supported the proposed 80 percent threshold for projected and actual
enrollment. Along with several other commenters, MACPAC and MedPAC
urged CMS to monitor levels of MA dual eligible enrollment after
implementation to verify that the final rule's requirements remain
effective against the proliferation of D-SNP look-alikes.
Response: We thank the commenters for their support and agree that
post-implementation monitoring will be important to determine the
effectiveness of the rule. We are finalizing the proposed regulatory
language regarding the dual eligible enrollment threshold at paragraphs
(d)(1)(ii) and (d)(2)(ii) of this final rule and reiterating here that
the threshold includes enrollment of all categories of dually eligible
individuals, including partial-benefit and full-benefit dually eligible
individuals who are actually enrolled in medical assistance under a
state plan under Title XIX.
Comment: A commenter requested that we clarify that the 80 percent
threshold applies at the plan level (that is, the PBP level) and not at
the contract, or ``H number,'' level.
Response: We reiterate here that the 80 percent threshold in
paragraphs (d)(1)(ii) and (d)(2)(ii) applies at the plan level and not
at the contract, or ``H number,'' level.
Comment: A commenter requested that we specify the data source used
to determine the percentage of dually eligible enrollees in a plan
subject to the proposed regulation.
Response: We intend to use data and reports on January enrollment
and dual eligible status, such as the January Monthly Membership
Report, generated by the MARx system (or a similar or successor report)
to determine the percentage of dually eligible enrollees.
Comment: Several commenters stated that our proposed regulatory
language at Sec. 422.514(d), ``CMS does not enter into or renew a
contract under this subpart for an MA plan,'' was confusing since the
language references both contracts and plans. These commenters
suggested that CMS clarify that it will not approve or renew a specific
plan benefit package (PBP), rather than the entire contract, when D-SNP
look-alike MA plans meet the 80 percent threshold.
Response: We appreciate the commenters' request for clarification.
When an MA organization enters into a contract with CMS to offer MA
products, the MA organization can establish multiple PBPs within that
one contract, so long as those products are the same type (for example,
all HMO or all PPO). We proposed the language at paragraph (d) to
accommodate this reality. When an MA organization has multiple plans
under one contract, Sec. 422.514(d), read in combination with contract
severability rules at Sec. 422.503(e), allows CMS to sever the D-SNP
look-alike from the rest of the contract, in effect allowing CMS to
renew only the portion of the contract that does not include the D-SNP
look-alike. We believe the language at paragraph (d) accurately
describes our intent. Therefore, we are finalizing this regulatory
language as proposed. In addition, for those circumstances where the D-
SNP look-alike is the only PBP offered in the contract, we are
finalizing a new paragraph (f) to clarify that we would consider
actions taken consistent with paragraph (d) to warrant special
consideration to exempt affected MA organizations from the denial of an
application for a new contract or service area expansion pursuant to
Sec. Sec. 422.502(b)(3) and (4), 422.503(b)(6) and (7), 422.506(a)(3)
and (4), 422.508(c) and (d), and 422.512(e)(1) and (2). In other words,
when CMS declines to enter into or renew a contract consistent with
paragraph (d), that action does not preclude the impacted MA
organizations from applying for a new MA contract or a service area
expansion or its board members or trustees from serving another MA
organization.
Comment: A commenter recommended that CMS consider defining D-SNP
look-alikes as MA organizations that offer a D-SNP and an MA-PD plan
under the same contract, with the majority (that is, 50 percent or

[[Page 33813]]

more) of dually eligible beneficiaries enrolled in the MA-PD plan
rather than the D-SNP.
Response: While we appreciate the comment, we do not understand the
rationale for defining D-SNP look-alikes as MA organizations that have
a majority of dually eligible individuals enrolled in an MA-PD plan as
compared to a D-SNP offered by the same MA organization. We would be
concerned that any such policy would undermine our proposal in two
ways. First, it would permit certain organizations to maintain D-SNP
look-alikes whenever such plans were coupled with D-SNPs with a larger
number of dually eligible individuals, even if the D-SNP is in a
different geographic area. Second, it would allow D-SNP look-alikes to
continue operating as long as the MA organization did not also offer a
D-SNP under the same contract. Therefore, we decline to accept this
recommendation.
Comment: A commenter supported CMS' proposal at Sec. 422.514(d)(2)
to exempt from the prohibition on D-SNP look-alikes those MA plans that
are active for less than one year and with enrollment less than or
equal to 200 enrollees at the time of CMS' determination. A few
commenters suggested that CMS consider alternative criteria for which
new MA plans are exempted from our proposed requirements. A commenter
recommended that CMS expand the exemption to plans that had been active
three or more years. The commenter believed this change would allow
plans to appropriately respond to any unexpected enrollment patterns.
Another commenter encouraged CMS to raise the enrollment minimum from
200 enrollees to 500 enrollees to better align with enrollment levels
already required for plan viability for Medicare Part D Prescription
Drug Plans (PDPs) and reduce administrative burden.
Response: We appreciate the comments, but we do not find the
recommended changes to be persuasive. While the minimum enrollment
threshold for low enrollment PDPs is higher at 1,000 beneficiaries, we
do not believe PDPs are an apt comparison. We believe a better
comparison for D-SNP look-alikes is the minimum enrollment threshold
for low enrollment SNPs, which is 100 enrollees for plans in existence
for three or more years, as outlined in the 2020 Final Call Letter.\16\
We proposed a minimum enrollment standard of 200 to allow some
additional flexibility for initial enrollment patterns that may not be
representative of the longer term enrollment pattern for the plan. Once
the initial enrollment period has passed or the number of enrollees
during that first year of operation exceeds 200 enrollees, we believe
the enrollment profile accurately reflects whether or not the plan was
designed to exclusively enroll dually eligible individuals. Therefore,
we are finalizing the D-SNP look-alike exemption criteria in this final
rule at paragraph (d)(2)(ii) to exempt those D-SNP look-alikes active
for less than one year and with enrollment less than or equal to 200
enrollees at the time of CMS' determination using January enrollment of
the current year.
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\16\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
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Comment: A commenter noted that certain C-SNPs, including ESRD C-
SNPs, may enroll a large number of dually eligible individuals and
appreciated that we were clear in the proposed preamble that the
proposed enrollment threshold for D-SNP look-alikes only applies to
non-SNP MA plans.
Response: We welcome the comment's perspective. As we stated in the
proposed rule preamble, we proposed 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. We are finalizing as proposed at paragraph (d) that
the prohibition on D-SNP look-alike contracting does not apply to any
specialized MA plan for special needs individuals as defined in Sec.
422.2.
Comment: A commenter supported our proposed implementation timing
at paragraphs (d)(1) and (2) to allow D-SNP look-alikes operating in
2020 to transition enrollees to other MA plans offered by the D-SNP
look-alikes' parent organizations for an effective date of January 1,
2021, and to no longer enter into or renew contracts with D-SNP look-
alikes for plan year 2022 and subsequent years. A few commenters
suggested that CMS finalize any policy on D-SNP look-alikes in time for
plan year 2021 bid preparation, preferably by April 2020, and to ensure
a smooth transition for enrollees. Some commenters requested that CMS
delay implementation of the proposed changes by requesting a one-year
delay, a two-year delay, or by specifically requesting that D-SNP look-
alikes be permitted to operate until 2023 or later. A commenter
recommended CMS employ an incremental phased-in approach so that plans
above the 80 percent enrollment threshold are permitted to continue
operating for a longer period of time. Another commenter suggested
that, if CMS will not allow at least an additional year for
implementation, CMS allow for continuation of certain plans for the
2022 plan year where the MA organization can demonstrate a good faith
effort to apply for and implement a compliant D-SNP product. Commenters
cited various reasons for delaying implementation, including allowing
MA organizations additional time to file applications, gain approval of
compliant D-SNP products, facilitate a smooth transition of enrollees,
and consider continuity of care, nuances of state requirements, and
market dynamics that might conflict with the proposed rule.
A commenter noted that the need for a delay is particularly
important in states where plans' ability to create D-SNPs is limited,
and several commenters emphasized the need for sufficient time to
develop new products, especially to meet state requirements for
integrated plans. A few commenters indicated that CMS' proposed
timeline did not align with the California Advancing and Innovating
Medi-Cal (CalAIM) initiative to integrate Medicare and Medicaid through
D-SNPs and Medicaid MLTSS plans. These commenters expressed concern
that, under the proposed timeline, D-SNP look-alike enrollees in
California could face multiple Medicare plan transitions in a short
period of time, which would potentially disrupt care and confuse
beneficiaries. These commenters believed that a later implementation
timeframe would allow D-SNP look-alikes extra time to implement a
transparent process by which beneficiaries can select plans and
transition with minimal disruption.
A commenter noted the additional time necessary for approval of new
D-SNPs and a coordinated transition process is especially important
given the COVID-19 pandemic. Another commenter requested that CMS allow
at least two years for dually eligible individuals, MA plans, states,
and other stakeholders to review policy options and devise and
implement viable alternatives to CMS' proposal to achieve compliance.
Response: We appreciate the comments supporting the proposed
implementation timeline, and we agree with many of the comments
recommending that we consider delaying the contract limitation for
existing D-SNP look-alikes by one year. While we believe the proposed

[[Page 33814]]

implementation timeframe remains feasible, we understand that providing
an additional year before CMS declines to renew existing D-SNP look-
alike plans would give all states and MA organizations more time to
consider and collaborate on a more integrated approach and an
appropriate transition for enrollees. However, we disagree with the
request to delay the proposed dual eligible enrollment thresholds for
at least two years. We believe that delaying our implementation of D-
SNP non-renewals for one additional year prior will provide sufficient
time for MA organizations to develop and seek approval for new plans,
coordinate with state integrated care efforts, and facilitate a
transparent and smooth transition of beneficiaries.
Therefore, we are finalizing paragraph (d)(2) to provide that CMS
will not renew a contract for a D-SNP look-alike starting for plan year
2023 (rather than plan year 2022 as proposed). For plan year 2023, our
determination that plans meet the criteria in paragraph (d)(2) would be
based on our assessment of the plan's enrollment in January 2022. This
will extend by one year the timeline for CMS to non-renew a contract
for any non-SNP plan with actual enrollment consisting of 80 percent or
more dually eligible enrollees (with the exception of an MA plan active
less than one year and with enrollment of 200 or fewer individuals at
the time of the determination). Additionally, we are finalizing
paragraph (d)(2) with a slight restructuring of using new paragraphs
(d)(2)(i) and (ii) for better organization and clarity.
Comments recommending a delay in implementation were based on MA
organizations seeking more time to establish new D-SNPs, ensure smooth
beneficiary transitions for existing D-SNP look-alike enrollees, and
coordinate transitions with state integrated care approaches. Since
these expressed reasons for an implementation delay apply to existing
D-SNP look-alikes but not to potential new D-SNP look-alikes that are
either in contract application or annual bidding stages, we do not
believe there is a need to delay the effective date for the prohibition
on CMS not entering into contracts for new D-SNP look-alikes.
Implementing the timeline for the prohibition on new D-SNP look-alikes
as proposed also avoids the need for additional beneficiary
transitions.
We are therefore finalizing our proposal in paragraph (d)(1) that
CMS does not enter into a contract--beginning with plan year 2022--for
a new MA plan that projects in its bid submitted under Sec. 422.254
that 80 percent or more of its total enrollment are enrollees entitled
to medical assistance under a state plan under Title XIX. We are
finalizing paragraph (d)(1) with a slight restructuring of using new
paragraphs (d)(1)(i) and (ii) for better organization and clarity. We
are retaining the proposed date in paragraph (d)(1), despite changing
the date in paragraph (d)(2), to prevent the creation of new D-SNP
look-alikes in 2022 that CMS would subsequently non-renew one year
later. We are also finalizing as proposed the timeline on which MA
organizations will be authorized to transition enrollees from a D-SNP
look-alike to another plan, proposed at paragraph (e).
The changes to our proposed policy give MA organizations with
existing D-SNP look-alikes more time to coordinate with state
integrated care approaches and transition enrollees in a thoughtful,
transparent manner that minimizes the number of beneficiary
transitions. This finalized approach also allows D-SNP look-alikes that
are ready to transition their enrollees the ability to do so as soon as
2021 and eliminates the proliferation of new D-SNP look-alikes,
beginning in 2022. We are available to provide guidance to any MA
organization regarding transition to a new or existing D-SNP and
encourage MA organizations to monitor their Monthly Membership Reports
to determine if they are approaching or above the allowable threshold
for dually eligible enrollees in a non-SNP plan in any state where the
contracting limitations under this regulation will apply.
Comment: A commenter noted that if an MA organization has not
submitted an application for a D-SNP for contract year 2021, it would
not be able to transition D-SNP look-alike enrollees in 2021, as the
commenter believed was required under CMS' proposal. This commenter
added that some states have not yet clarified which plans will be
allowed to offer D-SNPs in specific markets for 2021.
Response: We agree with the commenter that the D-SNPs that will
operate in specific markets in plan year 2021 are not yet known and
will not be public information until fall 2020. However, we believe
this commenter may have misunderstood the timing of our proposal. We
proposed to allow, but not require, D-SNP look-alikes operating in 2020
to transition enrollees for an effective date of January 1, 2021, and
we proposed that CMS not enter into or renew contracts with D-SNP look-
alikes beginning January 1, 2022. As explained earlier in this section,
we are finalizing paragraph (d)(2) to allow an additional year--until
plan year 2023--before CMS will decline to renew a contract for an
existing MA plan that meets our dual eligible enrollment threshold.
Under our original proposal, existing D-SNP look-alikes could, but were
not required to, transition their enrollees for a January 1, 2021, or a
January 1, 2022 effective date before the contract limitation in
paragraph (d)(2) requires action by CMS. With our revisions for the
final rule, we are also permitting an option for existing D-SNP look-
alikes to transition enrollees for a January 1, 2023 effective date.
Under the final provisions of Sec. 422.514(d), CMS will permit any new
D-SNP look-alike that begins to operate on January 1, 2021 to continue
operating until December 31, 2022. However, an MA organization offering
such a new D-SNP look-alike could choose to transition its enrollees as
early as January 1, 2022. Further, the transition is not required to be
only to a D-SNP, so the MA organization operating an existing D-SNP
look-alike does not need to apply to offer a D-SNP.
Comment: A number of commenters preferred an alternative discussed
in the proposed rule that would require an MA organization to
transition any dually eligible individuals enrolled in a non-renewing
D-SNP look-alike into a D-SNP for which they were eligible if such a
plan is offered by the MA organization. Some of these commenters
believed D-SNP look-alikes should not be able to transition dually
eligible individuals into other MA plans when a more integrated option
exists. A commenter supported this alternative since it viewed a
requirement to transition dually eligible individuals into D-SNPs as
continuing federal efforts to strengthen integration of care for dually
eligible individuals. A commenter specifically suggested that CMS
prioritize transition of full-benefit dually eligible individuals to D-
SNP products and other integrated plans.
Response: We appreciate the commenters' support for the proposed
alternative, and we share the commenters' preference for integrated
care. Although we considered an alternative in the proposed rule 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. We believe that transitioning D-SNP look-alike enrollees to
D-SNPs or other plans authorized by CMS to exclusively enroll dually
eligible individuals, when one is offered by the

[[Page 33815]]

same MA organization or another MA organization that shares the same
parent organization as the MA organization, furthers federal goals to
integrate care for dually eligible individuals. However, we also expect
that some MA organizations may be unable to transition all D-SNP look-
alike enrollees into the same MA plan, since the D-SNP look-alike
enrollees may not all meet the eligibility criteria for a particular
special needs plan offered by the MA organization or another MA
organization that shares the same parent organization as the MA
organization.
Our proposal included language at paragraph (e)(1) to allow MA
organizations to transition D-SNP look-alike enrollees into one or more
MA plans that meet the criteria proposed at paragraphs (e)(1)(i)-(iii).
While we expect and encourage dually eligible enrollee transitions to
D-SNPs or other integrated plans to occur in many cases, even in the
absence of a specific federal requirement, we believe that the
complexities associated with a regulation that prioritizes or restricts
transitions to D-SNPs or other integrated plans that way would outweigh
the potential benefits. Thus, we are finalizing paragraph (e) that an
MA organization with a non-SNP MA plan determined to meet the
enrollment threshold finalized at paragraph (d)(2)(ii) may transition
enrollees into another MA-PD plan (or plans), including a D-SNP, if
offered by the same MA organization, as long as any such MA-PD plan
meets certain proposed criteria finalized at paragraph (e) and, if such
transition is to a D-SNP, enrollees meet the D-SNP eligibility
criteria.
Paragraph (e) allows MA organizations multiple options. First, an
MA organization can choose not to participate in any transition process
under paragraph (e), in which case the enrollees in a D-SNP look-alike
would be enrolled by default in the original Medicare fee-for-service
program, unless the enrollee made an active choice otherwise. Second,
an MA organization can choose to transition all enrollees from a D-SNP
look-alike to a different plan that meets the criteria in paragraph
(e)(1). Third, recognizing that D-SNP look-alike enrollees may not all
qualify for the same new plan, paragraph (e) allows an MA organization
to transition look-alike enrollees to multiple plans. For example, an
MA organization could transition from its D-SNP look-alike: (1) Dually
eligible enrollees into a D-SNP for which they were eligible and (2)
non-dually eligible enrollees into a non-SNP plan, provided both plans
meet the criteria in paragraph (e)(1).
MA organizations must abide by the anti-discrimination provision
(based on health status) in section 1852 of the Act and Sec. 422.110
and other applicable law (for example, civil rights law) when
exercising the transition authority. These provisions are applicable to
the enrollment transitions authorized under Sec. 422.514(e) and would
be especially important to consider where an MA organization chooses to
transition enrollees into more than one MA plan. With the exception of
transitioning an individual into a C-SNP, an MA organization must not
choose a particular plan for an enrollee to transition into based on
health status, if the enrollee were eligible for more than one plan
offered by the MA organization or its parent organization to receive
transitioned enrollees. For example, it would be a violation of the
anti-discrimination provision if an MA organization transitioned most
dually eligible members from a D-SNP look-alike to a D-SNP but
transitioned dually eligible members with diabetes to a different
qualifying non-SNP MA plan. As necessary, we will monitor use of the
transition authority under this rule to ensure compliance with the
applicable anti-discrimination provisions and may take other action as
warranted to protect beneficiaries.
Finally, we note that we intend to inform state Medicaid agencies
of transitions of enrollees from D-SNP look-alikes into D-SNPs in their
state so the states are aware for purposes of their own integrated care
efforts and communications with stakeholders.
Comment: A commenter requested that CMS add language that
specifically includes MMPs as a plan type eligible to receive
beneficiaries who transition from D-SNP look-alikes. Another commenter
requested that states be given the flexibility to transition dually
eligible look-alike enrollees into a D-SNP or other plan authorized by
CMS to exclusively enroll dually eligible individuals, such as an MMP.
Response: We appreciate these comments. The proposed language did
not explicitly name MMPs as a type of MA plan into which D-SNP look-
alike enrollees could transition because MMPs are not defined in
regulation, and CMS can facilitate enrollments from D-SNP look-alikes
into MMPs under separate authority. We clarify that MMPs are a type of
plan authorized to exclusively enroll individuals entitled to medical
assistance under a state plan under Title XIX. CMS is testing the
Financial Alignment Initiative under section 1115A of the Act. Some of
the demonstration states in the Financial Alignment Initiative are
transitioning individuals from an MA plan, including a D-SNP look-
alike, to an MMP through passive enrollment. If an MA organization also
sponsors an MMP and desires to transition D-SNP look-alike enrollees to
the MMP, we would partner with the state Medicaid agency and use our
existing authority and processes to execute the transition. Outside of
the context of a demonstration or model test under section 1115A of the
Act, however, we do not agree with the commenter's request that states
be given the flexibility to transition D-SNP look-alike enrollees. CMS
will work directly with D-SNP look-alikes to operationalize the
transitions, consistent with other Medicare plan transitions, and
ensure states are aware of them.
Comment: A commenter requested that CMS ensure dually eligible
individuals who previously received care through a managed care plan do
not default into the original Medicare fee-for-service program. The
commenter stated that these individuals should have the opportunity and
support necessary to choose a plan that meets their needs and does not
disrupt their care.
Response: We appreciate the commenter's request and agree with the
concern. However, we expect the number of D-SNP look-alike enrollees
who enroll in the original Medicare fee-for-service program as a result
of this rulemaking to be very small. In our proposed Collection of
Information (COI) burden estimates, we estimated that only one percent,
or 1,808, D-SNP look-alike enrollees would make a Medicare choice other
than the MA plan into which they are transitioned by the MA
organization. Our estimate was based on our experience with the rate of
dually eligible enrollees opting-out of passive enrollment from an MA
plan to an MMP offered by the same parent organization as part of the
Medicare-Medicaid Financial Alignment Initiative.
Comment: A commenter requested that CMS clarify whether the
proposed transition approach allows transition of D-SNP look-alike
enrollees to MA plans of a different plan type, such as from an HMO to
a PPO.
Response: We appreciate the commenter's request for clarification.
In the proposed rule, we stated that our proposed transition process
was conceptually similar to ``crosswalk exception'' procedures
historically allowed by CMS and proposed at Sec. 422.530 in the
proposed rule. We also clarified that, in contrast to the proposed
crosswalk exceptions, our proposal would allow the transition process
to apply across legal entities

[[Page 33816]]

offered by MA organizations under the same parent organization, as well
as between SNPs and non-SNP plans. However, it was not our intent to
allow for the transition process to apply across product types--for
example, HMO to PPO, and vice versa. We are therefore modifying the
regulation text to add a new paragraph (e)(1)(iv) to stipulate that an
MA plan or plans receiving enrollees under the transition process we
are finalizing in paragraph (e) must be of the same plan type (for
example, HMO or PPO) as the D-SNP look-alike. An MA organization will
not be permitted to transition an individual from a D-SNP look-alike
PPO to an MA-PD plan that is an HMO, or vice versa.
Comment: A commenter appreciated that our proposed transition gives
D-SNP look-alikes the ability to transition non-D-SNP members into a D-
SNP across legal entities. This commenter requested that CMS allow
transitions across legal entities in other situations where it would be
in the beneficiary's best interest, such as transitioning a beneficiary
with a chronic condition into a C-SNP under a different legal entity.
Response: The commenter's understanding of our proposed transition
approach in Sec. 422.514 in connection with transitioning enrollees
out of a D-SNP look-alike is accurate. Our approach, which we are
finalizing as proposed at paragraph (e), allows MA organizations to
transition D-SNP look-alike enrollees into an MA plan or plans which
meet the criteria in paragraph (e)(1) and are offered by the same MA
organization or another MA organization that shares the same parent
organization as the MA organization. Under our approach, D-SNP look-
alike enrollees who are eligible for a C-SNP could be transitioned into
a C-SNP that meets the criteria in paragraph (e)(1). With regard to
crosswalks or enrollment changes in other contexts, the recommendation
is outside of the scope of our proposal for Sec. 422.514; we will take
the comment under consideration in connection with the crosswalk
proposal (proposed to be codified at Sec. 422.530) in section VI.C. of
the proposed rule, which we intend to address in a future final rule.
Comment: Some commenters encouraged CMS to finalize the proposed
policy on D-SNP look-alikes with sufficient advance timing, preferably
in advance of the 2021 bid deadline, to allow for enrollee transitions.
Response: We agree it is important, where possible, to finalize the
policy in advance of bid deadlines so that MA organizations can have
sufficient time to make decisions for 2021 plan offerings. At paragraph
(d), we are finalizing the timing of when we would implement the
prohibition on contracting for D-SNP look-alikes with the modifications
discussed earlier. D-SNP look-alikes operating in 2020 may choose to
transition their enrollees effective January 1, 2021, January 1, 2022,
or January 1, 2023, and D-SNP look-alikes operating in 2021 may choose
to transition their enrollees effective January 1, 2022 or January 1,
2023. For plan year 2022 and subsequent years, CMS will not enter into
a contract with a new MA plan that meets criteria outlined in paragraph
(d)(1), and for plan year 2023 and subsequent years, CMS will not renew
a contract with a MA plan that meets criteria outlined in paragraph
(d)(2). We note that MA organizations will be able, under Sec.
422.514(e) as finalized here, to transition enrollees in D-SNP look-
alikes to other plans in advance of CMS non-renewing the D-SNP look-
alike PBPs effective January 1, 2023 and January 1 of subsequent plan
years.
Comment: A commenter noted that D-SNPs currently must have executed
state Medicaid agency contracts with applicable states and requested
that CMS also allow plans to meet this requirement with subcontracts
through a directly contracted entity in order to ease transitions for
beneficiaries into the most integrated plan possible.
Response: Consistent with the revised SMAC requirements and the new
definition of a D-SNP codified in the April 2019 final rule, a plan
must have a direct contract with the state Medicaid agency to meet the
definition of a D-SNP at Sec. 422.2. CMS does not consider
subcontracting arrangements with Medicaid managed care plans in lieu of
SMACs to approve a plan as a D-SNP.
Comment: A commenter recommended that CMS allow an opt-out process
for D-SNP look-alike enrollees being transitioned to a new plan. The
commenter indicated that such an opt-out process would preserve
beneficiary choice.
Response: We appreciate the comment and agree that the ability of
an enrollee to opt out is important to ensure beneficiary choice. As we
discussed in the preamble of the proposed rule, 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 criteria described in the proposed rule
and finalized here. Under the transition authority we are finalizing,
an MA enrollee could be transitioned from one MA plan offered by an MA
organization to another MA-PD plan (or plans) without the enrollee
having completed an election form or otherwise indicate their
enrollment choice as typically required. However, the timing of these
transitions permits the enrollee to make an affirmative choice for
another MA plan of his or her choosing during the annual election
period (AEP) from October 15 through December 7. Section 422.514(e)
ensures this right because the description of the MA plan to which the
enrollee would be transitioned must be provided in the ANOC that must
be sent consistent with requirements in Sec. 422.111(a), (d), and (e).
The ANOC must be sent at least 15 days before the beginning of the AEP.
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. If a
transitioned enrollee elects to enroll in a different plan during the
AEP, enrollment in the plan the enrollee selected would take precedence
over the plan into which the MA organization transitioned the enrollee.
Transitioned enrollees would also have additional opportunities to
select another plan through the Medicare Advantage Open Enrollment
Period described in Sec. 422.62(a)(3) from January 1 through March 31.
Affected individuals may also qualify for a Special Election Period
(SEP), such as the SEP for plan non-renewals at Sec. 422.62(b) or the
SEP for dually eligible individuals or Part D low-income subsidy
eligible beneficiaries at Sec. 423.38(c)(4). For D-SNP look-alike
enrollees who are not transitioned by an MA organization per proposed
paragraph (e)(1), the MA organization must send a written notice
consistent with Sec. 422.506(a)(2). This requirement will ensure that
the content of that notice includes the content sent when a plan is
non-renewing (including information about other enrollment options) and
that the notice is sent by October 2 (90 days before the end of the
year). We believe that the transition process we proposed and are
finalizing provides sufficient opportunity for affected enrollees to
opt out of their new plan and make a different election. Therefore, as
described earlier in this section, we are finalizing the transition
process at paragraph (e) largely as proposed with some minor
modifications and technical changes described elsewhere in this
section.
Comment: A few commenters expressed concern about the disruption

[[Page 33817]]

of aligned Medicare and Medicaid coverage at the point of transition,
especially when an individual is enrolled in a Medicaid plan under the
same parent organization as the D-SNP look-alike. These commenters
recommended that affected beneficiaries be permitted to stay with the
MA plan or MA organization to ensure continued integration of Medicare
and Medicaid benefits. The commenters believed that such a disruption
in ongoing care plans and care teams at the individual level would
likely outweigh any additional benefit from the D-SNP integration
requirements at the plan level.
Response: We appreciate the commenters' concerns about potential
disruption of aligned coverage. The transition approach proposed and
finalized at paragraph (e) permits MA organizations to transition D-SNP
look-alike enrollees into another MA plan or plans (including into a D-
SNP for enrollees who are eligible for such a plan) offered by that MA
organization or by another MA organization that shares the same parent
organization. We expect the vast majority of D-SNP look-alike enrollees
to be transitioned into a plan offered by the same parent organization
as the D-SNP look-alike, which would facilitate the sharing of any
enrollee care plans and, in some cases, continued access to the same
care teams. Also, as explained earlier in this section, we estimate
that only one percent of D-SNP look-alike enrollees will move to the
original Medicare fee-for-service program or to another MA plan outside
of the same parent organization. To the extent that any enrollees in a
D-SNP look-alike are enrolled in a Medicaid managed care plan under the
same parent organization as the D-SNP look-alike, the transition
authority finalized in paragraph (e) allows similar enrollment in plans
offered by the same entity or parent organization.
Comment: Some commenters requested that CMS consider state-specific
integrated care initiatives as it finalizes its transition policy. In
particular, a few commenters encouraged CMS to coordinate transition of
D-SNP look-alikes with states where integrated care plan initiatives
are proposed or underway to avoid unintended confusion or enrollment
barriers for dually eligible individuals. A commenter suggested that
CMS issue guidance to states about enrollee transitions initiated by D-
SNP look-alikes so that transitions of dually eligible individuals are
coordinated with any changes that states are proposing in Medicaid
enrollment, which would help minimize the number of transitions an
individual experiences over a short period of time. A few commenters
requested that CMS consider the impacts of any state-imposed moratorium
on contracting with D-SNPs in counties where MMPs are offered, citing
such a policy in California. A commenter stated that any such
moratorium could affect the ability of individuals who have opted out
of MMPs or do not meet MMP eligibility criteria to enroll in other
integrated plan options. Another commenter noted that D-SNPs are best
positioned to meet the unique needs of dually eligible individuals, and
the California restrictions on D-SNP enrollment are harmful when dually
eligible individuals do not have the flexibility to enroll in a D-SNP.
This commenter expressed concern that if CMS moved forward with the
proposed policy and D-SNPs remained closed to enrollment, beneficiaries
in areas like those in certain California counties would likely enroll
in non-SNP MA plans that not only would not offer the care coordination
required by D-SNPs, but may impose higher premiums and out-of-pocket
expenses.
Response: We thank the commenters for sharing these concerns. As we
stated in our proposed rule preamble, section 164(c)(4) of MIPPA does
not obligate states to contract with D-SNPs, which therefore provides
states with significant control over the availability of D-SNPs. As
discussed earlier, we are finalizing language to delay CMS non-renewal
of D-SNP look-alikes to January 1, 2023 and subsequent years, to allow
more time for MA organizations and states to coordinate transitions.
This delay will also better align the timing of any enrollee
transitions from D-SNP look-alikes in California with the current
CalAIM implementation timing of January 1, 2023. We do not expect D-SNP
look-alike enrollees to experience higher premiums since the transition
approach proposed and finalized at paragraph (e) only permits MA
organizations to transition D-SNP look-alike enrollees into MA plans
that meet certain criteria, including having a combined Part C and Part
D premium of $0 for individuals eligible for the premium subsidy for
full subsidy eligible individuals described in Sec. 423.780(a).
Comment: A commenter appreciated CMS giving MA plans the ability to
transition enrollees in non-D-SNP look-alikes into D-SNPs across legal
entities but expressed concern that there could be disproportionate and
unintended impacts to the Members Choosing to Leave the Plan Star
Rating measure for contracts with the D-SNP look-alikes where the
transition authority is used. This commenter requested that CMS ensure
that all proposed D-SNP look-alike transitions are excluded from the
Members Choosing to Leave the Plan Star Rating measure because the
commenter did not believe this measure, which is representative of
enrollee satisfaction, would accurately reflect performance if
transitioned members were included in the measure.
Response: We thank the commenter for raising this issue. The
specifications for the Members Choosing to Leave the Plan Star Rating
measure allow beneficiaries transitioned as a result of a PBP
termination to be excluded from the calculation of this Star Rating
measure. The vast majority of D-SNP look-alike enrollees transitioned
into another MA plan or plans will be identified in MARx as
disenrollment reason code 09, termination of a contract (CMS-
initiated), or disenrollment reason code 72, disenrollment due to a
plan-submitted rollover. Neither disenrollment reason code 72 nor 09
will be counted toward the calculation of the Members Choosing to Leave
the Plan Star Rating measure. As discussed earlier, we estimated one
percent of, or 1,808, D-SNP look-alike enrollees would make a Medicare
choice other than the MA plan into which they are transitioned. MARx
will identify these transitions as disenrollment code 13, disenrollment
because of enrollment in another plan, and these transactions will be
counted toward calculation of the Members Choosing to Leave the Plan
Star Rating measure. Since such a small number of transitioning D-SNP
look-alike enrollees would be counted, we do not believe a change to
the Star Rating measure specifications is needed.
Comment: Some commenters requested that CMS only permit D-SNP look-
alikes to transition members into other MA plans for which provider
networks have at least a 90 percent overlap with the provider network
of the D-SNP look-alike. These commenters requested that, if this
standard is not met, enrollees should not be transitioned to another
plan and instead default to coverage under the original Medicare fee-
for-service program. One of these commenters noted that because any
plan receiving D-SNP look-alike enrollees would be part of the same
parent organization as the D-SNP look-alike, that parent organization
could adjust the MA plan networks to meet this 90 percent standard.
Response: We appreciate the commenters' concern that dually
eligible individuals maintain their providers from the network of the
D-

[[Page 33818]]

SNP look-alike. As we discussed in response to other comments, MA
organizations may transition enrollees from a D-SNP look-alike into
another MA plan offered by the same parent organization, including a D-
SNP. Many provider participation agreements used by MA organizations
include provisions that the providers contract for all product types
the MA organization offers. In fact, CMS assesses network adequacy at
the contract level rather than at the plan level (see section V.A. of
this preamble). In similar instances where CMS transitioned enrollees
from MMPs to D-SNPs under the same parent organization, there was a
high degree of overlap in the provider network, as assessed at the
contract level. Based on our understanding of common contracting
processes and past experience with MMPs and MA organizations that offer
D-SNPs, we believe a high degree of overlap will exist between the
contracted provider networks in a D-SNP look-alike and a MA plan
offered by the same parent organization, making it unnecessary for CMS
to impose a standard that requires a specific percentage of provider
overlap. Additionally, and as we noted earlier in this section, in
those instances where a dually eligible individual receives notice that
they are being transitioned to a MA plan that does not include their
providers, they retain the ability to choose a different MA plan or the
original Medicare fee-for-service program. Finally, in any instances in
which there would be meaningful network differences between the D-SNP
look-alike and the MA plan to which a member is transitioned, we
strongly encourage plans to communicate with members about the
potential impacts of such changes.
Comment: A commenter explained that there were many lessons learned
during the implementation of Cal MediConnect, a capitated model
demonstration under the Financial Alignment Initiative, that
highlighted the importance of consumer protections such as continuity
of care and network parity. The commenter noted that during the
transition to Cal MediConnect, the Department of Health Care Services,
California's state Medicaid agency, implemented continuity of care
standards and provided guidance allowing the receiving Cal MediConnect
plan, which was an MMP, to use the HRA completed by a D-SNP. To
minimize disruptions in care, the commenter requested that CMS consider
beneficiary protections similar to those included in the state's
proposed CalAIM D-SNP transition plan and establish requirements for
transferring a D-SNP look-alike enrollee's HRA and care plan, as well
as requirements for continuity of care and network parity, and a
prohibition on receiving plans' imposition of additional cost-sharing
requirements.
Response: We appreciate the commenter's perspective and support a
smooth transition between D-SNP look-alikes and another MA plan, but we
do not believe establishing additional requirements as suggested is
necessary. As discussed in the preamble of our proposed rule, D-SNP
look-alikes are not subject to federal D-SNP requirements, including
the requirements to develop HRAs and individualized care plans. Thus,
we do not expect D-SNP look-alikes necessarily will have any HRAs or
care plans to transfer to another MA plan in connection with the
transition of a beneficiary's enrollment. As discussed earlier in this
section, to the extent that a D-SNP look-alike has developed HRAs or
individualized care plans, we expect the vast majority of D-SNP look-
alike enrollees to be transitioned into a plan offered by the same
parent organization as the D-SNP look-alike. We believe that
transitions under paragraph (e) will facilitate the sharing of any HRAs
and care plans and promote continuity of care because the new plan will
be operated by an entity with the same parent organization, if not the
same MA organization, which likely means overlapping or the same
personnel and policies. Additionally, all transitioning beneficiaries
will have Medicare's standard Part D continuity of care protections for
prescription drugs (including temporary fills of non-formulary drugs
during a transition period as provided under Sec. 423.120(b)(3)).
Plans receiving transitioned enrollees must also provide other
continuity of care requirements for MA plans, including those outlined
in Sec. 422.112(b). As we describe earlier in this section, we believe
that there will be a high degree of provider network overlap across
plans that are offered by the same MA organization or share a parent
organization, making it unnecessary for CMS to impose a standard that
requires a specific percentage of provider overlap. Finally, we do not
expect D-SNP look-alike enrollees to experience higher premiums since
the transition approach proposed and finalized at paragraph (e) only
permits MA organizations to transition enrollees in a D-SNP look-alike
into MA plans that meet certain criteria, including having a combined
Part C and Part D premium of $0 for individuals eligible for the
premium subsidy for full subsidy eligible individuals described in
Sec. 423.780(a). We also note that, pursuant to Sec. 422.504(g)(1),
MA organizations cannot impose cost sharing requirements for Medicare
Parts A and B services on full-benefit dually eligible individuals that
would exceed the amounts permitted under the state Medicaid plan if the
individual were not enrolled in the MA plan.
Comment: Several commenters encouraged CMS to require that the ANOC
notifying a beneficiary being transitioned to a new plan identify D-SNP
look-alike providers known to not be in the receiving plan's network,
focusing specifically on primary care providers and specialists who the
beneficiary has seen twice or more in the past year. One of these
commenters explained that this information would help beneficiaries
make informed choice about whether to participate in the transition and
prevent surprise access-to-care issues in the early months of
enrollment. A commenter expressed a similar view but suggested the ANOC
identify any providers seen in last year. Another commenter noted the
importance of a plan's provider network to beneficiaries with
disabilities. We also received one comment recommending that the ANOC
contain information about other plan options.
Response: We appreciate the commenters' perspectives and support
transparency on MA provider networks, but we do not agree that the ANOC
is an appropriate means of communicating beneficiary-specific provider
information since it is not a beneficiary-specific notice. Standardized
language in the ANOC model already provides general information about
changes to an MA plan's network and directs enrollees to the plan's
updated provider network directory to help with decision-making during
the AEP. As we discussed earlier in this section, we believe the vast
majority of D-SNP look-alike enrollees will be transitioned into an MA
plan within the same parent organization as the D-SNP look-alike and
there will be a high degree of provider network overlap across plans
that are offered by the same MA organization or share a parent
organization, lessening the need to provide beneficiary-specific
provider information. Additionally, and as we noted earlier in this
section, in those instances where a dually eligible individual is
transitioned to a MA plan that does not include their providers, they
retain the ability to choose a different MA plan or the original
Medicare fee-for-service program.

[[Page 33819]]

While we support beneficiary education and choice about plan
options, we also do not believe the ANOC is the appropriate vehicle for
communicating information about other plan options. As described
earlier, the transition process of D-SNP look-alike enrollees into
another MA plan or plans will overlap with the AEP. Enrollees who are
subject to being transitioned under Sec. 422.514(d) have multiple ways
of identifying other plan choices, such as through reviewing the
Medicare & You Handbook, consulting Medicare Plan Finder, and
contacting 1-800-Medicare and the State Health Insurance Assistance
Program in their state.
Comment: A commenter requested that CMS provide guidance for
providers and beneficiaries explaining why the transition from D-SNP
look-alikes to another MA plan or plans is occurring.
Response: We appreciate the comment and the desire for providers
and beneficiaries to be informed about the transition. However, we
believe it is the responsibility of MA organizations that are
transitioning enrollees to other MA plans to educate providers and
enrollees about the transition and the benefits of the new (receiving)
plans. As discussed earlier in this section, the MA organization
receiving D-SNP look-alike enrollees is required to send these
enrollees an ANOC consistent with Sec. 422.111(a), (d), and (e) that
includes information on benefits and provider network changes. We are,
however, finalizing paragraph (e)(2)(ii) with minor modifications to
clarify that the responsibility of providing information to
transitioned enrollees in the ANOC rests with the MA-PD plan into which
individuals are transitioned, and that the ANOC describes changes to
the MA-PD plan's benefits and provides information about the MA-PD
plan.
Comment: A commenter expressed support for the proposed D-SNP look-
alike contracting standards, while noting potential negative impacts,
including reduced plan competition and consumer choice. The commenter
recommended that states be required to contract with all MA-PD plans
that have an approved MOC and suggested three different contracting
options: (1) States enter into a care coordination contract with plans;
(2) states pay plans to coordinate Medicare and Medicaid services,
assuring alignment with the state's strategy to deliver LTSS or managed
LTSS (MLTSS); and (3) states pay plans to coordinate Medicare and
Medicaid services and deliver LTSS. Another commenter suggested that
plans meeting certain CMS criteria for integrated care could earn a
``Standard of Excellence for Dually-Eligible Individuals'' seal of
approval that could be used for marketing purposes and posting on
Medicare Plan Finder.
Response: We appreciate the commenters' input on strategies that
could improve plan competition and support consumer choice. We note
that some of the commenters' recommendations, such as requiring states
to contract with all MA-PD plans that have an approved MOC, are beyond
CMS's existing authority. As we gain experience with implementing the
requirements in this final rule, we will take into consideration those
recommendations that are within CMS's authority.
Comment: A commenter recommended CMS consider requiring that any
entity that meets the 80 percent dual enrollment threshold meet minimum
standards of integrated care coordination and data sharing for its
full-benefit dually eligible members, including in the eight states
that do not currently have any D-SNPs (as of July 2019). This commenter
supported requiring that MA organizations in these eight states
transition members to an MMP if one exists or, if one does not, submit
a MOC, complete HRAs, and provide integrated care coordination and
information sharing for all of its full-benefit dually eligible
members.
Response: We appreciate the commenter's alternative approach. We
clarify that proposed paragraphs (d)(1) and (2) would, in fact, limit
new and existing D-SNP look-alikes from operating in states where a D-
SNP or any other plan authorized by CMS to exclusively enroll
individuals entitled to medical assistance under a state plan under
Title XIX, including MMPs, exists. The limit on new D-SNP look-alikes
precludes CMS from entering into a new contract for a D-SNP look-alike
for 2022 and subsequent years. The limit on existing D-SNP look-alikes
precludes CMS from renewing a contract for an existing D-SNP look-alike
for 2023 and subsequent years. However, under current law, CMS does not
have the authority to require D-SNP look-alikes in the eight states
without D-SNPs to submit MOCs, conduct HRAs, or provide integrated care
coordination and information for all of its full-benefit dually
eligible members. Section 1859(f) of the Act requires that each D-SNP
have a contract with the state Medicaid agency; this requirement is in
addition to other D-SNP requirements this commenter references.
Allowing D-SNP look-alikes to operate without such state contracts
would allow such plans to circumvent an important D-SNP requirement.
Comment: A few commenters proposed the application of new federal
measures nationwide that would require D-SNP look-alikes to make
progress on a pathway toward greater care integration. Rather than not
approving or renewing contracts for certain D-SNP look-alikes, a
commenter suggested that this alternative approach would assure
continued beneficiary choice, as certain integrated care plans receive
lower Star Ratings than other plans that do not provide integrated
care. Another commenter suggested that D-SNP look-alikes could provide
more integrated care if CMS required them to notify the state Medicaid
agency or appropriate Medicaid managed care plan when full-benefit
dually eligible individuals are admitted to a hospital or skilled
nursing facility (that is, the requirement recently codified at Sec.
422.107(d) as one of three integration options available to D-SNPs
beginning in 2021).
Response: We appreciate the support for increased opportunities to
integrate care for individuals who are dually eligible and the
importance of beneficiary choice. Though we intend, through this final
rule, to discourage the rapid proliferation of D-SNP look-alikes that
undermine the statutory and regulatory framework for D-SNPs, we will
continue to consider other ways to further promote integrated care for
individuals who are dually eligible.
Comment: A few commenters proposed that CMS conduct additional
research on the market dynamics of D-SNP look-alikes, noting factors
such as incentives for brokers who steer enrollees toward or away from
certain service delivery models. These commenters suggested that,
rather than implementing broad restrictions on D-SNP look-alikes, CMS
could address those market distortions directly. For example, if D-SNP
look-alikes result from inappropriate steering of beneficiaries, these
commenters noted that CMS could institute measures reinforcing
referrals to products best suited to the beneficiary's needs. A few
commenters noted that if misleading marketing practices were found to
be a root cause, CMS has regulations and program rules to stop them.
Another commenter supported the strong enforcement of existing
marketing and broker requirements to prevent the targeting of dually
eligible individuals for marketing MA plans that do not offer
integrated care. The commenter noted that if CMS believes it lacks the
authority required to discontinue this behavior, Congress should grant
the agency the authority it needs.
Response: We appreciate the commenters' perspectives on the need

[[Page 33820]]

to avoid beneficiary confusion and take steps against misleading
marketing practices. Our proposed rule included various proposed
provisions codifying previous subregulatory guidance from the Medicare
Communications and Marketing Guidelines prohibiting non-D-SNP plans
from marketing their plan as if it were a D-SNP; those proposals will
be addressed in a future final rule. We note, however, that MA
organizations remain responsible for ensuring that their agents and
brokers comply with part 422, subpart V. Current requirements (such as
Sec. 422.2268(a)(1) and (2)) include prohibitions on misleading or
confusing marketing and communications; MA organizations must ensure
downstream entities--such as their agents and brokers--that perform
marketing or enrollment on behalf of the MA organization also comply
with these requirements. We will also continue to monitor plans'
compliance with CMS marketing rules prohibiting misleading marketing
practices, including activities of agents and brokers, to ensure that
dually eligible individuals can make informed choices. This includes
review of complaints about inappropriate marketing practices CMS
receives through the Complaint Tracking Module described in Sec.
422.504(a)(15). As we gain experience with implementing the
requirements in this final rule, we will evaluate whether additional
rulemaking on marketing practices is necessary.
Comment: A few commenters suggested improving and increasing
education for dually eligible individuals and providers about the
benefits of integrated care and the availability of plans that offer
such care. A few commenters suggested that brokers should be required
to educate dually eligible individuals on the integrated care options
within their service area to assure that they can make informed
choices. A commenter recommended that CMS require any low-premium MA
plan that attracts dually eligible individuals to educate them about
the availability of D-SNP options within their service area.
Response: We appreciate recommendations for improved provider and
beneficiary education on the availability and benefits of integrated
products, and we will take into consideration ways to strengthen agent
and broker training requirements and marketing rules within our current
authority.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed provisions at Sec. 422.514(d) and (e) with the
following modifications:
We are reorganizing the regulation text by adding new
paragraphs (d)(1)(i) and (ii) and (d)(2)(i) and (ii) for better
organization and clarity of the final requirements, as well as to
establish different effective dates for the provisions of paragraphs
(d)(1) and (2). Accordingly, we are also updating the reference in
paragraph (e)(1)(i) from paragraph (d)(2) to paragraph (d)(2)(ii).
We are finalizing the provision at paragraph (d)(2) with
the date 2023 instead of 2022 to extend by one year the timeline on
which the contract limitation will apply to an existing non-SNP plan
with actual enrollment consisting of 80 percent or more dually eligible
enrollees (with the exception of an MA plan active less than one year
and with enrollment of 200 or fewer individuals at the time of the
determination).
We are modifying paragraph (e)(1)(iv) to stipulate that an
MA plan (or plans) receiving enrollees under the transition process in
paragraph (e) must be of the same plan type (for example, HMO or PPO)
as the D-SNP look-alike.
We are making a minor modification to paragraph (e)(2)(ii)
to eliminate the reference to Sec. 422.2267(e)(3), as that proposed
provision is not being finalized in this rule. We are also modifying
paragraph (e)(2)(ii) to clarify that the responsibility of providing
information to transitioned enrollees in the ANOC rests with the MA-PD
plan into which individuals are transitioned, and that the ANOC
describes changes to the MA-PD plan's benefits and provides information
about the MA-PD plan.
We are finalizing paragraph (e)(4) with a technical change
to clarify that the content as well as the mechanism and timing
requirements in Sec. 422.506(a)(2) apply to the notice an MA
organization must provide to any enrollees in a D-SNP look-alike that
the MA organization is not transitioning to a new plan.
We are adding a new paragraph (f) to clarify that we would
consider actions taken consistent with paragraph (d) to warrant special
consideration to exempt affected MA organizations from the denial of an
application for a new contract or service area expansion pursuant to
Sec. Sec. 422.502(b)(3) and (4), 422.503(b)(6) and (7), 422.506(a)(3)
and (4), 422.508(c) and (d), and 422.512(e)(1) and (2).
[GRAPHIC] [TIFF OMITTED] TR02JN20.000

[[Page 33821]]

III. 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.
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.
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 III.B. and III.C. of this final 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
proposed 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.
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.
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.
As noted earlier, 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.
We received a large number of comments related to this proposal.
The discussion below pertains specifically to comments related to
eligibility and the removal of the prohibition on beneficiaries with
ESRD enrolling in an MA plan as proposed in Sec. Sec. 422.50(a)(2),
422.52(c), and 422.110(b).
Comment: Generally, all commenters supported the statutory change
removing the prohibition for ESRD beneficiaries to enroll in an MA
plan. Many commenters noted that allowing these beneficiaries to enroll
in MA plans will provide care coordination and, thus, improved clinical
outcomes for this vulnerable population. A commenter also noted that MA
beneficiaries have a relatively low rate of switching among plans and
tend to stay with the selected plan long term, and this could
contribute to better outcomes through longer coordination of care. Many
commenters stated that this change will provide options for obtaining
supplemental benefits and access to health and wellness programs not
available in Original Medicare.
Several commenters stated that MA plans provide a maximum out-of-
pocket (MOOP) cost sharing for all enrollees, which makes MA an
attractive option for these beneficiaries with high annual medical
costs. Commenters noted that this MOOP may significantly decrease
patients' out-of-pocket costs. A commenter noted that the MOOP is
especially important for those ESRD beneficiaries who are under age 65,
and may not be eligible to purchase a Medigap policy to supplement
their Original Medicare expenses. Several commenters noted that this
provision will help improve the lives of, and empower, ESRD
beneficiaries consistent with the President's Executive Order on
Advancing American Kidney Health.
Response: We agree with the commenters and appreciate their support
of the proposal.
Comment: Several commenters requested that CMS clarify if the
current optional employer/union group waiver for enrollment of ESRD
members will be eliminated and, if so, questioned when guidance would
be updated to reflect the change.
Response: Under Section 1857(i) of the Act, CMS has the statutory
authority to waive or modify requirements that hinder the design of,
the offering of, or the enrollment in, employer/union-sponsored MA
plans. As noted in the Medicare Managed Care Manual Chapter 9, section
30.3, CMS used this authority to grant a waiver to allow MA plans
offered by MA organizations under contract with an employer or union,
or offered directly by an employer or union, to choose to accept
enrollees with ESRD under certain circumstances, provided that all
otherwise eligible individuals with ESRD are permitted to enroll. With
the enactment of the Cures Act, effective plan years on or after
January 1, 2021, the prohibition on MA enrollment for ESRD
beneficiaries is removed. Therefore, the waiver will no longer be
effective and MA plans, including MA EGWPs, must accept enrollments of
ESRD beneficiaries. We plan to update guidance as soon as possible.
Comment: A commenter questioned if the 30-month coordination of
benefits period for those entitled to Medicare based on ESRD status
will be eliminated based on the removal of the prohibition.
Response: The regulation codifies that those individuals with ESRD
cannot be restricted from enrolling in an MA plan. However, nothing in
the language of the regulation eliminates or is to be construed as
eliminating the 30-month coordination of benefits period that section
1862(b)(1) of the Act imposes with regard to Medicare coverage of
beneficiaries whose entitlement is based on ESRD. In other words, any
Group Health Plan coverage effective at the time a beneficiary with
ESRD enrolls in an MA plan will remain the primary payer during the 30-
month coordination of benefits period.
Comment: A commenter questioned how removing the prohibition on
individuals with ESRD from enrolling in

[[Page 33822]]

MA plans will impact the way ESRD information must be obtained and
reconciled in order to ensure appropriate payment. The commenter also
questioned if CMS is considering increasing resources for the
QualityNet helpdesk, as ESRD enrollments in MA plans are likely to
increase, which may prompt higher volumes of cases where ESRD statuses
and payments need to be reconciled and corrected in the future.
Response: Completion of the CMS-2728-U3 form (End Stage Renal
Disease Medical Disease Evidence Report--Medicare Entitlement and/or
Patient Registration, OMB control number 0938-0046) by a dialysis
center, (including physician attestation and patient signature) is
required for an individual to be medically determined to have ESRD for
purposes of filing for Medicare benefits. However, collection of these
data on the CMS-2728-U3 are also used to establish and maintain a
nationwide kidney disease registry for dialysis, transplant, and
prospective transplant patients, and will store pertinent medical facts
on each registrant, regardless of Medicare status. CMS enrollment
systems ultimately receive this information resulting in MA plans
receiving payment based on ESRD capitation rates and risk adjustment.
Further information on this process can be found in section 6.2.2 of
the Plan Communication User Guide for Medicare Advantage Prescription
Drug Plans.
At this time, we have no plans to add additional resources to the
QualityNet Help Desk but we will monitor call volumes to see if we need
to increase the number of agents fielding ESRD Quality Reporting System
calls.
Comment: A commenter requested clarification on whether MA plans
will be allowed to include the question regarding ESRD status on the MA
enrollment form. The commenter also questioned if this change will
impact the required Data Elements to consider an enrollment request
complete.
Response: CMS has proposed changes to the standard (``long'') model
form used for MA and Prescription Drug Plan (PDP) enrollment (currently
approved under OMB control number 0938-0753 CMS-R-267), to reduce data
collection and simplify the enrollment process. When adopted, the new,
``shortened'' enrollment form will 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. The new ``shortened'' form used for enrollment into MA and
PDP plans will not contain the ESRD status question. We expect MA plans
to use the new shortened form, (once OMB has approved its use) for the
2020 AEP, which begins on October 15, 2020, for January 1, 2021
effective dates. This timeframe aligns with the effective date of the
removal of the prohibition of MA enrollment for ESRD beneficiaries. As
the ESRD status question will not be on the form, it is not a data
element which will be required to consider the enrollment complete. MA
plans do not need to know the ESRD status of an enrollee to process an
enrollment in light of the changes made by the Cures Act, and are
prohibited from discriminating against potential enrollees on the basis
of a health status factor. Data element requirements will be updated in
future guidance.
Comment: A commenter questioned how CMS plans to work with state
Medicaid agencies regarding implementation of ESRD enrollment in D-
SNPs. Specifically, the commenter stated that some states do not permit
enrollment into a D-SNP plan when a beneficiary has been diagnosed with
ESRD and questioned how CMS plans to address the discrepancy between
current state enrollment restrictions prohibiting patients with ESRD
from enrolling in a state's D-SNP plans and the removal of the
prohibition. The commenter also questioned if CMS will require states
to adopt policies or align with CMS' enrollment changes.
Response: States already have the ability in their state Medicaid
agency contract with each D-SNP to restrict which dually-eligible
individuals may enroll in the D-SNP. If the state's contract with a D-
SNP excludes those with ESRD, the D-SNP may retain that exclusion in
order to comply with the state contract required under Sec. 422.107.
Comment: A commenter questioned how the enrollment change will
affect MMPs. They specifically questioned if CMS and state Medicaid
agencies will revise the three-way-contracts and if MMP plan rates
would be affected.
Response: We note that currently, most states that are testing a
capitated model of integrated care in demonstrations under the
Financial Alignment Initiative (FAI) authorized under section 1115A of
the Act permit those beneficiaries with ESRD to enroll in MMPs. Only
South Carolina and six counties in California exclude those with ESRD
from enrolling in an MMP. We are consulting with those two states to
determine if, starting CY2021, they want to continue that exclusion
under the model of integrated care being tested under the FAI
demonstration authority. If they decide they do want to include the
ESRD population, CMS would work with those states to update the
applicable Medicaid MMP rates, as needed. The MMP Medicare rate
structure already includes rates specific for individuals with ESRD and
these rates would apply for any MMP enrollees with ESRD; specifically,
the ESRD dialysis state rate applies for individuals in the dialysis
and transplant status phases, and the Medicare Advantage 3.5 percent
bonus county rate applies for individuals in the functioning graft
status phase, with all of these rates risk adjusted using the
Hierarchical Condition Category -ESRD risk adjustment model for the
applicable year.
Comment: A commenter stated that a disproportionate share of
beneficiaries with ESRD could be enrolling in D-SNPs and requested that
CMS monitor enrollment of beneficiaries with ESRD into D-SNPs and
ensure that payments are adequate.
Response: We appreciate the feedback provided by the commenter. We
will continue to analyze these issues as additional data emerges. We
will consider whether, consistent with the statutory requirements for
setting ESRD rates in section 1853(a)(1)(H) of the Act, any refinements
to the ESRD rate setting methodology may be warranted in future years.
Comment: A commenter stated that there should be oversight and
penalties for companies who use aggressive marketing campaigns to
recruit ESRD patients and ``bait and switch'' with services the
beneficiary was promised and not delivered.
Response: We appreciate the commenters' concerns. MA plans must
comply with the marketing and communications requirements in 42 CFR
part 422, subpart V, and specifically, Sec. 422.2268(a)(1) and (2),
which include prohibitions on providing information that is inaccurate
or misleading, and engaging in activities that could mislead or confuse
Medicare beneficiaries. As part of ensuring their compliance with these
requirements, MA organizations must monitor and oversee the activities
of their subcontractors, downstream entities, and/or delegated entities
as well. If CMS finds that MA plans have failed to comply with
applicable rules and guidance, CMS may take compliance or enforcement
actions, including, but not limited to, intermediate sanctions or civil
money penalties.
Comment: Some commenters raised concerns with implementing new
rules given the ongoing COVID-19 pandemic and the strain it is putting
on the entire United States health care system. A few commenters urged
CMS to consider delaying implementation of this change

[[Page 33823]]

and continue to prohibit beneficiaries with ESRD from enrolling in MA
plans until at least 2022. A commenter requested that CMS consider
making all new 2021 requirements voluntary rather than mandatory.
Response: The statutory change provides beneficiaries with the
right to make an election for an MA plan if they meet the otherwise
applicable requirements beginning January 1, 2021. CMS lacks authority
to delay implementation of this statutory change. We are sympathetic to
the commenters' concerns that additional changes during the on-going
pandemic may increase burdens and make compliance more difficult.
However, the pandemic has further indicated that it is important to
break down the barrier that has prohibited beneficiaries with ESRD from
the enrolling in MA and having access to benefits such as care
coordination and limitations to out-of-pocket costs. We also note that
these changes are required by law (the Cures Act), effective for plans
years on or after 2021. We appreciate that the COVID-19 pandemic has
interrupted timing for implementing new requirements, but we are also
mindful of the fact that the Cures Act was enacted in 2016 and, as a
result, plans have been aware of the change and are likely planning for
these enrollments.
Comment: Several commenters suggested that CMS develop educational
materials that will provide accurate and objective information about MA
plan availability and options, services provided, and potential out-of-
pocket costs. A commenter requested that CMS provide clear and easy to
understand rules that prohibit discriminatory behavior so that patients
that are entitled to Medicare Part A and enrolled in Part B know how
they can exercise their right to select an MA plan.
Response: Thank you for the comments. We agree, and as we implement
this new and important policy, we will continue to provide educational
and outreach materials and other clear guidance to those beneficiaries
that are entitled to Medicare Part A and enrolled in Part B. CMS has
reviewed, and will continue to review beneficiary publications to
identify potential areas for improvement, and update public facing
documents as needed so that Medicare beneficiaries are able make an
informed coverage choice.
Comment: A commenter stated that it is important for individuals
with ESRD to have access to MA plan options through special election
periods (SEPs) for exceptional conditions. A commenter stated that an
ESRD beneficiary should understand his or her option to change back to
Original Medicare. Another commenter noted that if people sign up for
MA and they realize it is not the option for them, they should have the
ability to modify their enrollment, switch plans, or to cancel and
return to Original Medicare.
Response: We agree that beneficiary choice is important and
beneficiaries with ESRD--like all other beneficiaries--should carefully
consider their enrollment options when they become eligible for
Medicare and during subsequent AEPs. All beneficiaries who join an MA
plan have opportunities to change plans or return to the original
Medicare fee-for-service program during the AEP (October 15 through
December 7) or the Medicare Advantage Open Enrollment Period (January 1
through March 31, and during the first three months of Medicare Part A
entitlement and Part B enrollment). In some cases, such as when a
beneficiary moves out of the service area or is in a plan that does not
renew its contract, a SEP is available. Of particular note is the
``SEP65,'' wherein an MA eligible individual who elects an MA plan
during his or her initial enrollment period for Part B surrounding his
or her 65th birthday may disenroll from this MA plan and elect coverage
through the original Medicare fee-for-service program any time during
the 12-month period that begins on the effective date of coverage in
the MA plan. Beneficiaries may also use SEPs for exceptional conditions
newly codified in Sec. 422.62(b)(4) through (25) and described in
section 30.4.4 of Chapter 2, Medicare Managed Care Manual, as
appropriate, including the SEP for Individuals with ESRD Whose
Entitlement Determination Made Retroactively to enroll in an MA plan.
Further, to the extent that there is an exceptional situation for an
individual that is not addressed by our existing SEPs, codified in this
final rule, we will have the ability to respond to the exceptional
situation pursuant to Sec. 422.62(b)(26). Finally, there are SEPs
available, under Sec. 422.62(b)(3), in situations where the MA plan
fails to provide medically necessary services or the plan (or its
agents) materially misrepresented the plan's provisions in marketing
materials.
Comment: A commenter suggests the establishment of an ESRD
ombudsman to address any issues with implementation of this expansion
of MA eligibility that may arise for beneficiaries, MA organizations,
or their contracted providers.
Response: The Medicare Beneficiary Ombudsman is dedicated to
resolving complaints, grievances and requests for information submitted
by Medicare-eligible individuals and their advocates concerning any
aspect of the Medicare program. Other entities and resources, including
the CMS Regional Offices, State Health Insurance Assistance Programs,
and 1-800-MEDICARE are also available to assist beneficiaries with
issues or questions.
Comment: A commenter proposed that CMS update the enrollment
guidance to remove ESRD enrollment restrictions and to release the
updated guidance in April. The commenter further states that the
technology and process updates necessary for plans to implement the
changes and the increase in MA membership has led to an increase in the
number of materials that plans need to produce, straining production
timelines.
Response: Thank you for the comment. We understand the commenter's
concern and plan to issue guidance as soon as possible. We are also
mindful of the fact that the Cures Act was enacted in 2016 and, as a
result, MA organizations have been aware of this change for some time.
Comment: A commenter suggested that dialysis cost sharing be
included in the standard services/items reflected on individual plan
searches in the Medicare Plan Finder (MPF) tool, and added that this
information is not currently reflected.
Response: We appreciate and agree that this additional data will
help Medicare beneficiaries with ESRD find and choose an MA plan. We
plan to add this information for plans offering coverage in 2021.
Comment: A couple of commenters agreed with our decision not to
amend Sec. 422.66(d)(1) (requiring MA organizations to accept newly
eligible Medicare beneficiaries who are seamlessly converting from
health plan coverage offered by the MA organization) because the
provision already applied to all beneficiaries regardless of their ESRD
status. A commenter suggested that CMS slightly modify Sec.
422.66(d)(1) to remove the language, ``(regardless of whether the
individual has end-stage renal disease)'' to eliminate any confusion
about the prohibition no longer being in effect.
Response: We thank the commenters for their feedback. We believe
that the regulation does not require further amendment.
Comment: Commenters also provided a wide range of feedback
regarding other downstream issues related to this change in enrollment
criteria for the MA program including assurance of adequate payment for
plans, quality of

[[Page 33824]]

care, HEDIS measure changes, beneficiary MOOP and cost-sharing
policies, and network adequacy. A commenter suggested that
beneficiaries are likely to have improved outcomes if enrolled in a
plan that uses an established care delivery model, and several other
commenters requested that CMS allow MA plans to participate in the
Center for Medicare & Medicaid Innovation kidney models to improve the
dissemination of best practices in kidney care. Another commenter
requested that CMS develop and submit SSBCI benefits for these
beneficiaries.
Response: We appreciate commenters for their feedback. Since those
comments are outside the scope of the changes proposed in Sec. Sec.
422.50(a)(2), 422.52(c), and 422.110(b), they will not be addressed in
this section. To the extent that the comment is about other proposals
in the notice of proposed rulemaking, it is, or will be, addressed in
connection with that proposal elsewhere in this final rule or a future
final rule.
After review and consideration of all comments on the proposal to
remove the prohibition on ESRD beneficiaries enrolling in an MA plan
and for the reasons in the proposed rule and these comments and
responses, we are finalizing the revisions to Sec. Sec. 422.50(a)(2),
422.52(c), and 422.110(b) as proposed.

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 proposed conforming regulatory changes to reflect the revision
to the statute.
Specifically, we proposed 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 proposed 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 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.
The following is a summary of the comments we received and our
responses:
Comment: Several commenters expressed support for the
implementation of this Cures Act requirement.
Response: We appreciate the commenters' support of our approach to
implementing this change.
Comment: A commenter encouraged CMS to monitor the effects of the
proposal's approach to organ acquisition costs.
Response: While we will continue to monitor and analyze the impact
of this change, we must comply with the statutory requirement for FFS
Medicare to cover kidney acquisition costs for MA beneficiaries.
Comment: A commenter noted that neither the proposed rule nor the
calendar year 2021 Advance Notice, which was published on February 5,
2020, provided clear guidance on billing and reimbursement for organ
acquisition costs. This commenter urged CMS to clarify whether these
services are to be billed directly to Medicare Administrative
Contractors (MACs) and paid directly to the providers involved, rather
than being paid to MA plans for pass-through to providers. The
commenter also requested that CMS clarify which organ acquisition costs
will be payable by FFS Medicare.
Response: We appreciate the commenter's request for further
clarification. We want to emphasize that the payment changes for organ
acquisition costs apply only to kidneys. Effective January 1, 2021, FFS
Medicare will cover kidney acquisition costs for MA beneficiaries in
accordance with the processes and guidance outlined in the Claims
Processing Manual,\17\ CMS Pub. 100-04, chapter 3 and the Provider
Reimbursement Manual,\18\ CMS Pub. 15-1, chapter 31. Hospitals
currently bill MA claims to their respective MACs for processing as no-
pay bills so that the MA inpatient days can be accumulated on the
Provider Statistics & Reimbursement Report (PS&R) (report type 118).
These no-pay bills must identify kidney acquisition costs using revenue
code 081X and the hospital must track each MA kidney transplant. For
instructions on billing for kidney acquisition costs, please refer to
chapter 3, sections 90.1 through 90.1.3, of the Claims Processing
Manual. For details on services included as kidney acquisition costs,
please refer to chapter 31, section 3101, of the Provider Reimbursement
Manual. The MA kidney transplants will be used in the numerator and
denominator on the Medicare cost report to determine Medicare's share
of kidney acquisition costs. Final payment will be made to the hospital
through the Medicare cost report.
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\17\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs-Items/CMS018912.
\18\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
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Comment: A commenter questioned how CMS addresses the difference
between cadaveric organ acquisition and living donor organ donation in
assessing kidney acquisition.

[[Page 33825]]

Response: We appreciate the commenter's question. Please refer to
the Provider Reimbursement Manual, CMS Pub. 15-1, chapter 31,\18\ for
more information on provider reimbursement for the costs related to
acquiring living donor organs and cadaveric donor organs.
After careful consideration of all comments received and for the
reasons outlined in the proposed rule and our responses to comments, we
are finalizing the regulatory changes to Sec. 422.322 to conform with
the statutory amendments requiring FFS Medicare coverage of kidney
acquisition costs for MA beneficiaries, effective January 1, 2021.

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,\19\ the applicable amount and the specified amount are used
in the calculation of the MA benchmarks and capitation rates. We
proposed to revise the relevant regulations to reflect these
amendments.
---------------------------------------------------------------------------

\19\ 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.
---------------------------------------------------------------------------

Specifically, we proposed 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, as described in section 1853(n)(4) of the
Act and Sec. 422.258(d)(2)(iii), cannot exceed the applicable amount
specified in section 1853(k)(1) of the Act 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 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 proposed to make conforming amendments to
paragraphs (d)(3), (5), and (6) of Sec. 422.258. As amended, paragraph
(d)(3) would 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) would 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 proposed 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), (d)(5),
(d)(5)(i) and (ii), and (d)(6).
We proposed to amend Sec. 422.306 by revising the introductory
text and adding a new paragraph (d). Proposed paragraph (d) described
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 requested
comment on 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 proposed 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 addressed
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, we
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, we 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.
We did not propose any regulatory amendments to address this.

[[Page 33826]]

We appreciate commenters' feedback on our approach to implementing
this Cures Act requirement. We received the following comments on our
proposed regulatory changes, to which we provide responses below:
Comment: Numerous commenters expressed concerns about the
methodologies for excluding kidney acquisition costs from MA benchmarks
and for developing MA ESRD state rates. Several commenters requested
additional transparency and data regarding the carve-out methodology,
voiced concerns about the magnitude of the carve-out, and provided
suggestions for alternative ways to calculate and apply the kidney
acquisition adjustment. A commenter specifically noted that if the
kidney acquisition carve-out amounts were to be artificially high,
excluding these costs from MA benchmarks would exacerbate the perceived
issues of underpayment in MA for ESRD beneficiaries.
Response: Section 1853(b) provides for CMS to use the annual
Advance Notice to provide notice of proposed changes to be made in the
methodology for the MA capitation rates and risk adjustment factors
from the methodology and assumptions used in the previous announcement.
As discussed, the kidney acquisition carve-out is part of the
methodology for developing the MA capitation rates. Pursuant to the
statute, CMS proposed the methodology for calculating the kidney
acquisition costs to be excluded from the MA benchmarks in the 2021
Advance Notice by providing a step-by-step description of the
calculations to be used to adjust the rates. CMS also detailed in the
calendar year 2021 Advance Notice the methodology used to develop ESRD
state rates. After considering all public comments received and
consistent with the statutory requirement to exclude the cost of kidney
acquisitions for organ transplants from the primary components of the
MA capitation rates, CMS finalized the kidney acquisition carve-out
methodology, as well as the ESRD rate methodology, in the calendar year
2021 Rate Announcement. Similar comments regarding the need for
transparency and accuracy in calculating the kidney acquisition cost,
the methodology used by CMS, and the amount of payment to MA plans were
raised in that context and addressed by CMS in the calendar year 2021
Rate Announcement. We direct readers to that document for a more
detailed discussion of these issues.
Comment: A commenter requested that CMS explain whether the
exclusion of kidney acquisition costs from MA benchmarks has an impact
on Medicare-Medicaid Plans (MMPs).
Response: CMS develops annual Medicare capitation rates used for
MMP payment. The MMP capitation rates are based on an estimate of what
would have been spent in the payment year had the demonstration not
existed. Beneficiaries enroll in the MMP demonstrations from both MA
and Medicare FFS, and therefore the MMP Medicare capitation rates are
developed with a weighted average of these populations' spending
assumptions, proportional to the combination of enrolled dually
eligible beneficiaries. Therefore, the MMP Medicare capitation rates
are developed using both the published Medicare standardized FFS county
rates (which are part of the MA ratebook calculation files that are
released with the annual Rate Announcement) and an MA component that is
based on MA plans' bids and rebates.
As discussed in the calendar year 2021 Rate Announcement, kidney
acquisition costs will be carved out of the contract year 2021 Medicare
standardized FFS county rates. MA plans will bid against benchmarks
that exclude kidney acquisition costs, in accordance with the statutory
amendments to sections 1853(k) and (n); this is also consistent with
how MA plans are no longer responsible for the costs of kidney
acquisitions. Therefore, both components of the MMP Medicare capitation
rate (the Medicare standardized FFS county rates and the MA component
of the MMP rate) will exclude kidney acquisition costs. MMPs (like MA
plans) will no longer be responsible for organ acquisition costs for
kidney transplants; such costs will be excluded from the MMP rates and
instead covered under Medicare FFS.
Comment: A commenter noted that plans will need to re-contract for
transplant services to remove the cost of kidney acquisitions. This
commenter explained that it is unlikely that the new contracts will
carve out costs that are comparable to (or lower than) the costs being
removed from the MA benchmarks. This commenter also requested the
precise amounts CMS has paid on behalf on MA enrollees to each
provider.
Response: We appreciate the commenter's concerns regarding this
issue but must comply with the statutory requirement to exclude kidney
acquisition costs from MA benchmarks. To date, CMS has paid for kidney
acquisition costs for MA beneficiaries through the county and ESRD
state rates in the MA ratebooks.
Comment: Numerous commenters noted concerns about the adequacy and
accuracy of the ESRD rates as well as the perceived underfunding of the
underlying ESRD PPS. A few commenters also requested that CMS consider
various options related to payment for dialysis services, including the
establishment of a fee schedule cap for dialysis centers,
implementation of zero cost sharing for dialysis services, and
provision of an incentive payment for MA plans to offer home dialysis.
Response: As these comments did not address the impact,
implementation, or consequences of the kidney acquisition carve-out
required by the Cures Act, they are out of the scope of this
rulemaking.
After careful consideration of all comments received and for the
reasons outlined in the proposed rule and out responses to the
comments, we are finalizing the proposed changes to Sec.
422.258(d)(3), (d)(5) introductory text, (d)(5)(i) introductory text,
(d)(5)(ii), and (d)(6)(i) and the introductory text of Sec. 422.306
and paragraph (d).

IV. 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 explained in the proposed rule that our proposal
did not use those terms 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. In the proposed rule, we proposed to adopt a new
Sec. [thinsp]422.3 to implement the exception at section 1855(b)(1) of
the Act and establish in regulation options for MA organizations to use
insurance for costs beyond a specified threshold. We

[[Page 33827]]

proposed 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 value of the
insurance for costs that exceed $10,000 in a contract year. We also
proposed that if the MA organization chooses to purchase pro rata
coverage that provides first dollar coverage, the value of that
coverage cannot exceed the value of the option of purchasing stop loss
insurance for enrollee health care costs that exceed a threshold of
$10,000 in a contract year. We noted in the proposed rule that the
statutory exceptions at section 1855(b)(2) through (b)(4) of the Act
still apply and that our proposal would serve 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 proposed that the limits in Sec. [thinsp]422.3 apply for purposes
of insuring (or making other arrangements) for costs of providing basic
benefits in excess of the established threshold and that those limits
would not apply to supplemental benefits offered by MA organizations.
We proposed to implement the exception at section 1855(b)(1) of the Act
because of concerns raised to CMS that absent the implementation of
specific standards by CMS under section 1855(b)(1) of the Act, there
was ambiguity about the legal basis of MA organizations sharing risk
through reinsurance. We noted in our proposed rule that a number of MA
organizations expressed concern to CMS about this legal uncertainty as
they have utilized reinsurance within the MA program. To resolve this
uncertainty, we proposed to formally establish reinsurance standards
implementing section 1855(b)(1) of the Act. Our proposal was generally
not about subsections (b)(2) through (b)(4) of section 1855 of the Act.
Under our proposed implementation of the exception at section
1855(b)(1) of the Act, MA organizations that voluntarily choose to
purchase insurance to limit their exposure to losses in furnishing
basic benefits to individual enrollees would have two options. In the
first option, an MA organization could purchase insurance (or make
other arrangements) 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
value of the stop loss insurance for medical expenses exceeding $10,000
per member per year. Specifically, the value of first dollar pro rata
insurance could not exceed the value of $10,000 per member per year
stop loss insurance.
In the proposed rule, we noted that in discussions with the
National Association of Insurance Commissioners (NAIC) and in 2018 Call
Letter comments we previously received, CMS was advised 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 has the purpose of reducing financial exposure to
changes in health care costs, helps manage capital requirements, and
allows health care insurers to grow enrollment. As we explained in our
proposed rule, discussions with the NAIC and earlier information we
received from the industry indicated that MA organizations located in
areas with fewer beneficiary choices (for example, rural, underserved
areas) particularly benefit from access to 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 also noted that excessive reinsurance can be viewed as a hazard
to the extent that the direct health insurer (here, the MA
organization) might pass such a large share of their risk and premium
through insurance and that the MA organization could then be viewed as
no longer possessing the primary responsibility for furnishing the
health care services. We further explained in our proposed rule that
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 benefits to enrollees. We stated that 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 also stated that we seek to balance
these different interests in setting the threshold for the individual
stop loss insurance coverage authorized by the statute.
We also explained that the $10,000 threshold we proposed 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

[[Page 33828]]

August 2019 report: An Update to the Economic Outlook: 2019 to 2029.
In our discussion, we stated that based on a scan of the market and
current practices of commercial health insurers, we believed that the
$10,000 threshold for stop loss insurance that we proposed reflected a
level of risk transfer that was reasonable and consistent with
supporting robust competition in Medicare Advantage. We also explained
our positon that the proposed level of risk transfer would be
acceptable given that CMS closely monitors MA organizations in terms of
their administration of their MA plans, specifically their timely
provision of medically necessary health care services to enrollees and
their overall financial solvency. We further clarified that CMS has a
direct contract with each MA organization and despite any insurance
arrangements, the MA organization remains responsible and liable to
each individual enrollee for furnishing the covered benefits. In
addition, we explained that 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. We also noted that 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 solvency laws or provide that CMS regulation supersedes
them. We noted 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 the wide adoption
of the NAIC reinsurance model laws by states ensures reasonable
consistency for MA organizations subject to reinsurance review as part
of the state's financial solvency determination. Finally, we stated
that CMS oversight along with the states' oversight of financial
solvency substantially would ensure that CMS would 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
enrollees with benefits covered under the MA plan.
We also acknowledged that the reinsurance marketplace is complex
and evolving. Therefore, we asked for comments regarding our proposed
reinsurance regulation generally and the specific threshold proposed.
We stated that we were particularly interested in comments whether the
$10,000 threshold is a reasonable level and if the flexibility we
proposed for MA organizations in permitting insurance or other
arrangements that are actuarially equivalent to the $10,000 threshold
for individual medical costs is sufficient to remove the uncertainty
about the use of reinsurance by MA organizations. We also solicited
comments that would provide additional information about insurance or
other arrangements for addressing the risk of costs that exceed
specific thresholds on an individual enrollee basis.
In our proposed rule, we also explained that we would consider an
MA organization to include its parent organization when evaluating
compliance with the proposed standard for reinsurance and compliance
with the statute. The result of that would be to evaluate compliance
with section 1855(b) of the Act (not just subsection (b)(1)) and
proposed Sec. [thinsp]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. We requested comments on this
approach and 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 organization to be a separate
entity from an MA organization.
We thank commenters. We received 13 comments on this proposal; we
summarize these comments and our responses follow:
Comment: Several commenters were generally supportive of Sec.
[thinsp]422.3(a)(1) affirming the ability of MA organizations to
purchase stop loss insurance for basic Medicare covered medical
expenses for an individual enrollee that exceed with an aggregate value
of $10,000 or more per member per year in any year. However, several
commenters expressed concerns about the proposed pro rata insurance
requirement at Sec. [thinsp]422.3(a)(2), requiring that this option
not exceed the actuarial cost of purchasing stop loss insurance for
enrollee health care costs that exceed a threshold of $10,000 in a
contract year. A commenter stated that they read the proposed
regulation as requiring that the value of the insured risk does not
exceed a value which is actuarially equivalent to the aggregate value
of the costs of providing basic benefits to an individual enrollee
which exceeds an aggregate level that is greater than or equal to
$10,000 during a contract year. The commenter said that they found this
language difficult to follow. This commenter also said that, further
complicating the matter, excess of loss insurance (that is, stop loss)
and first dollar proportional (that is, pro rata) insurance are very
different forms of reinsurance. Other commenters were also concerned
that because of the differences in these types of insurance it would be
difficult calculating an actuarial value for the cost of purchasing
annual pro rata insurance, which shares costs with an insurer on a
first dollar proportional basis. The commenters also said that their
uncertainly about how to calculate this actuarial equivalency would
make it difficult for them to ensure they would be in compliance with
the proposed regulatory requirement. Several commenters recommended
that instead of an actuarial equivalence that we set a limit on the
amount of risk that an MA organization would be allowed to transfer to
a reinsurer. Several commenters specifically proposed that CMS adopt a
10 percent standard under which an MA organization would be required to
maintain a minimum of 10 percent of the financial risk in any
reinsurance arrangement involving the sharing of costs proportionately
with an insurer on a pro rata first dollar basis.
Response: We agree that the reinsurance options under proposed
Sec. 422.3(a)(1) and (2) are different and acknowledge this
potentially creates uncertainty and difficulties in determining
actuarial equivalency, as pointed out by the commenters. As we noted
above the statute permits an MA organization to use insurance or make
other arrangements for the cost of providing basic benefits to an
individual enrollee that exceed a certain threshold. In order to
provide an option for using insurance or other arrangements for some of
the cost of providing basic benefits to an individual enrollee before
the threshold is exceeded, we sought to establish a way to equate the
$10,000 stop loss threshold to sharing the risk proportionally on a
first dollar basis (that is, pro rata insurance) to provide additional
flexibility to MA organizations while ensuring compliance with the
statute.
In considering these comments we appreciate that there could be
difficulty for some organizations in determining whether and when the
two reinsurance options were actuarially equivalent or in determining
an actuarially equivalent dollar amount for the two reinsurance
options. We also recognize that it would be administratively simpler if
we were to adopt a single standard for the amount of risk an MA
organization can transfer to an insurer under this regulation. As we
discuss below we are finalizing regulation text to clarify how

[[Page 33829]]

MA organizations can make an actuarial equivalency determination
between the $10,000 stop loss insurance option and the option to
purchase first dollar proportional (that is, pro rata) insurance. In
addition, we have determined that the ability to purchase pro rata
insurance affords the MA organizations the necessary flexibility to
purchase different types of reinsurance. We are specifically finalizing
this regulation to allow an MA organization to have insurance or make
another arrangement for the cost of providing basic benefit to an
enrollee, the aggregate value of which exceed an aggregate value that
is equal to or greater than $10,000. In effect, an MA organization can
have stop-loss insurance per enrollee with a $10,000 attachment point.
In addition, the MA organization may use insurance to share costs
proportionately on a per member per year first dollar basis as long as
the amount of risk retained by the MA organization is actuarially
equivalent to the risk retained in purchasing $10,000 per member per
year first dollar stop loss insurance. To specifically address the
concerns about actuarial equivalence valuations we have determined that
actuarial equivalence may be calculated as the expected percentage of
the MA organization's claim cost of providing basic benefits to an
individual enrollee that is greater than or equal to $10,000 during a
contract year. The MA organization may share its costs proportionately
on a first dollar basis up to the expected percentage. For example,
assume that the actuarially supported expected percentage is 66
percent. In this example, the MA organization may reinsure (cede) up to
66 percent of such costs proportionately on a first dollar basis.
However, we recognize that there are other reasonable actuarial
approaches that could be used to determine the actuarial equivalence
cost when purchasing pro rata insurance. We will accept approaches that
are based on a reasonable actuarial methodology. An MA organization may
also value its pro rata insurance by establishing a specific percentage
level of risk that it can reinsure that is not more than the actuarial
value of $10,000 individual stop loss insurance. Appreciating that some
commenters indicated that the proposed regulation text describing the
permissible stop-loss arrangement was confusing, we are clarifying this
in the final regulation text. The regulation now states the permissible
insurance or other arrangement by describing the permissible
reinsurance or other arrangement in terms of how much and which
financial risk the MA organization must retain: The MA organization
must retain the risk for at least the first $10,000 in costs of
providing basic benefits per individual enrollee during the contract
year.
To specifically address the concerns about actuarial equivalence
valuations, we are finalizing regulation text to clarify that MA
organization may make a determination of actuarial equivalence based on
reasonable actuarial methods. We are finalizing that an MA organization
may share the costs of providing basic benefits on a per member per
year first dollar basis when: (i) The actuarial value of the risk
retained by the MA organization is actuarially equivalent to the value
of the risk that must be retained using the permissible stop-loss
arrangement that is described in paragraph (a)(1) and (ii) the
determination of actuarial equivalence is based on reasonable actuarial
methods. For example, actuarial equivalence may be reasonably
calculated using the expected percentage of the MA organization's claim
cost of providing basic benefits to an individual enrollee that is
greater than or equal to $10,000 during a contract year. The MA
organization may share its costs proportionately on a first dollar
basis up to that expected percentage. For example, assume that the
actuarially supported expected percentage is 66 percent. In this
example, the MA organization may reinsure (cede) up to 66 percent of
such costs proportionately on a first dollar basis. However, we
recognize that there are other reasonable actuarial approaches that
could be used to determine the actuarial equivalence cost when
purchasing pro rata insurance. We will accept approaches that are based
on a reasonable actuarial methodology. An MA organization may also
value its pro rata insurance by establishing a specific percentage
level of risk that it can reinsure that is not more than the actuarial
value of $10,000 individual stop loss insurance.
Comment: Several commenters asked for clarification about the
applicability of the proposed reinsurance rule, asking if it would
apply to quota share reinsurance arrangements under section 1855(b)(1)
of the Act alone, or will it also apply to quota share reinsurance
arrangements under subsections (b)(2), (b)(3) and (b)(4) of section
1855 of the Act as well. The commenters wanted to know if quota share
arrangements would be permissible only in the specific circumstances
described in our proposed rule to implement section 1855(b)(1) of the
Act.
Response: Our proposal and this final rule at Sec. 422.3(a) are
specifically about implementing section 1855(b)(1) of the Act. Section
1855(b)(1) permits MA organizations to insure or make other
arrangements for the cost of providing to any enrolled member basic
benefits the aggregate value of which exceed a threshold set by the
agency. We proposed that threshold ($10,000) and a way that MA
organizations could share that particular risk proportionately by tying
the parameters for the proportionate-risk arrangement to the actuarial
value of the financial risk where the stop loss threshold is over
$10,000.
MA organizations are only permitted to share risk proportionally so
long as the risk (the type and amount) is in the statutory exceptions
at section 1855(b) of the Act. Section 1855(b) of the Act describes
types of risk for which an MA organization may use insurance or make
other arrangements. For example, section 1855(b)(2) permits an MA
organization to obtain insurance or make other arrangements for the
cost of basic benefits provided to its enrollees other than through the
organization because medical necessity required the provision of those
basic benefits before that organization could furnish them; an MA
organization could use insurance to cover all of the costs described in
subsection (b)(2), use a quota share arrangement for those costs, or
use some other reinsurance arrangement for those costs. However,
section 1855(b)(2) only permits the use of reinsurance or risk sharing
arrangements for those specifically described costs. Our proposal and
this final rule at Sec. 422.3(a) do not address the other statutory
exceptions at section 1855(b) of the Act.
Comment: Several comments asked that CMS acknowledge that CMS
policy has, in the past, permitted MA organizations to utilize quota
share reinsurance arrangements with captive insurance companies and
risk bearing entities including provider-affiliated captive insurance
companies, or other risk-bearing entities under the authority of
section 1855(b)(4) of the Act, and that CMS will continue to allow
this. Commenters also asked that CMS further clarify whether the
provider-affiliated entity must be wholly-owned by the provider, or
whether a lower percentage of ownership is required.
Response: Section 1855(b)(4) of the Act permits an MA organization
to make arrangements with physicians or other health care
professionals, health care institutions, or any combination of such
individuals or institutions to assume all or part of the financial risk
on a prospective basis for basic benefits

[[Page 33830]]

furnished by such physicians, by such other health professionals or
through such institutions. The type of payment arrangement used between
the MA organization and contracting physicians, other health
professionals or institutions for this specified financial risk is not
limited by Sec. 422.3(a). To be clear on this point, we are finalizing
Sec. 422.3(c) to state that the type of payment arrangement between an
MA organization and contracting physicians, other health professionals
or institutions for the financial risk on a prospective basis for the
provision of basic benefit by those physicians or other health
professionals or through those institutions) is not limited by Sec.
422.3(a).
Comment: Two commenters asked if reinsurance options under Sec.
422.3(a)(1) and (2) can also include MA supplemental benefits. A
commenter stated that it is operationally very challenging to separate
the revenues and expenses associated with supplemental benefits from
the revenues and expenses associated with basic benefits.
Response: As we stated in the proposed rule, 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). The limits in proposed Sec.
422.3(a) and finalized in this rule 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. MA organizations are not prohibited from obtaining
reinsurance for supplemental benefits and this final rule does not
limit either the form or amount of reinsurance for supplemental
benefits.
Comment: Commenters were supportive of our proposal with respect to
section 1855(b) to broaden our interpretation of MA organization to
include the parent organization. This would mean that CMS would
evaluate compliance with 1855(b) of the Act and proposed Sec. 422.3 at
the parent organization level, such that risk sharing or allocations
MAO of losses and costs among wholly-owned subsidiaries would not be
evaluated. Commenters also asked if CMS will accommodate situations
where an MA organization obtains reinsurance from captive insurance
companies, an affiliate and/or a joint venture or alliance partner. A
commenter noted that reinsurance is a useful means by which to share
profits/losses in joint ventures and alliances, an entity may choose to
allocate its risk to a reinsurer that is an affiliate of the MA
organization and to another joint venture or alliance partner. The
comment states that these arrangements serve as a mechanism to
facilitate the allocation of profits/losses under a joint venture or
alliance.
Response: In this final rule we are affirming that for purposes of
1855(b) of the Act and for Sec. 422.3, we will evaluate compliance at
the parent organization level, such that risk sharing or allocations of
losses and costs among wholly-owned subsidiaries will not be evaluated.
These internal arrangements would be treated as the MA organization
retaining full financial risk for the losses or risks that are covered
through the internal arrangement. We are adding language to the final
regulation at Sec. 422.3(b) confirming this position. Reinsurance
arrangements facilitated for purposes of joint venture and alliance
partner must comply with 1855(b) of the Act, CMS regulations and
requirements, other federal laws and regulations, and state laws and
requirements.
We thank the commenters for sharing their concerns and
recommendations regarding our proposed implementation of Section
1855(b)(1) in the MA regulations at Sec. 422.3. After careful
examination of all comments received and for the reasons set forth in
the proposed rule and our responses to comments, we are finalizing
Sec. 422.3 with modifications from the proposal. As finalized,
paragraph (a) provides that an MAO may obtain insurance or make other
arrangements for the cost of providing basic benefits to an individual
enrollee during the contract year in one of two ways. We are finalizing
Sec. 422.3(a)(1) to permit an MA organization to use insurance or make
other arrangements for the cost of providing basic benefits to an
individual enrollee during the contract year so long as the MA
organization retains risk for at least the first $10,000 of that cost.
We are finalizing Sec. 422.3(a)(2)(i) permitting reinsurance on a per
member per year first dollar basis so long as the MA organization
retains at least an amount of risk that is actuarially equivalent to
the value of risk retained in paragraph (a)(1). We also clarify in the
final regulation at Sec. 422.3(a)(2)(ii) that MA organizations
obtaining such reinsurance under the option described at Sec.
422.3(a)(2)(i) may utilize any reasonable actuarial methodology to
determine actuarial equivalence.
We are also adding Sec. 422.3(b) clarifying that CMS will consider
a parent organization to be part of an MA organization for purposes of
section 1855(b) of the Act. Finally, we are adding regulation text at
Sec. 422.3(c) to clarify the type of payment arrangement used between
an MA organization and contracting physicians, other health
professionals or institutions for the financial risk specified in
section 1855(b)(4) of the Act is not limited by paragraph (a).

B. Medicare Advantage (MA) and Part D Prescription Drug Program Quality
Rating System (Sec. Sec. 422.162, 422.166, 423.182, 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. 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). 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, codified a
policy to adjust Star Ratings for disasters, and finalized some measure
updates. In the Medicare and Medicaid Programs; Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency Interim
Final Rule (85 FR 19230; CMS-1744-IFC) published in the Federal
Register website on April 6, 2020, CMS adopted a series of changes to
the 2021 and 2022 Star Ratings to accommodate the disruption to data
collection posed by the COVID-19 pandemic. Specifically, the IFC:
Eliminates the requirement to collect and submit
Healthcare Effectiveness Data and Information Set (HEDIS) and Medicare
Consumer Assessment of Healthcare Providers and Systems (CAHPS) data
otherwise collected in 2020 and replaces the 2021 Star Ratings measures
calculated based on those HEDIS and CAHPS data collections with earlier
values from the 2020 Star Ratings (which are not

[[Page 33831]]

affected by the public health threats posed by COVID-19);
Establishes how we will calculate or assign Star Ratings
for 2021 in the event that CMS's functions become focused on only
continued performance of essential agency functions and the agency and/
or its contractors do not have the ability to calculate the 2021 Star
Ratings;
Modifies the current rules for the 2021 Star Ratings to
replace any measure that has a systemic data quality issue for all
plans due to the COVID-19 outbreak with the measure-level Star Ratings
and scores from the 2020 Star Ratings;
In the event that we are unable to complete Health
Outcomes Survey (HOS) data collection in 2020 (for the 2022 Star
Ratings), replaces the measures calculated based on HOS data
collections with earlier values that are not affected by the public
health threats posed by COVID-19 for the 2022 Star Ratings;
Removes guardrails for the 2022 Star Ratings by delaying
their application to the 2023 Star Ratings;
Expands the existing hold harmless provision for the Part
C and D Improvement measures to include all contracts for the 2022 Star
Ratings; and
Revises the definition of ``new MA plan'' so that for
purposes of 2022 quality bonus payments based on 2021 Star Ratings
only, new MA plan means an MA contract offered by a parent organization
that has not had another MA contract in the previous 4 years, in order
to address how the 2021 Star Ratings will be based in part on data for
the 2018 performance period.

Please see the IFC for further information on these changes for the
2021 and 2022 Star Ratings.
In the February 2020 proposed rule, we proposed enhancements to
further increase the stability of cut points by modifying the cut point
methodology for non-CAHPS measures through direct removal of outliers.
We also proposed to increase the weight of patient experience/
complaints measures and access measures and 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.
We proposed to modify the classification of the Statin Use in Persons
with Diabetes (SUPD) measure from an intermediate outcome measure to a
process measure, starting with the 2023 Star Ratings, due to feedback
in response to the Draft 2020 Call Letter and to align with the measure
steward's clarification regarding the measure's classification. In
addition, we proposed other policies to amend the Part C and Part D
Star Ratings but are not addressing those proposals in this final rule;
those other proposals will be addressed in a future final rule.
Our proposal was for the changes we address here--the removal of
outliers, increasing the weight of certain classes of measures,
removing the Rheumatoid Arthritis Management measure, and reclassifying
the SUPD measure--to be effective for the 2021 performance period and
the 2023 Star Ratings. As discussed in this section, we are finalizing
the proposed changes with some modifications. As finalized, the change
to the weight of the patient experience/complaints measures and access
measures, the removal of the Rheumatoid Arthritis Management measure,
and the reclassification of the SUPD measure are applicable (that is,
data would be collected and performance measured) for the 2021
measurement period and the 2023 Star Ratings. Under this final rule the
direct removal of outliers will apply for the 2022 measurement period
and the 2024 Star Ratings.
CMS appreciates the feedback we received on our proposals. In the
sections that follow, which are arranged by topic area, we summarize
the comments we received on each proposal and provide our responses.
Below we summarize some general comments we received about the
potential impact of the COVID-19 public health emergency on our Star
Ratings proposals.
Comment: Numerous commenters requested that CMS refrain from making
any changes to the Star Ratings system until the COVID-19 pandemic's
impact on the healthcare system is better understood. They suggested we
delay any changes to the quality rating system until after the public
health emergency resulting from COVID-19 subsides due to the
significant uncertainties around the duration and impact of COVID-19 on
the healthcare system.
Response: CMS agrees that there is a lot of uncertainty about how
COVID-19 will impact the healthcare system. However, we still believe
that it is important to move forward with some limited Star Ratings
changes to further emphasize the importance of patient experience/
complaints measures and access measures and to help stabilize the
movement in the cut points from year to year. The changes to the
weighting of patient experience/complaints measures and access measures
apply to the 2021 measurement year, not the 2020 measurement year when
the pandemic first started. The implementation of Tukey outlier
deletion has been delayed an additional year. Although there is some
uncertainty how COVID-19 will impact the healthcare system and quality
measurement, plans will have until the 2021 measurement year to adjust
their processes to account for the impact of COVID-19 on Star Ratings
measures.
Comment: Commenters raised concerns that additional Star Ratings
changes may be needed to account for COVID-19 in future years. For
example, several commenters noted data collection challenges could
impact 2021, 2022, 2023, and 2024 Star Ratings for some measures. A
commenter noted COVID-19 may overwhelm our healthcare systems leading
to significant impacts on many measures. A few commenters specifically
noted concerns about supply chain disruptions and prescription drug
shortages. A commenter noted that plan activities in response to
emergency situations can create unintended consequences in the years
following, including for Star Ratings. Another commenter suggested CMS
revisit the capacity and capability expectations defined in specific
measures and meet with provider and plan stakeholders when the crisis
has abated; they suggest some measures may need to be re-tooled so that
scarce resources are devoted to building capacity and functionality of
the health and social delivery systems.
Response: CMS is continuing to monitor the situation to see if
additional Star Ratings changes are necessary and appropriate. As noted
above, the IFC includes a series of changes for the 2021 and 2022 Star
Ratings to accommodate challenges arising from the COVID-19 pandemic.
Please see the IFC for further information on these changes for the
2021 and 2022 Star Ratings. CMS recognizes that there may be impacts
from COVID-19 on measure scores and is delaying the implementation of
Tukey outlier deletion for an additional year to allow these impacts to
play out before adding an additional methodological change for the cut
point calculations.
Comment: A commenter asked that CMS remain cautious on pursuing
changes that could weaken the ability of plans to make quality
improvements in the aftermath of COVID-19.
Response: CMS recognizes the challenges that COVID-19 has placed on
the healthcare system and Part C and Part D plans that are subject to
the Quality Star Rating System. CMS continues to monitor whether
additional Star Ratings adjustments are necessary and appropriate.

[[Page 33832]]

Comment: A commenter requested that CMS ensure that policy changes
that allow pharmacies to meet prescription drug therapy needs during
the COVID-19 outbreak are not used to penalize pharmacies in their
performance ratings.
Response: CMS will continue to monitor the impact of COVID-19 on
the healthcare system. The Part C and D Star Ratings are for rating the
Medicare health and drug plans not pharmacies.
Comment: Several commenters noted that different areas of the
country may experience the pandemic differently, and there may also be
differences by health plan populations, such as those with high dual
eligible or low-income populations. A commenter noted that CDC's
recommendation for social distancing, especially for more vulnerable
populations, may result in Medicare beneficiaries not pursuing
preventive screenings, and that this may be more impactful for
beneficiaries in geographies more heavily impacted by COVID-19 and for
beneficiaries in rural areas with less access to care.
Response: CMS will continue to monitor the impact of COVID-19 on
the healthcare system and Part C and D plans. The IFC addressed the
immediate impact of the pandemic on the Part C and D Star Ratings
program and made additional modifications for the 2022 Star Ratings, in
recognition that the COVID-19 pandemic may impact performance on the
Star Ratings measures during the 2020 measurement period. CMS delayed
the implementation of guardrails to allow cut points to adjust to
changes in industry performance for the 2020 measurement period.
Additionally, CMS expanded the hold harmless provisions for the Part C
and D improvement measures that are based on the 2020 measurement
period so that those measures where there is a significant decrease in
performance will not bring down a contract's overall or summary ratings
for the 2022 Star Ratings. CMS continues to monitor to what extent our
current policy for extreme and uncontrollable circumstances codified at
Sec. Sec. 422.166(i) and 423.186(i) will help address the issue of
some geographic areas being more impacted than others and whether
additional Star Ratings adjustments are necessary and appropriate.
Comment: A commenter asked that CMS consider the longer-term
economic ramifications that COVID-19 is causing to highly impacted
areas when considering Star Ratings policies.
Response: CMS will continue to monitor the impact of COVID-19 on
the healthcare system and Part C and Part D plans that are subject to
the Quality Star Rating System. CMS continues to monitor whether
additional Star Ratings adjustments are necessary and appropriate.
Comment: A commenter suggested that given the strain COVID-19 is
placing on the healthcare system, CMS should suspend Effectiveness of
Care measures based on 2020 data. Another asked whether the Part D
appeals measures would still be removed for 2021.
Response: Generally, these comments are out of the scope of the
proposed rule and the policies we are addressing in this final rule.
The IFC addressed the immediate implications of the pandemic on the
Part C and D Star Ratings program. Specifically, for the 2020
measurement year, it delays the implementation of guardrails so cut
points will adjust downward if industry performance broadly declines as
a result of the pandemic. CMS is proceeding to remove the Part D
appeals measures for the 2020 measurement year and the associated 2022
Star Ratings, as outlined in the 2020 final Call Letter, under Sec.
423.184(e)(1) and based on our determination that the measure is no
longer reliable.
Comment: Several commenters gave specific feedback related to the
IFC and the 2021 and 2022 Star Ratings.
Response: We thank commenters for this feedback, but these comments
are out of scope for this rule. We will discuss comments to the IFC
policies in a future final rule.
2. 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 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 one 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

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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
one year to the next. The IFC (CMS-1744-IFC) delays the implementation
of guardrails for an additional year; thus, it will be implemented for
the 2021 measurement year and the 2023 Star Ratings.
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 in order to provide the public prior notice of a proposal
for incorporating removal of outliers and an opportunity to comment on
a specific approach and so that we could continue to evaluate the
methodologies for outlier removal (84 FR 15761).
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 such 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.
In the February 2020 proposed rule, we proposed to use Tukey outer
fence outlier deletion as the method to identify and delete outliers
before applying the already-applicable mean resampling and hierarchical
clustering processes. With mean resampling, measure-specific scores for
the current year's Star Ratings are randomly separated into 10 equal-
sized groups. The hierarchical clustering algorithm is done 10 times,
each time leaving one of the 10 groups out. The method results in 10
sets of measure-specific cut points. The mean cut point for each
threshold per measure is calculated using the 10 values. 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 or above a certain point. We proposed that the lower point or the
``lower outer fence'' would be identified with this formula: (first
quartile-3.0 x (third quartile-first quartile)); and the higher point
or the ``upper outer fence'' would be identified with this formula:
(third quartile + 3.0 x (third quartile-first quartile)). The Tukey
outer fence outlier deletion will remove all outliers based on the
previous definition for the two points (that is, the lower and upper
outer fences) and does not remove any cases that are not identified as
outliers. Values identified as outside the Tukey outer fences would
then be removed immediately prior to clustering.
We explained in the proposed rule that 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, because these
measures will be removed starting with the 2022 Star Ratings. In
general, there tends 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.
We requested comments on our proposal to use Tukey outer fence
outlier deletion as an additional step prior to hierarchal clustering.
We explained that under our proposal in the first year of implementing
this process, 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
proposed to amend Sec. Sec. 422.162 and 423.182 to add a definition of
the outlier methodology (``Tukey outer fence outliers'') and to amend
Sec. Sec. 422.166(a)(2)(i) and 423.186(a)(2)(i) to apply the outlier
deletion using that methodology prior to applying mean resampling with
hierarchal clustering.
We received the following comments related to our proposal, and our
responses follow:
Comment: Most commenters opposed moving forward with the Tukey
outlier deletion at this time, citing a variety of different reasons. A
handful of commenters raised general concerns about the Tukey outlier
deletion method, mentioning criticism in academic communities about
applying Tukey fences to skewed data, given what the commenters
characterized as the Tukey approach's assumption of a normal
distribution. Other commenters suggested additional research is needed
on alternatives for removing outliers. Some commenters did not support
the use of Tukey outlier deletion without more information about how
the Tukey outlier fence models will be applied and more detail on CMS
analyses. A couple of commenters did not support adding Tukey outlier
deletion given the fluctuation it may cause in the ratings.
Response: CMS is concerned about extreme outliers influencing cut
point determinations and has selected an approach to identify and
remove outliers prior to clustering contract scores to determine cut
points for assigning measure stars. The main objective of removing
outliers is to stabilize cut points and prevent large year-to-year
fluctuations in cut points caused by the scores of a few contracts. CMS
selected the conservative outer-fence form of the Tukey outlier
deletion method because it is transparent (easily understood and can be
implemented by stakeholders with widely-available software) and robust
to distributional shape (it performs as intended for this purpose
across the range of score distributions seen in Star Ratings data).
CMS disagrees that the Tukey outer fence outlier approach is
inappropriate for identifying the outliers to be removed from the
performance score data. Even when the data are not normally distributed
(for example, in a skewed distribution), the Tukey approach performs as
intended. The Tukey outer fence outlier deletion approach is a standard
statistical method that is non-parametric, that is, it is not dependent
on distributional assumptions. We plan to adopt a more conservative
definition, based on Tukey outer fences, that only removes scores that
are extreme outliers. This approach removes fewer outliers at both
extremes of the score distribution than the inner

[[Page 33834]]

fence approach. We plan to identify and remove extreme outliers
immediately prior to applying the clustering algorithm to set cut
points. The Tukey outer fences would be calculated from the set of
measure scores after removing contracts that are to be excluded from
clustering (such as because the measure is voluntary for that
contract).
The first step in applying the Tukey outlier deletion method is
calculating the first quartile (Q1) and third quartile (Q3) of the
score distribution: 25 percent of scores fall below Q1, another 25
percent of scores fall above Q3, and the remaining 50 percent of scores
fall between Q1 and Q3. Next, we calculate the interquartile range
(IQR), the difference between the third and first quartiles (IQR = Q3 -
Q1), which refers to the range of the middle 50 percent of all scores.
The Tukey outer fence method identifies extreme outlier as those that
are below (Q1 -3 x IQR) or above (Q3 + 3 x IQR).
We examined the use of trimming as an alternative outlier removal
approach and found very similar results as those described in the
proposed rule from using the Tukey approach. We performed simulations
that trimmed any scores that were above the 99th percentile or below
the 1st percentile, trimming values at the tail ends of the
distribution prior to clustering. The method had effects on Star
Ratings similar to those of the Tukey method. An important strength of
the Tukey outer fence outlier deletion method over the trimming method
is that trimming removes a fixed proportion of plan scores for each
measure, regardless of whether those scores are distant from the center
of the score distribution. In contrast, the Tukey outer fence method
removes only true outliers that are the most distant from the center of
scores.
Comment: Some commenters suggested alternatives to outlier deletion
to help improve the stability of cut points. A commenter suggested that
CMS might consider cut points using plans in similar geographic areas
with similar characteristics. Another suggested CMS explore other
classification methods such as Isolation Forest, DBSCAN, or k-means
clustering. A couple of commenters recommended a guardrail cap less
than 5 percent.
Response: CMS agrees that stability is a goal for the cut points,
but we disagree with the recommendations of the commenters to achieve
that stability. Setting regional or geographic benchmarks (cut points)
would lead to a 5-star contract in one area differing in terms of
performance from a 5-star contract in another area. The Medicare
program does not set regional standards, but rather applies a single
national standard to evaluate plan performance. As required under
section 1851(d), CMS disseminates information to Medicare beneficiaries
(and prospective Medicare beneficiaries) on the different coverage
options to promote an active, informed selection among such options.
This includes plan quality and performance indicators to compare plan
options. In order to compare in a consistent way, CMS uses a single
national standard since different regional cut points could hide
deficiencies in different areas. Additionally, many measures are based
on compliance with Medicare rules and requirements (for example, call
center measures and appeals measures) and reflect compliance with
Medicare program requirements, not comparative compliance. Using
regional cut points would warp the results and complicate our use of
Star Ratings under Sec. Sec. 422.504(a)(17), 422.510(a)(4)(ix),
423.505(a)(26), and 423.509(a)(4)(x).
Regarding the choice of clustering method, hierarchical clustering
is one of the most commonly used methods for clustering observations
into groups. There are pros and cons of all methods for clustering,
including those identified by the commenters. We have considered other
methods and believe hierarchical clustering is the best option for the
Part C and D Star Ratings program because it is well understood, easily
implemented, and performs well for a variety of different data
distributions. The other very commonly used clustering algorithm is k-
means, however one key weakness of that approach is that the final set
of clusters depends on the initial random assignment of points to
clusters and it is highly sensitive to the initial placement of cluster
centers. Specifically, when the algorithm is repeated on the same
dataset it may result in different cluster assignments. Additionally,
the k-means method is sensitive to outliers (for example, Gan and Ng
(2017),\20\ Govender and Sivakumar (2020) \21\), and therefore it would
not resolve the issue that outliers can influence estimated thresholds.
The commenter also noted other clustering algorithms that are less
commonly used. For example, weaknesses of DBSCAN include sensitivity to
parameters and inability to handle clusters of points of varying
densities, which makes DBSCAN less attractive for clustering measure
scores. Isolation Forest is an outlier or anomaly detection technique
on the basis of decision trees that is not directly related to
clustering measure scores into 5 groups.
---------------------------------------------------------------------------

\20\ Gan, G., & Ng, M.K. (2017). K-means Clustering with Outlier
Removal. Pattern Recognit. Lett., 90, 8-14.
\21\ Govender, P. & Sivakumar, V. (2020). Application of k-means
and hierarchical clustering techniques for analysis of air
pollution: A review (1980-2019). Atmospheric Pollution Research.
11(1), 40-56.
---------------------------------------------------------------------------

Comment: A couple of commenters opposed Tukey outlier deletion
since they were concerned it would make it harder for plans with more
complex populations to perform well, including SNP plans. A commenter
noted the current national emergency emphasizes the need for the cut
point methodology to separate out plans with high proportions of
dually-eligible, disabled, and low-income individuals.
Response: The issues of whether it is harder for plans with complex
populations to perform well in Star Ratings and the method by which we
stabilize thresholds for cut points are unrelated. The strategy of
removing outliers for stability of cut points does not affect how
performance is compared across plans with and without complex
populations.
In simulations of Star Ratings calculated using the Tukey outer
fence outlier approach, we found that the effect of outlier removal on
SNP versus non-SNP contracts was not very different. When outlier
measure scores were removed as a part of our simulation using the data
for the 2018 Star Ratings, overall summary ratings shifted from 4 to
3.5 stars for approximately 4 percent of contracts without a SNP, and
for about 5 percent of contracts with a SNP for the contracts with
overall ratings. The removal of outliers will not necessarily have
consistent year-to-year impacts, and is dependent on where contracts
fall in the measure score distributions, with contracts near the bottom
of a score range being the most likely affected.
CMS adopted the categorical adjustment index (CAI) to address the
concern that plans with more complex populations have lower ratings
based on the population served under the contract. The CAI advances
more equitable plan comparisons because it generates Star Ratings that
contracts would have received if they had all served the same patient
population. That is, the CAI adjusts for within-contract disparities
based on measures that are not otherwise adjusted for patient
characteristics. CAI coefficients are estimated each year so if there
is a differential impact of COVID-19 on the measures of performance for
contracts with a higher percentage of dual eligible and disabled
beneficiaries versus contracts with a lower percentage of enrollees
with those social risk factors, the CAI values would reflect these

[[Page 33835]]

differences. The CAI will continue to adjust for the percentage of LIS/
DE and disabled beneficiaries within the contract in accordance with
Sec. Sec. 422.166(f)(2) and 423.186(f)(2), and therefore will adjust
for these differences for contracts with and without a SNP.
Comment: A commenter suggested that CMS retire measures from the
program when there are one percentage point differences in the same
direction between cut points year over year.
Response: CMS does not consider the size of changes in performance
from year-to-year to be a criterion for retirement of a measure,
particularly when there is still room for improvement on the measure.
CMS retires or removes measures from Star Ratings when there is a
change in clinical guidelines that mean that the measure specification
is no longer believed to align with or promote positive health outcomes
and when measures show low statistical reliability. These standards are
in Sec. Sec. 422.164(e)(1) and 423.184(e)(1), and we explained how we
interpret and apply the standards in the April 2018 final rule. When
measure scores are ``topped out'' (that is, show high performance
across all contracts), this decreases the variability across contracts
and makes the measure unreliable. On average, measures improve year-to-
year in the 1 to 3 percentage point range, with the exception of new
measures where the performance generally has more substantial room for
improvement or in situations where a structural change occurs (for
example, implementation of EHR tools) that significantly alter
performance on the measure.
Comment: A couple of commenters suggested convening a Technical
Expert Panel (TEP) to provide input into the Tukey outlier deletion.
Response: A TEP comprised of representatives across various
stakeholder groups convened on May 31, 2018 to provide feedback to the
RAND Corporation, the current CMS contractor for the Part C and D Star
Ratings program to obtain input on a number of issues, including
increasing the stability of cut points (https://www.rand.org/pubs/conf_proceedings/CF391.html). This TEP focused on different ways to
increase stability of cut points, including outlier deletion, but did
not focus on the different methods for deleting outliers. We do not
believe another TEP is necessary to specifically address this topic
given the RAND TEP already expressed strong support for directly
addressing outliers and this methodology for removing outliers is a
widely accepted methodology for removing outliers.
Comment: A handful of commenters wanted to see the impact on their
individual plans to be able to fully understand the effect of Tukey
outlier deletion.
Response: CMS plans to display simulations of Tukey outlier
deletion with mean resampling and guardrails for contracts to view in
HPMS for the 2021, 2022, and 2023 Star Ratings prior to implementing
the Tukey outlier change effective with the 2024 Star Ratings. These
simulations will use the actual data that will be populating the 2021,
2022 and 2023 Star Ratings and will include all of the changes
finalized related to cut point calculations. As noted in the NPRM, for
the first year (2024 Star Ratings), we will rerun the prior year's
thresholds, using mean resampling and Tukey outer fence deletion so
that the guardrails would be applied such that there is consistency
between the years. This, therefore, will be done for the simulations
using the 2021 Star Ratings. This will provide information for multiple
years for plans to see how the cumulative impact of the changes will
impact the cut points going forward. Please note that currently mean
resampling will be implemented with the 2022 Star Ratings, guardrails
will be added with the 2023 Star Ratings, and Tukey outlier deletion
will be implemented with the 2024 Star Ratings. Our planned simulations
will illustrate the cumulative effect of all of these policies.
Comment: A commenter said CMS could further address outliers by
removing contracts that are not eligible for Quality Bonus Payments
such as 1876 cost plans and Medicare-Medicaid Plans.
Response: CMS does not include Medicare-Medicaid Plans in the
calculation of cut points for the Part C and D Star Ratings since they
currently do not receive Star Ratings on Medicare Plan Finder; however,
although not eligible for bonuses, 1876 cost plans are part of the Part
C and D Star Ratings program (see Sec. 417.472(k)) and have
historically received Star Ratings on Medicare Plan Finder so these
contracts are included in the cut point calculations. Otherwise, the
ratings for public reporting would not be comparable for beneficiaries
to use in evaluating their coverage choices.
Comment: A commenter asked for clarification about whether measures
in the program for three or fewer years would be included in the Tukey
outlier deletion.
Response: We are finalizing the proposed amendment to apply Tukey
outlier deletion to all non-CAHPS measures, beginning with the 2024
Star Ratings. This application will be for all such measures regardless
of the number of years the specific measure has been used in the Star
Ratings program.
Comment: A number of commenters suggested publishing cut points in
advance of the measurement year by relying on the data from earlier
time periods, reinstituting pre-determined 4-star thresholds, or
designing cut points that establish clear national standards of care.
Some of the commenters noted that announcing cut points prior to the
measurement period would help plans and providers engage in value-based
contracts that incentivize higher quality.
Response: CMS understands the interest in setting pre-determined
cut points prior to the measurement year, but as stated previously in
the April 2019 final rule (84 FR 15752-15754) there are numerous
challenges in setting pre-determined cut points, including older data
not being reflective of current performance, average performance not
always increasing in a linear manner, external factors resulting in
significant changes in performance from year to year, larger gains in
performance generally seen for newer measures, and the rate of change
differing for low performing contracts compared to higher performing
ones. Additionally, the measures included in the Star Ratings program
do not have national standards of care that plans or providers should
meet; thus, it would be challenging to come to consensus on national
standards to rate plans in the Star Ratings program. If using older
data to predict or establish cut points, we risk causing unintended
consequences such as disincentivizing quality improvement or setting
cut points that are not aligned to significant changes in industry
performance. For example, no one could have predicted the significant
impacts the COVID-19 pandemic would have on industry performance for
various Star Ratings measures. The current methodology of hierarchal
clustering using the current year's data will adjust cut points for the
unforeseen impact on plan performance across the program. Since the
clustering methodology compares relative performance, it protects plans
from unanticipated impacts on industry performance. If there were pre-
determined thresholds based on historical data or an independent
standard, plans could end up all with uniformly low ratings when
unanticipated situations such as the COVID-19 pandemic occur.
Comment: A number of commenters recommended including outliers in
the

[[Page 33836]]

cut point calculations since they represent the true performance of
contracts on the measures. Commenters stated that without including
these outliers, CMS would not fully be representing industry
performance. Other commenters noted that with the current data
integrity polices in place for the Star Ratings program, these outliers
are legitimate measure-level contract scores.
Response: CMS agrees that an outlier may be a legitimate score for
a particular contract, but we also know that extreme outliers for a
measure in a given year can impact statistical analyses such as
clustering. In the April 2019 final rule (84 FR 15755-15758) we
received stakeholder feedback that in addition to guardrails and mean
resampling we should directly address the impact of outliers. Although
mean resampling does not directly address outliers, it helps mitigate
the effect of outliers because when establishing the thresholds each
data point (including outliers) is omitted from 10 percent of the cut
points that are estimated (cut points are repeatedly estimated on ten
subsets each containing 90 percent of the measure scores) and then
averaged across the ten 90 percent samples following resampling.
However, based on feedback from the industry to further increase the
stability of the cut points and to prevent large fluctuations in cut
points from one year to the next caused by the scores of a few
contracts, we proposed in the February 2020 proposed rule to more
directly remove extreme outliers and are finalizing that policy.
Comment: A handful of commenters supported the addition of Tukey
outlier deletion to the cut point methodology, while some suggested
delaying implementation or viewing Tukey outlier deletion as an interim
solution to improving the stability of the cut points. A commenter
suggested phasing in outlier deletion over a multi-year period by
putting the cut points with Tukey outlier deletion on display for two
years.
Response: We appreciate the support for the addition of Tukey
outlier deletion to the cut point methodology and have decided to delay
the implementation for an additional year recognizing that there may be
fluctuations in measure-level scores as a result of the COVID-19
pandemic. We will also display simulations for the 2021, 2022, and 2023
Star Ratings in HPMS for contracts to see the impact of removing
outliers on their stars.
Summary of Regulatory Changes
After consideration of the comments and for the reasons indicated
in the proposed rule and our responses to the related comments, we are
finalizing as proposed the definition ``Tukey outer fence outliers''
and the specific formulae used. We are finalizing revisions to
Sec. Sec. 422.166(a)(2)(i) and 423.186(a)(2)(i) to apply the Tukey
outlier deletion methodology prior to applying mean resampling with
hierarchal clustering as proposed with one modification. To allow for
potential fluctuations in measure-level scores as a result of the
COVID-19 pandemic during the 2021 measurement year, we are delaying the
addition of Tukey outer fence outlier deletion to the clustering
methodology for non-CAHPS measures until the 2022 measurement year and
the corresponding 2024 Star Ratings. Moving the effective date will
provide an opportunity for MA and Part D contracts to view simulated
results using Tukey outlier deletion for the 2021, 2022, and 2023 Star
Ratings in HPMS. We note that the regulation text in this final rule
incorporates the changes made by the IFC to Sec. Sec. 422.166(a)(2)(i)
and 423.186(a)(2)(i) during the period between the proposed rule and
this final rule. The effect of Tukey outlier deletion would create a
savings of $935 million for 2025, increasing to $1,449.2 million by
2030.
3. 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 through rulemaking 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 the February
2020 proposed rule, CMS proposed the removal of the Rheumatoid
Arthritis Management measure from the Star Ratings program for
performance periods beginning on or after January 1, 2021.
CMS proposed 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 proposed to
remove it starting with the 2023 Star Ratings.
Below we summarize the comments we received and provide our
responses and final decisions.
Comment: Most commenters supported the retirement of the Rheumatoid
Arthritis Management measure and offered a number of reasons for their
support. Approximately half of the commenters who supported removal
believed current measure specifications erroneously include certain
patients in the measure denominator: Those receiving medication through
clinical trials, patient assistance programs, or other ways of paying;
patients in remission or managing their illness with other drugs; and
patients who have side effects or cannot tolerate disease-modifying
anti-rheumatics drugs (DMARDS). A couple of commenters noted that the
rate of medication adherence would be a better measure of patient
outcomes than the current focus on DMARD dispensing. Individual
commenters raised a number of additional issues with the measure: The
role of the rheumatologist is not captured by the current measure; the
measure has low reliability; there is no clinical consensus on whether
patients in remission should remain on DMARD medications or should stop
taking them at some point; removal of the measure will streamline
ratings systems since NCQA has retired the measure from HEDIS; and
continued use of the measure would promote unnecessary use of DMARDS.
Response: CMS will pass along to the measure developer suggestions
made by commenters for additional research and new directions. NCQA has
retired this measure and therefore there will be no data for CMS to use
in the Star Ratings program for the 2023 Star Ratings and beyond, so
CMS will remove the measure from the Parts C and D Star Ratings.
Comment: A couple of commenters disagreed with CMS's proposal and
offered similar explanations and recommended actions for CMS to take

[[Page 33837]]

instead of removing the measure. The commenters note that there is room
for improvement in the measure in some populations and in some regions.
They also note that research is only beginning into the long-term
outcomes of patients recovering without use of DMARDS. For these
reasons, they suggest it is premature to update the specifications of
the measure or to retire the measure. Instead, they suggest additional
research into the long-term outcomes and functional status of patients
recovering without use of DMARDS.
Response: CMS will pass along the suggestions for future research
to the measure developer, NCQA. NCQA has retired this measure starting
with the 2021 measurement year, so starting in 2021 this measure will
no longer be submitted by plans and audited as part of the HEDIS
measurement set. Thus, there will be no data for CMS to use in the Star
Ratings program for the 2023 Star Ratings and beyond. Additionally, CMS
agrees with NCQA's assessment of the need to retire this measure at
this time.
Summary of Regulatory Changes
After consideration of the comments and for the reasons set forth
in the proposed rule and our responses to the related comments
summarized earlier, we are finalizing the removal of the Rheumatoid
Arthritis Management measure.
4. 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 that the weight for patient
experience/complaints measures and access measures will increase to 2.
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 measures 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. We stated 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 or only source of
information.
We explained the proposed increase in the weight would not impact
the assignment of stars at the measure level, just the calculation of
the overall and summary ratings, and would 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 \22\). 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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\22\ 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 proposed 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 measures and
access measures to 4 to further emphasize the importance of patient
experience/complaints and access issues.
We received the following comments related to our proposal, and our
responses follow:
Comment: The majority of commenters opposed the weight increase of
patient experience/complaints and access measures from 2 to 4. Most of
these commenters argued that CMS should not value patient experience
over clinical outcomes (currently weighted as 3) as they believe
clinical outcome measures are the most important. Because some plans
may not have enough enrollees to report all of the outcome measures
included in the Star Ratings program, some commenters argue the
proposed weighting changes would create an even greater imbalance
between the total weight given to patient experience measures versus
clinical outcome measures for these plans. A commenter stated that
since the intended purpose of the Star Ratings program is to compare
plan performance on measures related to beneficiary health outcomes and
experience, the increase has the potential to erode the integrity of
the Star Ratings program by basing the majority of the Star Rating
score on patient experience and complaints measures instead of clinical
outcomes.
Response: CMS appreciates the value commenters place on outcome
measures and will continue to advance work in the area of developing
new outcome measures. That being said, it is important to make sure the
voice of patients is heard and that patient experience is a key
component of the overall and summary Star Ratings. Part of putting
patients first and promoting patient-centered care is focusing on
patients' perspectives. Additionally, for those plans that may not have
enough enrollees to report all of the outcome measures included in the
Star Ratings program, we believe that this increased weighting of
experience measures would provide such plans an opportunity to focus on
improving patient experience and differentiate themselves in the market
as a plan that anticipates members' needs and works with enrollees in a
customized way. Consequently, we are emphasizing CMS's goal of
listening to the voice of the patient to identify opportunities to
improve care delivery. Under 1851(d) of the Act, CMS must provide
information to promote an active, informed selection among plans, and
hearing the perspective of beneficiaries is critical to understanding
the differences among options. Weighting these measures higher will
accomplish this goal.
Comment: A number of commenters argued that by increasing the
patient experience/complaints measures and access measures from a
weight of 2 to 4, CMS will be downplaying the importance of the
provision of high quality clinical care. Some commenters also noted
that this would not align with other CMS quality measurement programs,
such as the Health Insurance Exchanges Quality Rating System (QRS), the
underlying goals of the Part C and D Star Ratings program and non-
Medicare quality improvement efforts, or with CMS's guiding principles
for the Star Ratings program. A commenter noted that this contradicts
the U.S. Department of Health and Human Services' (HHS') efforts as
part of the Quality Summit to align federal healthcare quality rating
programs. A commenter noted that the proposal also runs counter to the
quality measurement principles of MedPAC, which establish the
importance of outcome measures.

[[Page 33838]]

Response: The proposed increase in weight for patient experience/
complaints measures and access measures is a new direction for the Part
C and D Star Ratings program to advance the agency's goal of putting
patients first and listening to their voice. While this direction
differs from current policies in other quality programs, it is part of
the agency's effort to strive to ensure we are meeting the needs of our
beneficiaries by listening to their feedback through the CAHPS survey
measures, disenrollment rates, and complaints measures. A primary
function of Medicare health and drug plans is the provision of health
care and drug services to beneficiaries. Measuring, and highly
weighting, the importance of access to these services greatly encourage
the industry to focus on their fundamental functions. Without access to
care and needed prescription medications, optimal clinical outcomes are
not probable. CMS believes access to services, care coordination, and
patient engagement are intrinsic to positive clinical outcomes. A
beneficiary's confidence in the health and drug plan helps facilitate
continuation of care which could lead to better clinical outcomes. We
agree with MedPAC's recommendation that population-based outcome and
patient experience measures are critical in evaluating MA quality.
Comment: Commenters also raised concerns that this would take focus
away from physician care and the clinical measures collected through
HEDIS. Other commenters noted that the overwhelming emphasis on patient
experience could have the unintended consequence of MA plans and
providers not focusing on preventive screenings, such as colorectal
cancer screening, which can save lives.
Response: Plans and providers should continue to focus on
preventive care, screenings, and physician care. This weight change
puts more emphasis on the voice of the beneficiary and access issues.
We disagree with the characterization that this emphasis is
overwhelming, and it in no way suggests that plans and providers should
not be continuing to provide important preventive care and screenings.
All MA and Part D sponsors are still required to have quality
improvement (QI) programs described at Sec. Sec. 422.152 and
423.153(c), respectively, in place. The primary goal of the MA
organization's QI program is to effect sustained improvement in patient
health outcomes. Additionally, by not continuing to focus on preventive
screenings and primary care, this will have a detrimental effect on
health outcomes and would have an impact on patient experience measure
scores, disenrollment rates, and complaint rates, all measures included
in the weight increase. Therefore, the risk of this particular negative
outcome from the change in weighting the patient experience/complaints
measures and access measures is minimized.
Comment: A number of commenters expressed concerns about what they
perceive to be a fundamental, unprecedented shift away from the
objective data-driven clinical Star Ratings measures to more subjective
patient experience measures and encouraged a more thoughtful approach
to ensure that the weight increase would not result in unintended
consequences. Commenters raised issues regarding CMS creating
incentives for plans and providers to provide care that would lead to
increased CAHPS scores, and they argued this may not be in the best
interest of Medicare beneficiaries and better health outcomes.
Response: Plans and providers should always be providing
professional, appropriate clinical care to Medicare beneficiaries,
thereby focusing broadly on quality, rather than on narrowly targeted
metrics represented by individual Star Ratings measures. Patient
experience is a fundamentally important aspect of healthcare quality.
Most of the evidence shows that better patient experience is associated
with better patient adherence to recommended treatment, better clinical
processes, better hospital patient safety culture, better clinical
outcomes, reduced unnecessary healthcare use, and fewer inpatient
complications (Anhang Price et al., 2014; Anhang Price et al., 2015
\23\). The Anhang Price et al., 2014 article which consisted of a
review of relevant literature related to CAHPS surveys and their
relationship to health care quality found that all but one out of
almost three dozen studies reviewed showed a positive correlation
between patient experiences and clinical care quality or were neutral.
The empirical evidence in the studies highlights that health care
providers and plans can concurrently provide better patient experiences
and better clinical quality. As discussed in the article, patient
experience of care surveys such as the CAHPS surveys evaluate a
critical component of care and focus on whether the care is patient-
centered. This is an important goal as we continue to emphasize the
importance of putting patients first.
---------------------------------------------------------------------------

\23\ Anhang Price, R., Elliott, M.N., Zaslavsky, A.M., Hays,
R.D., Lehrman, W.G., Rybowski, L., Edgman-Levitan, S. & Cleary, P.D.
(2014). Examining the role of patient experience surveys in
measuring health care quality. Medical Care Research and Review,
71(5), 522-554.
Anhang Price, R., Elliott, M.N., Cleary, P.D., Zaslavsky, A.M.,
& Hays, R.D. (2015). Should health care providers be accountable for
patients' care experiences?. Journal of general internal medicine,
30(2), 253-256. https://doi.org/10.1007/s11606-014-3111-7.
---------------------------------------------------------------------------

Comment: A few commenters expressed concerns that this change would
encourage plans to abandon efforts to drive clinically appropriate care
in lieu of catering to popular opinion that may be biased by
advertisements and media. Such behavior, it was noted, could result in
degraded health outcomes long-term for Medicare beneficiaries. They
argue programs that promote member health and safety, such as drug
management and utilization programs, could be damaged or abandoned. A
number of commenters stated that the improvement of health outcomes is
one of the largest drivers of the long-term goal of reducing American
health care costs and that shifting emphasis from clinical outcomes to
member experience could lead to increased medical and pharmaceutical
spending.
Response: Plans and providers should continue to focus on improving
health outcomes, while also ensuring that Medicare beneficiaries have
access to clinically appropriate and needed care, for example as
measured through the CAHPS surveys, Appeals, Members Choosing to Leave
the Plan, and Complaints measures. Outcome measures are still heavily
weighted in the Star Ratings program with a weight of 3. We believe
high quality care is meaningless unless the enrollee has access to that
care. All MA and Part D sponsors are required to have quality
improvement (QI) programs described at Sec. Sec. 422.152 and
423.153(c), respectively, in place. The primary goal of the MA
organization's QI program is to effect sustained improvement in patient
health outcomes and providing health care using evidence-based clinical
protocols. The QI program must also include a health information system
to collect, analyze, and report Medicare Parts C and D quality
performance data, including HEDIS, HOS, and CAHPS data. Additionally,
as described at Sec. 422.152(c), an MA organization's QI program must
include a chronic care improvement program. Part D sponsors must also
have established quality assurance measures and systems in place to
reduce medication errors and adverse drug interactions and improve
medication use. In addition to the requirements to focus on clinical-
based care, MA and Part D plans, given their payment structures should
have

[[Page 33839]]

incentives to decrease inappropriate medical and pharmaceutical
spending.
Comment: Some commenters argued that if physicians do not proceed
thoughtfully, patient experience measures could easily result in
adverse consequences that are potentially dangerous to the patient. A
commenter noted that if a person who is addicted to opioids seeks a
prescription and the physician does not provide one, the patient could
retaliate by leaving a negative review. It was suggested that in some
cases physicians who overprescribe opioids may have very high reviews
from patients, despite putting patients in real danger and contributing
to the nation's opioid epidemic.
Response: The CAHPS survey questions are based on statistically
valid samples of Medicare enrollees in each contract and should not be
influenced by a particular physician providing opioids or not. They are
not like crowd-sourced reviews. Most of the CAHPS survey questions
focus on enrollees' experiences of care such as whether they got an
appointment to see a specialist as soon as they needed, whether they
got care as soon as they needed, whether the health plan's customer
service gave them the information or help needed, and whether the
doctor's office followed up on test results.\24\ There are also global
ratings of the health care quality, health plan, and drug plan. The
change in measure weights does not suggest that any physicians behave
in a manner that puts patients in danger, nor does it provide an excuse
for a physician who does so.
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\24\ CAHPS composite items included in the Part C & D Star
Ratings are: Getting Needed Care, Getting Appointments and Care
Quickly, Customer Service, Care Coordination, and Getting Needed
Prescription Drugs. All of these measures are considered patient
experience of care measures.
---------------------------------------------------------------------------

Comment: A few commenters supported the increased weight of patient
experience/complaints measures and access measures but only if the
increase is gradual by moving it to a weight of 2.5 or 3 first to
promote stabilization of the Star Ratings. It was noted that this
proposal is a radical increase considering that CMS had maintained for
eight consecutive Star Ratings cycles (2012-2019) the original weight
of these measures (at a weight of 1.5). Commenters argued that when
changes are made to an organization's culture, it can take years to see
the improvements in patient experience scores since many beneficiaries
interact with the health care system only a few times a year.
Response: We disagree that this is an unexpected and sudden change.
The April 2018 final rule adopted an increase from 1.5 to 2 in the
weight of patient experience and complaints measures and access
measures. CMS signaled in that final rule that, given the importance of
hearing the voice of patients when evaluating the quality of care
provided, we intended to further increase the weight of these measures
in the future. While we appreciate that organizations are being
incentivized to quickly adjust to this weighting change, we believe it
is important to proceed at this time, in particular, in light of the
COVID-19 pandemic. The uncertainty from the pandemic is a critical time
for plans to be focused on patient experience. Plans need to enhance
patient experience to deal with the challenges of COVID-19 pandemic, to
work with beneficiaries in customized ways, and be as supportive as
possible. This is also an opportunity for them to distinguish
themselves and be innovative in maintaining access to care. A goal of
the Star Ratings program is to foster continuous improvement.
Comment: A handful of commenters opposed the weight increase for
measures from the CAHPS survey. These commenters argued that the CAHPS
survey measurement tool and methodology are outdated and need to be
updated to accurately capture beneficiaries' perspectives of care since
the private insurance market has significantly changed over time. Some
commenters opposed the survey due to a variety of other reasons,
including what they perceive as a lack of statistical reliability,
small sample sizes, compression of cut points, differences in
methodologies across CAHPS surveys and with the NCQA rating system, cut
point variability, contract-level rating volatility, and lack of
clinical relevance. A commenter stated that the measures are based on a
limited sample that may yield inaccurate, unreliable, or biased data. A
commenter stated that younger patients, those with disabilities, and
members enrolled in a D-SNP are underrepresented in the survey. A
couple of commenters stated that the CAHPS survey has no mechanism for
health plans to identify and address negative experiences for a
particular enrollee; therefore, these commenters encouraged CMS to
release secure beneficiary-level CAHPS response data. A commenter said
survey data should receive third-party validation.
Response: CAHPS measures 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 or
only source of information. As a result of more than twenty years of
research that is ongoing and leading to continuous improvement, CAHPS
surveys are very good measures of patient experience. The CAHPS
program, initiated in 1995, which includes the Medicare CAHPS Health
Plan Surveys, seeks to advance the scientific understanding of patient
experience with healthcare. Since then, CAHPS surveys have become
recognized as the most widely validated, reliable, and applied patient
experience surveys in the United States (Holt et al. 2019). Many
articles documenting the reliability and face, content, and construct
validity of the CAHPS surveys have been published (for example,
Crofton, Lubalin, & Darby, 1999; Darby, Hays, & Kletke, 2005; Hays et
al., 2014; Martino et al., 2009). In addition, many studies establish
the validity of CAHPS measures by assessing their association with
measures of structures, processes, and outcomes. For example, the 2014
review article (Anhang Price et al., 2014), in reviewing 34 studies,
found that evidence indicated positive associations between patient
experiences and other aspects or indicators of health care quality,
including patient behavior (adherence), best practice clinical
processes, better patient safety culture, and lower unnecessary
utilization.\25\
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\25\ Anhang Price, R., Elliott, M.N., Zaslavsky, A.M., Hays,
R.D., Lehrman, W.G., Rybowski, L., Edgman-Levitan, S. & Cleary, P.D.
(2014). Examining the role of patient experience surveys in
measuring health care quality. Medical Care Research and Review,
71(5), 522-554.
Crofton, C., Lubalin, J.S., & Darby, C. (1999). Consumer
Assessment of Health Plans Study (CAHPS). Foreword [Review]. Medical
Care, 37(3 Suppl.), MS1-MS9.
Darby, C., Hays, R.D., & Kletke, P. (2005). Development and
evaluation of the CAHPS hospital survey. Health Services Research,
40(6 Pt 2), 1973-1976.
Hays, R.D., Martino, S., Brown, J.A., Cui, M., Cleary, P.,
Gaillot, S., & Elliott, M. (2014). Evaluation of a care coordination
measure for the Consumer Assessment of Healthcare Providers and
Systems (CAHPS) Medicare survey. Medical Care Research and Review,
71, 192-202.
Holt, J.M. (2019). Patient experience in primary care: A
systematic review of CG-CAHPS surveys. Journal of Patient
Experience, 6(2), 93-102.
Martino, S.C., Elliott, M.N., Cleary, P.D., Kanouse, D.E.,
Brown, J.A., Spritzer, K.L., Hays, R.D. (2009). Psychometric
properties of an instrument to assess Medicare beneficiaries'
prescription drug plan experiences. Health Care Financing Review,
30(3), 41-53.
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The Medicare CAHPS survey is designed to capture changes in the
insurance market that may adversely affect patient experience. The
survey measures patient experience with care and captures whether
enrollees in MA

[[Page 33840]]

plans with narrow networks or closed panels or providers who are not
accepting new patients have less positive experiences or receive lower
quality care in the responses to existing questions on the survey. If
care is worse in some MA contracts because of these aspects of how care
is provided, the survey functions as intended by identifying and
reporting these differences to beneficiaries, contracts, and CMS.
The statistical reliability of the CAHPS measures is high, so that
higher star categories correspond to meaningfully better performance.
Generally, reliabilities of 0.7 or more are considered high for a
quality measure (Price, Elliott, Zaslavsky, et al., 2014). The
reliability of Medicare CAHPS measures ranges from 0.76 to 0.92.
Contracts may further increase the reliability of their own scores by
requesting sample sizes greater than the required minimum.
While the star category bands may appear to be narrow, the
reliability of CAHPS measures meet or exceed standards for quality
measurement (Adams 2009 \26\), so that higher star categories
correspond to meaningfully better performance. While the CAHPS scoring
using linear means may make between-plan differences appear to be
compressed, the high contract-level reliability establishes excellent
ability to differentiate plan performance. Based on the peer-reviewed
measurement and quality-measurement literature, experts in measurement
generally agree that reliability greater than 0.70 indicates acceptable
reliability; reliabilities of 0.80 or greater are preferable for
higher-stakes applications (Adams et al. 2010, Elliott et al. 2010;
Nunnally & Bernstein, 1994; Roland et al. 2009; Safran et al.,
2006).\27\
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\26\ https://www.rand.org/pubs/technical_reports/TR653.html.
\27\ Adams, J.L., Mehrotra, A., Thomas, J.W., & McGlynn, E.A.
(2010). Physician cost profiling--reliability and risk of
misclassification. New England Journal of Medicine, 362(11), 1014-
1021.
Elliott, M.N., Lehrman, W.G., Goldstein, E., Hambarsoomian, K.,
Beckett, M.K., & Giordano, L.A. (2010). Do hospitals rank
differently on HCAHPS for different patient subgroups? Medical Care
Research and Review, 67(1), 56-73.
Nunnally, J.C., & Bernstein, I.H. (1994). Psychometric theory
(3rd ed.). New York: McGraw-Hill.
Roland, M., Elliott, M., Lyratzopoulos, G., Barbiere, J.,
Parker, R.A., Smith, P., . . . & Campbell, J. (2009). Reliability of
patient responses in pay for performance schemes: Analysis of
national General Practitioner Patient Survey data in England.
British Medical Journal, 339, b3851.
Safran, D.G., Karp, M., Coltin, K., Chang, H., Li, A., Ogren,
J., et al. (2006). Measuring patients' experiences with individual
primary care physicians: Results of a statewide demonstration
project. Journal of General Internal Medicine, 21, 13-21.
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The differences between CMS's Medicare CAHPS implementation and
others largely reflect CMS's use of additional survey items, case-mix
adjustment, and reliability and statistical significance criteria to
improve the validity, reliability, and accuracy of Medicare CAHPS
scores and stars (https://www.ma-pdpcahps.org/globalassets/ma-pdp/scoring-and-star-ratings/2019-analysis-of-reported-measures.pdf);
several of these beneficial features are not included in other CAHPS
implementations. For example, the CMS Medicare CAHPS Getting
Appointments and Care Quickly composite includes a highly-reliable item
that is not present in alternate versions. The use of percentile
cutoffs, combined with reliability and statistical significance
testing, reduces the effects of chance and results in reliable, valid
star assignment for CAHPS measures. This methodology, combined with
highly-reliable underlying scores, ensures that changes in cut points
reflect changes in contract performance rather than chance. These
changes in cut points ensure that CAHPS Star Ratings continue to
accurately differentiate contract performance.
Patient experience is an inherently important dimension of
healthcare quality. It is also the case that the preponderance of
evidence shows that better patient experience is associated with better
patient adherence to recommended treatment, better clinical processes,
better hospital patient safety culture, better clinical outcomes,
reduced unnecessary healthcare use, and fewer inpatient complications
(Anhang Price et al., 2014; Anhang Price et al., 2015).
Medicare CAHPS case-mix adjustment, which is informed by 20 years
of research, accounts for factors such as age, health status, and dual
eligibility and ensures that contract scores are not influenced by
patient-level factors beyond their control. This adjustment ensures
that contract-level scores fairly represent all contracts. Analyses of
nonresponse in CAHPS data (Elliott et al. 2005; Elliott et al. 2009)
have shown little or no evidence of nonresponse bias in the presence of
CAHPS case-mix adjustment.
Medicare CAHPS survey vendors have access to beneficiary-level data
and are permitted to conduct analyses with these data that do not risk
disclosing the identity of respondents to plan sponsors, including
restrictions on reporting cell sizes smaller than 11. These
restrictions are necessary to ensure the confidentiality and validity
of beneficiary responses to the Medicare CAHPS survey.
The collection and processing of CAHPS data undergo a rigorous
quality assurance process that includes dual program coding, use of
test data sets, team review of products, investigation of outliers, and
comparisons to historic results. This quality assurance process is as
rigorous as that followed for the production of other quality measures.
Comment: A couple of commenters suggested different updates to the
content of the CAHPS survey. A commenter recommended that the Agency
for Healthcare Research and Quality (AHRQ) and CMS consider expanding
the survey to include questions on accuracy of provider directories and
ease of accessing the information. Another commenter noted that
questions on the CAHPS survey are not consistent across different lines
of business.
Response: The Medicare CAHPS Survey was updated in 2016 to
incorporate AHRQ's 5.0 updates to the CAHPS Health Plan Survey. CMS
uses the most current version of the CAHPS Health Plan Survey as it is
the national standard for measuring and reporting on the experiences of
consumers with their health plan, and the only assessment of patient
experiences with health plans endorsed by the National Quality Forum.
In May 2019, AHRQ published a request for information inviting public
comment to inform potential revisions to the Health Plan Survey (84 FR
21340). CMS will give careful consideration to any updates to the CAHPS
Health Plan Survey that AHRQ may provide in the future. Additional
testing and development to refine CAHPS items in areas such as care
coordination is ongoing. With regard to adding questions around
provider directories and ease of accessing plan information, specific
measures of information seeking, such as experience with written health
plan materials, have been explored in the context of CAHPS but have not
resulted in reliable measures due to too few plan members reporting
experience in the survey samples. CMS is exploring alternate ways of
improving the accuracy of plan directories. Differences in CAHPS
composite items across lines of business, such as in the Getting
Appointments and Care Quickly composite, in some cases reflect
additional items that Medicare CAHPS includes to maximize the
reliability and validity of the CAHPS measures.
Comment: A commenter supported the increase in the weight for
administrative access measures but

[[Page 33841]]

suggested keeping the CAHPS measures at their current weight because
the administrative measures already take into account member
experience. Another commenter said they would support an increase in
access measures because plans have a direct impact on the outcome of
these measures and can analyze, pinpoint root causes, and take action
to avoid adverse outcomes.
Response: We appreciate these comments. CMS wants to ensure that
the experiences of beneficiaries getting needed care, getting
appointments and care quickly, care coordination, and ratings of health
care quality, for example, are also emphasized with this weight change.
MA plans are responsible for providing all of the Part A and B benefits
and providing a managed care alternative to the traditional FFS
Medicare program. In some cases, the MA plans provide additional
(supplemental) benefits. One of the advantages of MA is the MA plan is
responsible for coordinating the care among the enrollee's health care
providers. Since the primary purpose of the health plan is to ensure
their enrollees get needed health care services, patient experience and
access measures that focus on whether the enrollee is getting needed
care are critical in evaluating whether a plan is fulfilling its
fundamental requirements.
Comment: A couple of commenters opposed the weight increase for
access measures but also asked for clarification and requested a
methodology change to the Call Center measures. A commenter requested
CMS consider publishing Call Center results in HPMS on the same
frequency as the Part C and Part D Timeliness Study (quarterly) to
allow plan sponsors to better align internal testing/monitoring against
CMS third-party testing. A commenter asked for clarification on the
definition of the ``Call Center,'' noting it is unclear if this
encompasses the Star Ratings measure for prospective members or if this
is in reference to the member customer service call center.
Response: While we appreciate feedback on the usefulness of the
Accuracy and Accessibility Study results and the request for
publication of those results quarterly, we cannot do this because of
the timing of the study. The Timeliness Study is conducted quarterly,
and CMS publishes the results quarterly; conversely the Accuracy and
Accessibility Study is conducted once a year, between February and May,
and CMS publishes the results once a year, as soon as they are
available in August. For purposes of the Star Ratings measure, the
prospective customer service call center results are included in the
measure calculation. The measure specification has not changed from
prior years.
Comment: A few commenters opposed the current appeals measures and,
consequently, did not believe the higher weight was prudent. One noted
that these measures are distorted because beneficiaries may be unaware
of the extent to which they are or are not receiving the proper
benefits. The commenter recommended CMS conduct a survey of providers
on how efficiently and accurately MA plans make organizational
determinations and appeals. A commenter expressed concern regarding
increasing the weight for appeals measures citing what they believe are
fundamental flaws in these measures. They stated both the plan and
Independent Review Entity (IRE) have difficulty reaching sound
decisions in the 72 hour timeframe and argued the IRE demonstrates the
same lack of medical expertise or misunderstanding of coverage
guidelines as the MA plan; the commenter recommended providing more
meaningful measures such as independent audits of the MA plans' initial
determinations, the frequency with which physicians appeal MA plans
initial determinations, the timeliness of initial determinations (using
a much shorter standard than 72 hours), and other measures they say
capture the patient and provider experience more accurately. A
commenter stated health plans should be held accountable for their
administrative responsibilities and insurance functions through
compliance standards and plan monitoring, not Star Ratings.
Response: CMS clarifies that both Part C appeals measures assess
the timeliness of appeals sent to the IRE and how often the IRE agrees
with the plan's decisions. The purpose of these measures is not to
directly assess the enrollees' comprehension of all of their plan
benefits. CMS acknowledges the comments for new measurement suggestions
for the Part C appeals process and is actively evaluating these
suggestions for future measure development. However, CMS does not agree
that there are fundamental flaws in the current Part C Appeals
measures. The purpose of the appeals measures is to ensure appeals that
are denied are processed in a timely manner and to assess if the denial
by the health plan was consistent with the benefit or coverage
requirements. CMS reminds plans that they can access timeliness and
compliance data in real time at www.medicareappeal.com and bring to the
attention of the IRE any data discrepancies. CMS disagrees that both
the plan and IRE have difficulty making sound decisions in the 72-hour
time frame and both lack the medical expertise or misunderstand the
coverage guidelines. CMS notes only expedited reconsiderations must be
sent to the IRE within 72 hours for Part C appeals (see Sec. 422.590).
In these cases this timeframe is required to avoid endangering the life
or health of the enrollee or the enrollee's ability to regain or
maintain maximum function; thus, a de novo review of an adverse
organization determination must be processed quickly. Examples of cases
that should be expedited include pre-service skilled nursing facility
cases, pre-service acute inpatient care cases and cases in which a
physician indicates that applying the standard timeframe for making a
determination could seriously affect the life or health of the enrollee
or the enrollee's ability to regain maximum function. Medicare health
plans have an obligation to determine if an appeal should be expedited,
including responding to an enrollee or provider request for expedited
determination. We also remind plans that in expedited and standard
service appeals, IRE may extend the decision timeframe by up to 14
calendar days if it is in the enrollee's interest.
Please remember if a plan fails to provide the appellant with a
reconsidered determination within the required timeframes, this failure
constitutes an affirmation of its adverse organization determination,
and the plan must submit the case file to the IRE for review. Plans and
sponsors must continue to have procedures in place for requesting and
obtaining information necessary for making timely and appropriate
decisions. The IRE's decision is based on the information gathered
during its review process and the IRE must issue a decision within the
same appeals timeframe as the plan. Please refer to 42 CFR 426.600(d).
Therefore, the timeframes for the plan and the IRE are aligned.
In response to the recommendation that plans be held accountable
for their administrative responsibilities and insurance functions
through compliance standards and plan monitoring instead of Star
Ratings, we assure commenters that this also happens. The Star Ratings
measures only focus on two aspects of the appeals processes. Program
audits provide a more comprehensive review of a sponsoring
organization's compliance with the terms of its contract with CMS,
including access to medical services and other enrollee protections
required by Medicare. For more information about the program audit
process, please see https://www.cms.gov/files/document/2020-

[[Page 33842]]

program-audit-process-overview.pdf. The purpose of the Star Ratings
system is to measure quality of a health and drug plan and to provide
information to help beneficiaries make more informed choices. The
appeals measures are such indices of quality.
Comment: A few commenters focused their comments on the Complaints
about the Health and Drug Plan measures. A commenter said they support
a modest increase in weight for these measures because plans are
generally able to analyze the root cause of the complaint and implement
strategies to address beneficiary concerns. A few commenters noted that
complaints not within the plans' control and complaints resulting from
CMS policy decisions should be excluded.
Response: CMS thanks the commenter for their support of a modest
increase in the weight of the complaints measure. Although a few
commenters noted that complaints not within the plans' control and
complaints resulting from CMS policy decisions should be excluded, CMS
expects plans to be integral in assisting beneficiaries and ensuring
their access to care is not disrupted, regardless if they directly
created the issue at question, or not. CMS expects health plans and
Part D sponsors will assist their enrollees in situations such as
these, and help them understand how to correct issues, even if the
underlying cause of complaints is not the sponsors' fault. Sponsors
have an important responsibility for providing continued access to
services. The fact that CMS received a complaint indicates the sponsor
has not helped service their enrollee, as Medicare instructs
beneficiaries to seek resolution first through their sponsors. If
sponsors take the opportunity to assist their enrollees proactively,
they will avoid having complaints recorded in the Complaints Tracking
Module (CTM). CMS issued guidance in the HPMS memo dated May 10, 2019,
Complaints Tracking Module (CTM) File Layout and Updated Standard
Operating Procedures, which describes the Plan Request process for
plans to submit requests to change incorrect contract assignments,
change issue designation (that is, from Plan Issue level to CMS Issue),
and change category/subcategory. The memo states that, for matters that
are delegated to CMS for handling and/or final resolution, plans are to
submit a CMS Issue Change Request and it lists examples of applicable
situations. In the SOP Appendix A, CMS lists the subcategories and
notes which subcategories are excluded from plan performance metrics.
Comment: A few commenters focused their comments on the
disenrollment measure, Members Choosing to Leave the Plan, stating that
the measure is flawed and misrepresents some changes in enrollment as
dissatisfaction. They suggest CMS consider excluding members who switch
plans but stay with the same parent organization, as it may actually
suggest a high level of satisfaction with the parent organization. A
commenter stated the measure is extremely volatile and can be impacted
by many factors beyond a member's experience with their health plan,
including job loss/movement, changes in individual finances, provider
changing plans, relocations and changes in member needs.
Response: CMS appreciates these comments, but disagrees that the
current specification for this measure is flawed. This measure reflects
voluntary movements from one contract to another. For example, if a
change in the provider network results in a beneficiary changing
contracts, this reflects a decision by the beneficiary that the current
contract is no longer providing the care or access to services that
they want. Similarly, if the health status of the enrollee changes, and
the current plan is not meeting the enrollee's changing health needs,
this may result in a voluntary disenrollment and should be reflected in
this measure.
This measure is a contract-level measure focused on quality at that
level; therefore, disenrollments are considered voluntary even when a
member enrolls into a different contract under the same parent
organization. The member is changing from one contract to another for a
reason and this should be reflected in this measure. If we were to
change the measure specification to consider disenrollments as no
longer voluntary when a member enrolls into another contract under the
same parent organization, this change would be advantageous to larger
parent organizations that have multiple contracts.
There are only 4 disenrollment codes used in this measure (11--
Voluntary Disenrollment through plan, 13--Disenrollment because of
enrollment in another Plan, 14--Retroactive and 99--Other (not supplied
by beneficiary)). We agree that there are reasons for disenrollment
that should not be counted against the plan. For example, enrollment
changes because of a contract service area reduction, a PBP
termination, LIS reassignments, passive enrollment of the enrollee into
a Demonstration (MMP), and changes in residence out of the service area
are not counted in the measure.
Comment: Some commenters supported the weight increase, indicating
they appreciate CMS adding further emphasis on the voice of the
patient. Some argued that better patient experience has been shown to
improve patient compliance with medical advice.
Response: CMS appreciates the commenters' support of our proposal.
Comment: Several commenters expressed concern about implementing a
weighting change during the COVID-19 pandemic because of the current
uncertainty how the public health emergency will impact care delivery
and patient experiences going forward. One noted this weight change
would not give health plans adequate time to adjust for the volatility
and inconsistency of CAHPS responses and difficulties in measurement
during this time. A couple of commenters noted that depending on the
state of the pandemic, additional weight afforded to the current
patient experience and complaints measures will not accurately capture
plan performance during this public health emergency and crisis.
Another commenter noted patient experience data during this period may
not be particularly accurate or useful as a measure of overall
performance of Medicare Advantage or individual plans due to how the
pandemic may impact how beneficiaries may respond to these types of
surveys.
Response: The changes to the weighting of patient experience/
complaints and access measures apply to the 2021 measurement year, not
the 2020 measurement year when the pandemic first started. CMS agrees
that there is a lot of uncertainty about how COVID-19 will impact the
healthcare system and quality measurement and recognizes the challenges
placed on the healthcare system and Part C and D plans; however, plans
have until the 2021 measurement year to adjust their processes to
account for the impact of COVID-19 on Star Ratings measures. One thing
that is certain for plans is how much they focus on addressing their
members' needs during the time of a pandemic. We believe that given the
uncertainty during such times, it is even more important that plans be
proactive, anticipate enrollees' needs, and work with them in a
customized way to mitigate any challenges that enrollees might face in
a pandemic environment. Therefore, it is important to move forward with
these Star Ratings changes to further emphasize the importance of
patient experience/complaints and access measures at this time. We
reiterate that patient experience is an inherently important dimension
of

[[Page 33843]]

healthcare quality and associated with better health outcomes and
improved care delivery. This is critical information to help
beneficiaries make more informed choices.
Comment: Some commenters noted that different areas of the country
are experiencing different limitations of health care resources related
to COVID-19, some of which may require redeployment of resources, so
differences in CAHPS and HOS survey scores may be neither meaningful
nor appropriate to compare plan performance. They request that CMS re-
evaluate these measures after the COVID-19 crisis is resolved. Several
commenters noted their concern about the long-term impact of the public
health crisis on respondents' physical and mental health, and their
perception of the health care system and health plans.
Response: CMS recognizes the challenges that COVID-19 has placed on
the healthcare system and quality measurement. We understand the
concern that it may impact how beneficiaries respond to CAHPS surveys
and, consequently, the CAHPS measure scores. To that end, we believe
that this would be a great opportunity for plans to focus even more on
supporting their enrollees, being proactive and anticipating enrollees'
needs, and working with them in a customized way to mitigate any
challenges that enrollees might face in a pandemic environment. We are
continuing to monitor whether additional Star Ratings adjustments need
to be proposed for future years.
Comment: Several commenters stated the weight increase should not
proceed at this time due to widespread restricted access to providers
due to concern about capacity and public safety as a result of COVID-
19, and the unknown duration of such restrictions. For example,
beneficiaries may not be able to assess their experience with in-person
encounters, and responses may be biased by exigencies secondary to
COVID-19. One notes the proposed CAHPS weight changes for the 2021
measurement period provide little time for health plans to adjust for
the volatility and consistency of CAHPS responses and difficulties in
measurement.
Response: Again, we believe that this would be the ideal time for
plans to take the opportunity to focus even more on supporting their
enrollees, being proactive and anticipating enrollees' needs, and
working with them in a customized way to mitigate any challenges that
enrollees might face in a pandemic environment, particularly challenges
in accessing services. As previously stated, these changes are for the
2021 measurement period so plans have time to adjust to the impacts of
COVID-19. Even in a pandemic environment, increasing the weight for
experience measures will encourage plans to focus on an enrollee's
experience with the plan (for example, plan communication, plan
innovation, mitigation of access issues). CMS will continue to monitor
the impact of the public health emergency on quality measurement. For
CAHPS measures, widespread changes in industry performance should be
reflected in the cut points.
Summary of Regulatory Changes
After consideration of the comments and for the reasons indicated
in the proposed rule and in the responses to comments, we are
finalizing the provisions regarding the weight increase for patient
experience/complaints and access measures as proposed at Sec. Sec.
422.166(e)(1)(iii) and (iv) and 423.186(e)(1)(iii) and (iv).
In the proposed rule, we stated that if both Tukey outlier deletion
and increasing the weight of patient experience/complaints measures and
access measures were adopted the net savings for the Medicare Trust
Fund would be $368.1 million for 2024, increasing to $999.4 million for
2030. We are finalizing the use of Tukey outer fence outlier deletion
as proposed but to begin one year later, with the 2024 Star Ratings,
and are finalizing the proposal to increase the weights of the patient
experience and complaints measures and the access measures to 4 for the
2023 Star Ratings. Based on the combination of these final policies, we
project the net cost to the Medicare Trust Fund would be $345.1 million
for 2024, increasing to a net savings of $999.4 million for 2030. There
is a net cost for 2024 since the increase in weight for patient
experience/complaints measures and access measures results in an
overall increase in the highest ratings for MA contracts, while in
future years with the addition of the Tukey outlier deletion there is
an overall decrease in the highest ratings for MA contracts.
5. Reclassification of the Statin Use in Patients With Diabetes (SUPD)
Measure (Sec. Sec. 422.164(d)(2), 423.184(d)(2)
Currently, the SUPD measure specifications require two diabetes
medication fills to meet the denominator while only a single fill of a
statin therapy is required to meet the numerator criteria. Recently,
the Pharmacy Quality Alliance (PQA), the measure steward, has clarified
SUPD as a process measure in a Frequently Asked Question (FAQ) (the FAQ
can be found at https://www.pqaalliance.org/measures-overview#supd),
therefore CMS no longer believes that the intermediate outcome measure
classification for the SUPD measure is appropriate. We proposed to
modify the classification of the SUPD measure from an intermediate
outcome measure to a process measure, starting with the 2023 Star
Ratings, based on data from the 2021 measurement period.
We received the following comments related to our proposal, and our
responses follow:
Comment: The majority of commenters supported modifying the SUPD
measure classification from an intermediate outcome to a process
measure, changing the weight from 3 to 1. Commenters noted that
outcomes are not measured in SUPD since it only requires a single fill
of a statin medication. They agreed that SUPD is a process measure that
is based on an important procedural intervention but does not capture a
therapeutic outcome since SUPD does not monitor the medication
adherence of a statin over a course of treatment. In addition,
commenters noted that classifying SUPD as a process measure is
consistent and aligns with the Part C Statin Therapy for Patients with
Cardiovascular Disease measure.
Response: CMS appreciates the commenters' support of this proposal.
It is consistent with the clarification from the measure steward, the
Pharmacy Quality Alliance (PQA), in 2019 that SUPD is a process measure
based on the National Quality Forum's (NQF) criteria.
Comment: A few commenters that support CMS's proposal to modify the
SUPD measure category to a process measure also noted that CMS should
exercise caution when creating additional measures in the Star Ratings
program or changing measure categorizations. Commenters were concerned
that measure weights are being changed too rapidly. One commenter also
expressed concerns with selecting the SUPD measure and recommends that
CMS consider replacing SUPD with the Healthcare Effectiveness Data and
Information Set (HEDIS) measure Statin Therapy for Patients with
Diabetes (SPD).
Response: CMS thanks the commenters for this feedback. CMS
carefully evaluates all of the measures incorporated in the Star
Ratings. CMS will continue to monitor each of the measures included in
the Star Ratings as well as future measures incorporated into the Star
Ratings. CMS also carefully evaluates the weights of each measure.

[[Page 33844]]

The weights are based on measure type. Typically, CMS aligns the
measure specifications with the measure steward. The Statin Therapy for
Patients with Cardiovascular Disease (SPC) is already included in the
Part C Star Ratings while the SUPD measure is included for Part D. CMS
first discussed the HEDIS SPD and SPC measures, and the PQA SUPD
measure in the 2016 Call Letter. As stated in the 2017 Call Letter, the
SPD measure overlapped with the SUPD measure. Therefore, CMS added only
one of the HEDIS measures (the Part C SPC measure) to the 2017 display
page as well as the Part D SUPD measure after consideration of
stakeholder feedback through the Call Letter process. CMS gained
experience with calculating and reporting the measures and added SPC
and SUPD to the Star Ratings as announced in the 2019 Call Letter.
Comment: Commenters provided feedback on the timeline proposed for
reclassifying SUPD starting with the 2023 Star Ratings (using 2021
data). Some noted that SUPD is a process measure that has not changed
in terms of specifications to warrant retaining SUPD as an intermediate
outcome measure for the 2021 and 2022 Star Ratings. Additionally,
commenters were concerned that retaining the classification as an
intermediate outcome with a weight of 3, rather than immediately
reclassifying SUPD as a process measure with a weight of 1, could lead
to confusion, and is inconsistent with the guidance of expert measure
developers, which could lead to instability for the Star Ratings.
However, there were a few commenters who supported CMS's proposed
timeline as it would take into consideration plan efforts and
coordination needed to account for the SUPD measure reclassification.
Response: Reclassifying SUPD as a process measure (including its
weight), is a substantive change that must be proposed and finalized
through rulemaking as required by Sec. 423.184(d)(2). In the April
2018 final rule, CMS finalized the weight of 3 for SUPD for the 2021
and 2022 Star Ratings. In the February 2020 proposed rule, CMS proposed
to reclassify SUPD as a process measure with a weight of 1 for future
years, starting with the 2023 Star Ratings. This timeline and approach
is consistent with the April 2018 final rule which outlined that a key
tenet of the Star Ratings program is to make changes prior to the
measurement year and to give sponsors enough lead time, in order to
ensure greater transparency and stability for the Star Ratings program
for plan sponsors.
Comment: A few commenters opposed reclassifying SUPD to a process
measure or changing the weight of 3 to 1. Commenters noted that statin
use for diabetic patients is an important and valuable intervention;
thus, SUPD should remain classified as an intermediate outcome measure.
Additionally, commenters were concerned with reclassifying SUPD and
lowering the weight in the absence of outcomes-focused measures within
the Star Ratings that address appropriate care for diabetes and
cardiovascular care, given the strong correlation between the two
conditions.
Response: CMS agrees that SUPD is an important measure that is
included in the Star Ratings. Per NQF's definition of process measures,
CMS agrees that prescribing a statin is a step in providing good care,
rather than an outcome of such care. Furthermore, the measure steward,
PQA, has classified SUPD as a process measure based on NQF's
definition. As such, CMS proposed to reclassify SUPD as a process
measure with a weight of 1 to align with the industry definitions.
Comment: Several commenters gave specific feedback regarding
exclusion criteria related to SUPD, such as beneficiaries predisposed
to statin intolerance or history of rhabdomyolysis. Commenters were
concerned that only using prescription claims limited the types of
exclusions included in SUPD. In addition, a few commenters noted this
quality measure does not reflect or capture achievable outcomes related
to reversing chronic disease or decreasing cardiovascular morbidity and
mortality.
Response: We thank the commenters for the feedback, but these
comments are out of scope for this rule since the comments do not
reference the reclassification of the SUPD measure and the subsequent
change to the measure weight. CMS will share the measure specification
comments with the measure steward, PQA, about the additional
populations that were recommended for exclusion, the concerns with
using prescription claims and exclusions, and to consider future
measures on outcomes related to reversing chronic disease.
Comment: A commenter was concerned with the current COVID-19 public
health emergency and how it could impact the accuracy of the measure.
Response: Thank you for this feedback. CMS will continue to monitor
the impact of the public health emergency on the SUPD measure.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to the comments, we are
finalizing the proposal without modification. Starting with the 2023
Stars Rating, the SUPD measure will be reclassified as a process
measure with a weight of 1. This change will be reflected in the
Medicare Part C & D Star Ratings Technical Notes for the 2023 Star
Ratings, which are based on the 2021 measurement period.

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

In the February 18, 2020 proposed rule (85 FR 9008), we proposed
certain modifications to the medical loss ratio (MLR) regulations for
the Medicare Part C and Part D programs. Briefly, we proposed to amend
Sec. 422.2420(b)(2)(i) to allow MA organizations to include in the MLR
numerator as ``incurred claims'' all amounts paid for covered services,
including amounts paid to individuals or entities that do not meet the
definition of ``provider'' as defined at Sec. 422.2. We also proposed
to codify the definitions of partial, full, and non-credibility and
credibility factors that we published in the May 2013 Medicare MLR
final rule (78 FR 31295 through 31296). Finally, for MA medical savings
account (MSA) contracts receiving a credibility adjustment, we proposed
to apply a deductible-based adjustment to the MLR calculation in order
to recognize that the variability of claims experience is greater under
health insurance policies with higher deductibles than under policies
with lower deductibles.
1. Background
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. The proposed rule provided
background on the Part C and Part D medical loss ratio (MLR)
requirements, including the statutory and regulatory authority. The
Part C statute, at section 1857(e)(4) of the Act, expressly imposes a
minimum medical loss ratio requirement for MA plans. 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

[[Page 33845]]

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.
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. We proposed 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 section II.A. of this final rule
and sections II.A. and VI.F. of the proposed rule, we proposed
revisions to the regulations at Sec. 422.100 in order 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 our longstanding interpretation of the statute to require
a supplemental benefit to be an item or service (1) that is primarily
health related; (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 2019 Call Letter, issued on April 2, 2018, we announced
that we had reinterpreted the scope of what would be ``primarily health
related'' in order to meet this criterion to be a supplemental benefit.
Under this reinterpretation, to be considered ``primarily health
related,'' a supplemental benefit must diagnose, prevent, or treat an
illness or injury, compensate for physical impairments, act to
ameliorate the functional or psychological impact of injuries or health
conditions, or reduce avoidable emergency and healthcare utilization;
we explained in the contract year 2019 Call Letter how this means the
benefit must focus directly on an enrollee's health care needs and must
be medically appropriate and 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 section II.A. of this final rule and
sections II.A. and VI.F. of the proposed rule, we also proposed
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 Sec. 422.102(f), as finalized in section II.A. of this final
rule, we are codifying 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 special supplemental benefits for the chronically ill
(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.
As explained in the proposed rule, under current 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
amendments to implement that change at Sec. 422.102(f) and the
continuation of our policy for establishing what it means for a benefit
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 proposed to amend the regulation to
remove the specification that incurred claims are payments to providers
for covered services.
The proposed rule explained that, if incurred claims do not include
amounts an MA organization pays to individuals or entities that are not
providers for supplemental benefits, including SSBCI, these
expenditures could still potentially be included in the MLR numerator
as expenditures related to quality improvement activities (QIAs). To be
considered a QIA under Sec. 422.2430, a 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,

[[Page 33846]]

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. As
explained in the proposed rule, 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 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 proposed amendments to Sec. 422.2420(b)(2)(i),
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 amounts paid for covered services would be included in the
incurred claims portion of the MLR numerator.
As explained in the proposed rule, 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
Sec. 422.102(f), as amended in this final rule, 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 our current guidance and on non-primarily health
related SSBCI under Sec. 422.102(f), as adopted in this final rule, we
proposed the following modifications to the regulation at Sec.
[thinsp]422.2420(b)(2)(i):
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.
Remove the specification that incurred claims include
payments under capitation contracts with physicians.
Replace the phrase ``direct claims,'' which customarily
refers to billing invoices providers submit to payers for
reimbursement, with the general term ``amounts.''
As amended under our proposal, 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 covered 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.
We received 27 comments on the proposed amendments to Sec.
422.2420(b)(2)(i). The following is a summary of the comments we
received on the proposal and our responses:
Comment: The majority of commenters supported the proposal. Many
commenters believed that including in the MLR numerator as incurred
claims all payments for covered services would provide greater
certainty and reduce plan burden by eliminating the need to assess
whether individual benefits meet the criteria to qualify as QIAs under
Sec. 422.2430. A number of commenters believed that the proposed
change would encourage the expansion of supplemental benefits to
address social barriers to care and MA enrollees' other health needs. A
few commenters commended us for recognizing the role played by
individuals and entities that are not providers in implementing the
expanded supplemental benefit flexibility. A couple of commenters noted
that they agreed with our view that including in incurred claims
amounts spent on these expanded supplemental benefits is consistent
with our prior determination that incurred claims should reflect the
benefit design under the contract.
Response: We thank the commenters for their support. We reiterate
that under our proposal and this final rule, only amounts expended by
the MA organization for covered services, which must meet the standards
of the MA program for coverage, can be included in the MLR numerator as
incurred claims.
Comment: A commenter supported the proposal but requested that we
clarify that the incurred claims portion of the MLR numerator will
include capitated payments by MA organizations to clinical risk-bearing
entities (for example, Independent Practice Associations (IPAs),
Physician Hospital Organizations (PHOs), and Accountable Care
Organizations (ACOs)) that include amounts for both medical and
administrative services, provided the arrangement satisfies a four-
factor test that was originally set forth in a guidance document \28\
related to the MLR rules that apply to issuers of employer group and
individual market private insurance (hereinafter referred to as the
``commercial MLR rules''), and later incorporated into our annual MLR
Data Form Filing Instructions for MA organizations and Part D sponsors.
The commenter expressed concern that, if the four-factor test does not
remain in place, all capitated payments to providers would need to be
divided between medical services and delegated administrative services,
and then aggregated up to the plan level to determine the amount to be
excluded from the MLR as administrative costs.
---------------------------------------------------------------------------

\28\ CCIIO Technical Guidance (CCIIO 2012--001): Questions and
Answers Regarding the Medical Loss Ratio Interim Final Rule.
February 12, 2012.
---------------------------------------------------------------------------

Response: The amendment to Sec. 422.2420(b)(2)(i), as proposed and
finalized, includes 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. This revision removes the
specification that the recipient of a payment for a covered service
must be a provider (or a physician, in the case of capitated payments)
to be included in incurred claims. The proposed change would not, if
finalized, exclude from the incurred claims portion of the MLR
numerator any payments that could be included in the numerator as
incurred claims under the current MLR rules. However, this amendment
also does not authorize inclusion in the numerator of costs that are
excluded from incurred claims, such as administrative expenses
addressed in Sec. 422.2420(b)(4).
The four-factor test referenced by the commenter has been
incorporated into our annual MLR Data Form Filing Instructions
(formerly the MLR Report Filing Instructions) (OMB control no.

[[Page 33847]]

0938-1232) (CMS-10476) for each contract year since contract year 2014.
The instructions specify that amounts paid by an MA organization or
Part D sponsor to clinical risk-bearing entities can be included in the
MLR numerator as incurred claims if the following criteria are met:
(1) The entity contracts with an issuer to deliver, provide, or
arrange for the delivery and provision of clinical services to the
issuer's enrollees but the entity is not the issuer with respect to
those services;
(2) The entity contractually bears financial and utilization risk
for the delivery, provision, or arrangement of specific clinical
services to enrollees;
(3) The entity delivers, provides, or arranges for the delivery and
provision of clinical services through a system of integrated care
delivery that, as appropriate, provides for the coordination of care
and sharing of clinical information, and which includes programs such
as provider performance reviews, tracking clinical outcomes,
communicating evidence-based guidelines to the entity's clinical
providers, and other, similar care delivery efforts; and
(4) Functions other than clinical services that are included in the
payment (capitated or fee-for-service) must be reasonably related or
incident to the clinical services, and must be performed on behalf of
the entity or the entity's providers.
Payments to risk-bearing entities that include payments for
administrative functions performed on behalf of the entity's member
providers are incurred claims for purposes of Sec. 422.2420 if all
four factors outlined above are met.\29\ However, to the extent that
administrative functions are performed on behalf of the MA organization
or Part D sponsor, that portion of the organization's or sponsor's
payment that is attributable to administrative functions may not be
included in incurred claims. This is the case regardless of whether
payment is made according to a separate, fee-for-service payment
schedule or as part of a global, capitated fee payment for all services
provided.\30\ We will continue to use this four-factor test to
determine whether an MA organization can include payments to clinical
risk-bearing entities.
---------------------------------------------------------------------------

\29\ For example, a bundled payment to an Independent Practice
Association (IPA) or similar entity for providing clinical services
to enrollees which includes: The IPA processing claims payments to
its member providers and submitting claims reports to issuers on
behalf of its providers; performing provider credentialing to
determine a provider's acceptability into the IPA network; and
developing a network for its providers' benefit, can be included in
incurred claims.
\30\ For example, payment for processing claims in order to
issue explanations of benefits (EOBs) to enrollees and handling any
stage of enrollee appeals cannot be included in incurred claims.
Payments for non-clinical services for which the contract between
the clinical risk-bearing entity, such as an IPA, and the MA
organization or Part D sponsor contains a ``clawback'' provision are
not considered incurred claims for MLR reporting purposes.
---------------------------------------------------------------------------

Comment: A commenter expressed concern that the proposed changes to
the definition of ``incurred claims'' could be interpreted as
sufficiently broad to permit MA plans and PDPs to include in the MLR
numerator costs associated with pharmacy benefit manager (PBM) services
due to the nexus between those services and beneficiary access to
covered drugs. The commenter was concerned in particular that the
proposed change would allow MA organizations and Part D sponsors to
include costs for implementing utilization management tools and
strategies in the MLR numerator as incurred claims.
Response: We appreciate the commenter's concerns. Amending Sec.
422.2420(b)(2)(i) as proposed to include in incurred claims amounts
paid for covered services, regardless of whether the payment is made to
a provider, does not allow MA organizations or Part D sponsors to
include in the MLR numerator amounts that are identified as non-claims
costs and excluded from incurred claims under our current rules. These
non-claims costs that continue to be excluded from the MLR numerator
include amounts paid to third party vendors for network development,
administrative fees, claims processing, and utilization management
(Sec. 422.2420(b)(4)). We note, however, that our current rules permit
a clinical-risk bearing entity's costs related to utilization
management and other administrative services to be included in incurred
claims if all four factors outlined in the previous response are met.
In addition, consistent with CCIIO's Technical Guidance,\31\ our MLR
Data Form Filing Instructions specify that when a third party vendor,
through its own employees,\32\ provides clinical services directly to
enrollees, the entire portion of the amount the issuer pays to the
third party vendor that is attributable to the third party vendor's
direct provision of clinical services should be considered incurred
claims, even if such amount includes reimbursement for administrative
costs directly related to the vendor's direct provision of clinical
services.\33\
---------------------------------------------------------------------------

\31\ See, for example, the May 13, 2011 CCIIO Technical Guidance
(CCIIO 2011-002), Q&A #12, available at: https://www.cms.gov/CCIIO/Resources/Files/Downloads/mlr-guidance-20110513.pdf.
\32\ The term ``through its own employees'' does not include a
third party vendor's contracted network of providers because such
network providers are not considered employees of the third party
vendor.
\33\ The MLR Data Form Filing Instructions include the example
of a Part D sponsor that contracts with a pharmacy benefit manager
(PBM) to provide clinical services directly to enrollees through a
mail order pharmacy. The instructions explain that the sponsor's
payments to the PBM for mail order pharmacy services provided
directly by the PBM's employees, including administrative costs
related to the PBM's direct provision of such mail order pharmacy
services, would be included in the sponsor's incurred claims.
---------------------------------------------------------------------------

Comment: A commenter opposed the proposal because they believed
that including all payments for covered services in the incurred claims
portion of the MLR numerator would be an unnecessary and inappropriate
deviation from the commercial MLR rules, which only include payments to
non-providers in the MLR numerator if they meet the requirements for
QIA-related expenditures. The commenter expressed approval for the
approach we took in the May 2013 Medicare MLR final rule, which was to
use the commercial MLR rules as a reference point for developing the
MLR rules for Medicare Advantage and Part D (hereinafter referred to as
the ``Medicare MLR rules'') and to only depart from the commercial
rules to extent necessary and appropriate given the Medicare context
(78 FR 31285, 31290). The commenter stated the proposed rule did not
identify any reason that the Medicare context makes it necessary and
appropriate to depart from the requirement in the commercial MLR rules
that incurred claims be paid to providers for covered services. The
commenter asserted that the Medicare context does not meaningfully
differ from the commercial context with respect to the benefits at
issue.
Response: We respectfully disagree with the commenter. We continue
to believe that it is important that we align the Medicare MLR rules
with the commercial 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. However, as stated in the February 2013 Medicare
Program; Medical Loss Ratio Requirements for the Medicare Advantage and
the Medicare Prescription Drug Benefit Programs Proposed Rule (78 FR
12428 through 12429) (hereinafter referred to as the ``February 2013
Medicare MLR proposed rule''), we also recognize that the commercial
MLR rules may need to be revised in order to fit unique

[[Page 33848]]

characteristics of the MA and Part D programs. We believe that it is
appropriate that we depart from the commercial MLR rules and expand the
meaning of ``incurred claims'' to include covered services furnished by
individuals and entities that are not providers, as proposed. The
amendment to section 1852(a)(3)(D) of the Act by the BBA of 2018 to
expand the types of supplemental benefits that can be ``covered
services'' under an MA plan and the implementation of that change at
Sec. 422.102(f), as well as CMS' reinterpretation of what it means for
a supplemental benefit offered by an MA plan to be primarily health
related, mean that permissible supplemental benefits might include
items and services that would not be furnished by a ``provider'' as
defined at Sec. 422.2. As we explained in the contract year 2019 Call
Letter, a benefit is primarily health related if it diagnoses,
prevents, or treats an illness or injury, compensates for physical
impairments, acts to ameliorate the functional or psychological impact
of injuries or health conditions, or reduces avoidable emergency and
healthcare utilization; and while we indicated that supplemental
benefits must be medically appropriate and recommended by a licensed
provider, we acknowledged that they might not be directly provided by a
health care professional. Because SSBCI are only required to have a
reasonable expectation of maintaining or improving the health or
overall function of the chronically ill enrollee and are not required
to be primarily health related, we believe those benefits can be
provided by someone who is not a health care professional. We are
concerned that uncertainty about whether payments for these benefits
can be included in the MLR numerator may make MA organizations less
inclined to include them in their plan offerings. We believe that it is
contrary to Congress' intent in amending section 1852(a)(2)(D) of the
Act, and that it undermines CMS' efforts to provide MA organizations
with additional flexibility to meet beneficiaries' health needs through
supplemental benefits, if the MLR fails to adapt to changes in the
permissible benefit design and ultimately deters MA organizations from
offering those benefits. In addition, we note that section 2718 of the
Public Health Service Act specifies that commercial MLRs shall reflect
the percentage of total premium revenue spent ``on reimbursement for
clinical services provided to enrollees,'' QIAs, and non-claims costs
(which are excluded from the MLR numerator). By contrast, section
1857(e)(4) of the Act, which sets forth the minimum MLR requirement for
the MA program, does not require that the portion of the MLR numerator
consisting of non-QIA expenditures should be for ``clinical services''
or otherwise specify how the Secretary should calculate Medicare MLRs.
Although the commercial and Medicare MLR requirements were both created
by the Affordable Care Act of 2010, the statute gives the Secretary
greater flexibility in determining how to integrate an MLR requirement
into the Medicare program. We continue to use this flexibility to
revise the calculation of the Medicare MLR as appropriate based on the
unique characteristic of the MA and Part D programs, and we believe
that amendment here is such an appropriate change.
Comment: A commenter believed that the proposed change was both
unnecessary and unlikely to be effective as a means of encouraging MA
organizations to expand their supplemental benefit offerings. The
commenter cited data showing that MA organizations had been increasing
their supplemental benefit offerings in recent years, which the
commenter attributed to previous rule changes. The commenter
recommended that instead of adjusting the MLR calculation to encourage
the expansion of coverage of supplemental benefits, we should address
the barriers to providing supplemental benefits that have been
identified by MA organizations--specifically, upfront costs, trade-offs
among benefits, return on investment, and provider availability. The
commenter cautioned that the proposal may have unintended, negative
impacts on non-supplemental benefit coverage, but the commenter did not
specify what it meant by non-supplemental benefit coverage or what
those negative impacts might be.
Response: We thank the commenter for their feedback and
recommendations. As indicated in our response to other comments, we
proposed to revise the meaning of ``incurred claims'' to include
payments for covered services furnished by individuals or entities that
are not providers as defined at Sec. 422.2 in order to avoid creating
uncertainty about whether expenditures for supplemental benefits can be
included in the MLR numerator, which might deter MA organizations from
offering those benefits. Although the purpose of our proposal was not
to give MA organizations an incentive to offer expanded supplemental
benefits, as noted above, we did receive numerous comments, some of
which were submitted by MA organizations, which expressed support for
the proposed change because the commenters believed it would encourage
plans to offer expanded supplemental benefits. Our efforts to change
how supplemental benefits are accounted for in the MLR numerator do not
preclude us from pursuing other opportunities that are appropriate for
CMS to take to promote the expansion of supplemental benefits.
Comment: A commenter requested that we clarify in final rulemaking
the review and enforcement actions we undertake to ensure that QIA is
not abused at the expense of MA enrollees. Another commenter requested
that we closely examine all MA activities that are currently
categorized as QIA to ensure that their utilization improves quality.
Response: At present, we do not actively collect information on MA
organizations' QIA expenditures. As a result of change to the MLR
reporting requirements finalized in the April 2018 final rule (83 FR
16674), MA organizations are not required to include in their annual
MLR submissions information on their QIA expenditures. We have the
authority under Sec. 422.2480 to conduct selected audit reviews of the
data reported under Sec. 422.2460, which includes the capability to
request detailed data regarding the QIA expenditures included in the
Medicare MLR, in order to determine that the MLR and remittance amounts
were calculated and reported accurately, and that sanctions were
appropriately applied. MA organizations are required to attest to the
accuracy of the MLR data submitted. In addition, we note that MA
organizations and Part D sponsors are required to submit and attest to
the data that details their spending on enrollee health care services
as part of their annual bids.
Comment: Several commenters requested that we expand our proposal
to include in incurred claims all expenditures related to combating
COVID-19.
Response: The commenters did not provide specific information on
the types of expenditures they wish to make that they believe would not
already be included in the MLR numerator as incurred claims under our
proposal. Without more detailed information, we are unable to determine
whether including the expenditures that the commenters are
contemplating in incurred claims would in fact necessitate a
modification to our proposal, or whether there is logical outgrowth to
make such a modification

[[Page 33849]]

or whether it is consistent with our overall policies on the Medicare
MLR.
Comment: We received several recommendations for additional changes
to the MLR requirements that are outside the scope of this final rule.
A commenter recommended that we delay implementation of the MLR
enrollment sanctions for contracts that fail to meet the MLR
requirement for three consecutive contract years; that we develop a
fixed quality improvement (QI) rate that could be added to the MLR
numerator, similar to what is permitted under the commercial MLR
regulations (45 CFR 158.221(b)(8)); that we provide guidance to plan
sponsors concerning corrections of prior MLR submissions when errors
are found that impact remittance calculations and that we develop a
process to correct such data; and that we not apply the MLR
requirements to standalone Part D plans. A commenter recommended that
we mandate in the final rule that Part D sponsors must utilize a system
to apply direct and indirect remuneration (DIR) fees at the point of
sale as a means of improving the accuracy of the reported MLRs.
Response: We thank the commenters for their recommendations and
will consider whether they are appropriate to address through future
rule-making or other guidance.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to the comments, we are
finalizing the proposal without modification.
3. Codifying Current Definitions of Partial, Full, and Non-Credibility
and Credibility Factors (Sec. Sec. 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 2013 Medicare
MLR proposed rule (78 FR 12438), 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 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 31295 through
31296), 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 appeared in that
final rule in Tables 1A (finalized here as Table 1 to Sec. 422.2440)
and 1B to (finalized here as 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 finalized through
the annual Advance Notice and Rate Announcement process the continued
use of these definitions and credibility factors.
As explained in the proposed rule, 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 proposed to amend
our regulations at Sec. Sec. 422.2440 and 423.2440 to codify the
definitions of partial, full, and non-credibility and the credibility
factors that we published in the May 2013 Medicare MLR final rule (78
FR 31296).
We proposed 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 proposed 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 proposed 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 proposed 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 proposed to
amend Sec. Sec. 422.2440 and 423.2440 by removing from paragraphs (a)
and (b) of both sections the text which indicates that CMS determines
whether a contract's experience is partially credible or fully
credible, respectively, and by adding at paragraphs (a), (b), and (c)
of both sections 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 proposed to add new paragraph (e) to address
the credibility adjustment for partially

[[Page 33850]]

credible contracts. We proposed 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 new paragraph (f), we proposed 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
Table 1 to Sec. 422.2440. New paragraph (f) also states the rules for
using 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 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 Table 1 to Sec. 422.2440 is determined by linear
interpolation.
At Sec. 423.2440, we proposed 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 Table 1 to Sec. 423.2440. New paragraph (e)
states the rules for using 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
Table 1 to Sec. 423.2440, the value associated with that number of
member months is the credibility adjustment; and (2) the credibility
adjustment for a number of member months between the values shown in
Table 1 to Sec. 423.2440 is determined by linear interpolation.
We received no comments on this proposal and are finalizing this
provision without modification for the reasons outlined in the proposed
rule.
4. Deductible Factor for MA Medical Savings Account (MSA) Contracts
(Sec. 422.2440)
We proposed 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 proposed that
the credibility adjustment for partially credible MA MSA contracts will
be calculated by multiplying the applicable base credibility factor in
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
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.
In the February 2013 Medicare MLR proposed rule (78 FR 12428), we
explained that we used the commercial MLR rules as a reference point
for developing the Medicare MLR rules. We sought to align the
commercial and Medicare MLR rules in order to limit the burden on
organizations that participate in both markets, and to make commercial
and Medicare MLRs as comparable as possible for comparison and
evaluation purposes, including by Medicare beneficiaries. 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).
As explained in the proposed rule, 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. The proposed rule noted 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. In light of this information, we believe that it is clear
that our policy of excluding a deductible factor for MA MSA contracts
should be revisited.
Further, 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 proposed rule noted that
our proposal to add a deductible factor to the MLR calculation for MA
MSA contracts 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). The proposed rule
also noted that, for many Medicare beneficiaries, the greatest barrier
to enrolling in an MA MSA has been 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
noted in the proposed rule our belief that finalizing a deductible
factor for MA

[[Page 33851]]

MSAs would make it less likely that MA organizations would be deterred
from offering MA MSA plans 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 proposed to adopt the same deductible factors that apply under
the commercial MLR regulations at 45 CFR part 158. As noted in the
December 1, 2010 Health Insurance Issuers Implementing Medical Loss
Ratio (MLR) Requirements Under the Patient Protection and Affordable
Care Act Interim Final Rule (75 FR 74881 through 74882), 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). We
explained in the proposed rule that we would prefer to use Medicare
data to develop the deductible factors that apply to MA MSAs, and that
we intend to assess the feasibility of using Medicare data for this
purpose. We noted in the proposed rule and continue to 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. We
proposed to apply the commercial deductible factors in the MLR
calculation for MA MSAs. We solicited 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 solicited 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 solicited 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 proposed new Sec. 422.2440(e)(2) to specify that the
credibility adjustment for an MA MSA contract would be the base
credibility factor determined under new paragraph (f), multiplied by
the deductible factor determined under new paragraph (g). At new
paragraph (g), we proposed to specify that the applicable deductible
factor for an MA MSA contract would 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 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 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 Table 2 to
Sec. 422.2440 is determined by linear interpolation.
We received 5 comments on the proposal to add a deductible factor
to the MLR calculation for MA MSAs. The following is a summary of the
comments we received on the proposal and our responses:
Comment: A commenter supported the proposal. The commenter
expressed hope that adding a deductible factor to the MLR calculation
for MA MSA contracts would lead to the greater availability of MA MSA
products in the marketplace, which the commenter believed would be an
attractive option for many consumers.
Response: We thank the commenter for their support.
Comment: A commenter stated that they do not support policies that
single out high-deductible health plans for preferential MLR treatment
for the purpose of encouraging beneficiaries to enroll in such plans.
Response: We appreciate the commenter's objection to MLR policies
that favor certain plan types over others. However, we disagree with
the commenter's characterization of the proposed application of a
deductible factor to the MLR calculation for certain MSA contracts as a
form of preferential treatment. As explained in the proposed rule and
summarized here, we believe an additional adjustment to the MLR
calculation for MSA contracts is appropriate because 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. This is the
case because high-deductible health plan enrollees' medical expenses
must exceed a higher threshold before the plan begins to incur claims
costs that can be included in the MLR numerator. 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 a low
average deductible. The deductible factor, which functions as a
multiplier on the credibility adjustment factor, is calibrated so that
the probability that a contract will fail to meet the MLR requirement
is the same for all contracts that receive a credibility adjustment,
regardless of the deductible level. Because the deductible factor is
intended to mitigate the increased likelihood that a contract with a
high deductible will fail to meet the MLR requirement due to random
variations in claims experience, we believe that its application to the
Medicare MLR calculation for MSA contracts serves to level the playing
field for all MA contract types. We believe that the absence of a
deductible factor from the current regulations unduly penalizes MSA
contracts and that adding a deductible factor removes this potential
deterrent to the offering of MSAs.
Comment: Three commenters opposed the proposal because they
objected to CMS giving MA organizations an incentive to enroll
beneficiaries in high deductible health plans such as MSAs. A commenter
expressed concern that beneficiaries may enroll in these plans due to
their low premiums and tax benefits, without realizing that they could
be responsible for thousands of dollars of pre-deductible costs should
they need significant medical attention. Another commenter warned that
Medicare beneficiaries have limited incomes and frequently experience
chronic conditions, the proliferation of high-deductible MSAs among
this vulnerable population could have catastrophic effects on
beneficiary health, as enrollees forego care to avoid paying high out-
of-pocket costs. A couple of commenters cited research which suggests
that although high deductible plans reduce costs, this may be
attributable to a decrease in utilization of necessary medical services
or to high

[[Page 33852]]

deductible plans enrolling younger, healthier members.
Response: We appreciate the commenters' concerns. Expanding access
to MSAs so that Medicare beneficiaries who see the advantages in
enrolling in a high-deductible plan have the option of doing so is a
priority of the Trump administration. As discussed in the proposed
rule, the proposal to add a deductible factor to the MLR calculation
for MA MSA contracts 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).
We note that the research cited by the commenters is mostly based
on the experience of enrollees in high-deductible health plans
operating outside of the Medicare context. We believe that the
widespread availability of zero premium MA plans makes it less likely
that Medicare beneficiaries will enroll in high deductible plans due to
the low premiums and tax benefits without adequately considering their
potential out of pocket liability. In addition, there are protections
to ensure that MSA enrollees have information that enables them to
assess the coverage provided by MSA plans. Section 1852(c)(1)(B) of the
Act and Sec. 422.111(b)(2)(ii) require that MSA plans disclose, in
clear, accurate, and standardized form to each enrollee at the time of
enrollment and at least annually thereafter, a comparison of the
benefits under the plan with benefits under other MA plans.
After consideration of the public comments we received and for the
reasons outlined in the proposed rule and our responses to comments, we
are finalizing the proposal without modification.

V. Codifying Existing Part C and D Program Policy

A. 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.\34\ 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 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, we require 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. We update and refine the
data and information that feed into network adequacy measures and
perform 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.
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\34\ See ``Medicare Advantage and Section 1876 Cost Plan Network
Adequacy Guidance'' https://www.cms.gov/Medicare/Medicare-Advantage/MedicareAdvantageApps/index.
---------------------------------------------------------------------------

In this final rule, we are codifying existing network adequacy
standards to provide MA organizations with a greater understanding of
how CMS measures and assesses network adequacy by adding a new
regulation at Sec. 422.116. Specifically, we are codifying 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 regulation also addresses 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. The final regulation reflects modifications from 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 amending
Sec. 417.416(e) to require 1876 cost organizations to also comply with
the network adequacy standards described in Sec. 422.116. A summary of
our proposal follows.
1. General Provisions
We proposed 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. We also proposed that when required by CMS, an MA
organization

[[Page 33853]]

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 explained 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 cross-referenced 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 proposed to exclude MSA plans from the
requirements in Sec. 422.116. By cross-referencing Sec.
422.114(a)(3)(ii), we carved 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.
We proposed, 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 our MA
Medicare Sample Census) in order to count toward the minimum number.
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. The minimum number criteria and
the time and distance criteria vary by the county type. We proposed 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 proposed to codify additional general rules about the
network adequacy requirements in this section. At paragraph (a)(3), we
proposed general rules for which provider types are not counted in
evaluating network adequacy. In paragraph (a)(4), we proposed to codify
certain administrative practices we have instituted over the past
several years. Specifically, we proposed to 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 also proposed that we would
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.
We may also update the Provider Supply file based on its findings from
validation of provider information.
2. Provider and Facility Specialty Types
We proposed 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. We identified and proposed to codify the 27
provider specialty types and 14 facility specialty types that are
currently used in the evaluation of network adequacy in each service
area. We 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 proposed to codify at Sec. 422.116(a)(3)
existing policy on the 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 proposed that hospital-based
dialysis may count in network adequacy criteria for the facility type
of Outpatient Dialysis. We clarified 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.
Section 2005 of the SUPPORT Act establishes a new Medicare Part B
benefit for Opioid Use Disorder 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 did not propose to include OTPs as
a facility type in Sec. 422.116(b)(2) and explained it was due to the
newness of the benefit and that we may consider adding OTPs to the
facility type list in future proposals. However, we reminded MA
organizations that they are required to pay for medically necessary
care from certified OTPs.
We proposed 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 as a
provider specialty type 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. We proposed at Sec. 422.116(a)(1) to require an MA plan
to submit an attestation when required by CMS. We explained that 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 did not propose any means for
CMS to add new provider specialty or facility types to the network
adequacy evaluation without additional rulemaking.
3. County Type Designations
We proposed at Sec. 422.116(c) to codify our current policy
regarding county designations. Network adequacy is

[[Page 33854]]

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 proposed to codify at Sec. 422.116(c) the five county type
designations using population size and density parameters that were
identified in Table 6 in the proposed rule (85 FR 9094). Under our
proposal, a county must meet both the population and density parameters
for inclusion in a given county type designation and we explained that
the proposed parameters are consistent with those we have used in
conducting network adequacy reviews in prior years. We explained that
we 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 \35\ estimate by the land area \36\ for that county.
We also stated that our county designation methodology was designed
specifically for MA network adequacy and may not be appropriate for
other purposes.
---------------------------------------------------------------------------

\35\ 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.
\36\ 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.
---------------------------------------------------------------------------

4. Maximum Time and Distance Standards and Customization
We proposed 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
proposed that CMS determines maximum time and distance 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
proposed to codify the base time and distance standards by county
designation that are in current practice with recent network reviews
and included the standards in Table 7 of the proposed rule (85 FR 9095)
as well as in the proposed regulation text as Table 1 to paragraph
(d)(2). We also explained in greater detail how the specific time and
distance standards we proposed for each provider and facility type and
county designation were developed and refer readers to the proposed
rule for that discussion (85 FR 9097).
As explained in the proposed rule, we have added flexibility in
recent years 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 proposed to codify this
flexibility and the process for using it 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.\37\ 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 percent 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 requested comment
on our customization methodology and whether we should adjust factors
in the distance calculation to achieve outcomes that are more
equitable.
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\37\ 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.
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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 proposed 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. We solicited 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, we have 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 an effort to
encourage more MA offerings in rural areas, we proposed 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.\38\ 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'' but 90 percent in urban
counties.\39\ 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.\40\
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.\41\ Further, our data indicates that
existing failures in MA plans' meeting the time and distance standards
frequently occur at the range between 80 to 89 percent of
beneficiaries. As a result, we proposed to adopt a similar change in
our MA network adequacy approach to account for access challenges in
Micro, Rural,

[[Page 33855]]

and CEAC counties; at Sec. 422.116(d)(4)(i) we proposed 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 estimated 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 proposed 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 noted that this specific
proposal did not include a change from current policy requirements for
a minimum number of provider specialties and facilities and that we
proposed, at paragraph (e), that MA plans would still be required to
maintain contracts with a minimum number of providers in each county.
---------------------------------------------------------------------------

\38\ 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.
\39\ 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.
\40\ 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.
\41\ Section 423.120(a)(1.).
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We also proposed 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 would receive an additional 10
percentage points towards the 85 percent requirement should they
contract with applicable telehealth providers under Sec. 422.135. We
explained that this is not currently part of the network adequacy
evaluation, but we believed 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
approximately 35 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, rather than supplement, in-person healthcare delivery.
A 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 are not 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 did
not propose any changes to how we currently calculate minimum provider
requirements and MA plans would still contract with a minimum number of
providers for each specialty type. We explained that we believed this
is imperative for MA plans to be able to provide in-person care when
needed or when preferred by the beneficiary and that contracting with
telehealth providers as a supplement to an existing in-person
contracted network would give enrollees more choices in how they
receive health care. Further, we explained that 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 proposed, 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 would not be eligible for this 10-percentage point credit
under proposed Sec. 417.416(e)(3).
We explained that 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, we noted how information from
prior network adequacy reviews show that many failures in meeting time
and distance standards occur in this 80 to 89 percent range. Therefore,
we stated, a 10-percentage point credit is significant enough to have
an impact on MA plans and encourage the use of telehealth, while being
proportionate to the role that telehealth providers have in a
contracted network. Further, we proposed to apply this telehealth
credit only to five specific provider specialty types: Dermatology,
psychiatry, neurology, otolaryngology and cardiology. We explained that
this limited approach would allow CMS to monitor the effectiveness of
the credit, 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.
We explained how we identified the five provider types for this
proposal. CMS considered previous input 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. In our
experience, 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 stated that it is critical to quality
health care that Medicare beneficiaries have a primary care provider
that they can visit in person and within a suitable time and distance.
Therefore, despite the potential and prevalence of telehealth for
furnishing primary care services, we did not believe that it was
necessary to take telehealth access into account when measuring and
setting minimum standards for access to primary care providers. We
solicited comments on the provider specialty types we proposed to be
eligible for the telehealth credit and whether CMS should expand or
limit this credit to a different set of provider specialties.
In the proposed rule, we explained that we had 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
suggested 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

[[Page 33856]]

survival and fewer hospitalizations.\42\ We acknowledged in the
proposed rule that there is more than one way to access medically
necessary dialysis care and stated that we wanted plans to exercise all
of their options to best meet a beneficiary's health care needs. We
solicited 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.
---------------------------------------------------------------------------

\42\ 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/.
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Additionally, we explained that CMS had received comments
concerning patterns of provider consolidation and its impact on higher
costs for patients. We received feedback from stakeholders that
providers in concentrated areas may leverage network adequacy
requirements in order to negotiate prices well above Medicare FFS
rates. We solicited comment on existing problems and behavior in non-
rural, consolidated provider markets and recommendations that we could
take to encourage more competition in these markets.
We also proposed a policy to incorporate consideration of
Certificate of Need (``CON'') laws into our network evaluations, as a
modification from our current policy after a brief summary of the
topic. 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 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.\43\ 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.\44\ 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.\45\ 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.\46\
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\43\ Daniel Sherman, ``The Effect of State Certificate-of-Need
Laws on Hospital Costs: An Economic Policy Analysis,'' Federal Trade
Commission, January 1988.
\44\ Vivian Ho, Meei-Hsiang Ku-Goto, ``State Deregulation and
Medicare Costs for Acute Cardiac Care,'' Med Care Res Rev., April
2013.
\45\ Matthew D. Mitchell, ``Do Certificate-of-Need Laws Limit
Spending?'' Mercatus Working Paper, Mercatus Center at George Mason
University, Arlington, VA, September 2016.
\46\ 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.
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After listing this research, we stated that it pointed out that CON
laws restrict the supply and competition for healthcare services and
increases costs and that 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 proposed 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 anticompetitive restrictions, that limit the number of
providers or facilities in a county or state. In the proposed rule, we
explained that, where appropriate, CMS may instead address network
adequacy by customizing base time and distance standards in states with
CON laws. We explained that the proposal was justified based on the
studies cited 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 proposed to make this credit equal to and in addition to, if
applicable, the proposed telehealth credit (10 percentage points) for
reasons similar to those for the telehealth credit policy: Information
from prior network adequacy reviews show that many failures in meeting
time and distance standards occur in the 80 to 89 percent range. We
explained that, under our proposal, CMS could 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
solicited 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 solicited comment about what other actions
CMS could take in markets with state CON laws.
We also considered whether there are circumstances where a more
limited application of network adequacy flexibility might be more
appropriate. We solicited 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.
5. Minimum Number Standards
We proposed 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 explained the general
rules at Sec. 422.116(e)(1) 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 also proposed to codify the

[[Page 33857]]

methodology for establishing the minimum number requirements for
specific contracted provider and facility specialty types per county.
We explained that CMS would use this methodology each year to determine
and publish the updated minimum provider standards on an annual basis
and that 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. Our proposal required the
provider/facility to be within the maximum time and distance of at
least one beneficiary in order to count towards the minimum number
requirements. We noted that 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.
We proposed to codify at Sec. 422.116(e)(2)(iii), our existing
practice that all facilities, except for acute inpatient hospitals
facilities, have a minimum number requirement of one. We limited the
methodology for establishing and changing the required minimum number
standard to acute inpatient hospitals and other non-facility provider
specialties. We proposed 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 were proposed in
paragraphs (e)(3)(i) and (ii) and explained in the preamble of the
proposed rule.
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. We stated that CMS had 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, U.S.
Census population data, National Ambulatory Medical Care Survey data,
AMA data on physician productivity, and published literature. We
proposed to codify those minimum ratios in the regulation at Sec.
422.116(e)(3)(i) and reproduced it in the preamble as Table 13. (85 FR
9101)
We stated that 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
proposed 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. We explained that CMS uses its MA
State/County Penetration data to calculate the total number of Medicare
beneficiaries residing in a county. For counties with lower
populations, and particularly for specialties with lower minimum
ratios, the minimum number is usually one.
We proposed to continue the current policy of calculating the 95th
Percentile Base Population Ratio annually for each county type. We
explained in the proposed rule that CMS has previously allowed MA
organizations to provide their expected enrollment and then define
their networks based on that number, but had later developed and
implemented a more objective means to measure network adequacy for all
MA plans consistently. Based on our position that the 95th Percentile
Base Population Ratio is a fair and consistent enrollment estimate that
can be applied to new and current plans, we proposed to codify its
continued use. 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 percent of plans have enrollment
lower than this level). We explained in the proposed rule how to
calculate the 95th Percentile Base Population Ratio. We use the List of
PFFS Network Counties \47\ to exclude PFFS plans in non-networked
counties \48\ from the calculation at the county type level. We use the
MA State/County Penetration data \49\ to determine the number of
eligible Medicare beneficiaries in each county, and our Monthly MA
Enrollment data \50\ 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
proposed to codify the methodology for calculating the 95th Percentile
Base Population Ratio at Sec. 422.116(e)(3)(ii)(B).
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\47\ CMS. PFFS Plan Network Requirements. Retrieved from:
https://www.cms.gov/Medicare/Health-Plans/PrivateFeeforServicePlans/NetworkRequirements.html.
\48\ Non-networked counties in this context means there are not
at least two networked plans operating in that county.
\49\ 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.
\50\ 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.
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6. Exceptions
Finally, we also proposed 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. Under our current policy, 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 proposed 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 the standards in Sec. 422.116. We proposed
that an MA organization may request an exception when two criteria are
met: (1) 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 (2) 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 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

[[Page 33858]]

organizations or exclusively with another organization. We proposed
that we would implement and interpret the regulation such that the MA
plan would have to contract with telehealth providers, mobile
providers, or providers outside the time and distance standards, but
accessible to most enrollees (or consistent with the local pattern of
care), in order for the MA plan to request an exception by CMS. In
evaluating exception requests, CMS proposed that it would 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. These three criteria were proposed to be codified at
paragraph (f)(2)(i), (ii) and (iii).
Currently, CMS collects information for purposes of testing an MA
organization's network adequacy using the PRA-approved collection
titled, ``Triennial Network Adequacy Review for Medicare Advantage
Organizations and 1876 Cost Plans, CMS-10636, OMB 0938-1346.'' \51\ 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 PRA
package, CMS explained that organizations must comply with the current
CMS network adequacy criteria posted in the HSD reference file on CMS's
website and updated annually. We proposed to codify the standards in
order 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). We proposed that CMS would continue to use
the HSD reference file as a means to communicate these standards to MA
organizations and that we anticipated that there would be no updates or
changes required to the approved collection of information for CMS to
assess network adequacy. We stated in the proposed rule how the
codified provisions would not impose any new or revised information
collection requirements (that is, reporting, recordkeeping, or third-
party disclosure requirements) or burden. We confirm here that these
provisions are not subject to the PRA.
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\51\ https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10636.
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We thank commenters for their input to help inform our final rule
on network adequacy policies. We received the following comments on
this proposal, and our response follows:
Comment: A number of commenters gave feedback regarding the
provider and facility specialty type lists in Sec. 422.116(b). Some
commenters suggested that CMS add provider specialty types for physical
therapist, occupational therapist, transplant providers, psychologists,
clinical social workers, nurse specialists, emergency physicians, and
optometry. A few commenters suggested that CMS add transplant centers
and inpatient rehabilitation hospitals and units to the list of
facility specialty types.
Response: We appreciate the many viewpoints and recommendations on
this subject. The regulation at Sec. 422.112(a) require that MA
organizations must ensure that all covered services are available and
accessible under the plan. Further, MA organizations must maintain a
network of providers to provide adequate access to covered services and
must make arrangements for care outside the plan provider network, at
in-network cost-sharing, when network providers are unavailable. As a
result of this critical protection, we do not require that all provider
and facility specialties be subject to network adequacy standards. In
past network adequacy reviews, we have not evaluated every possible
provider type that may provide a Medicare covered benefit in our
network reviews. We also have not evaluated provider subspecialties,
especially those that are extremely specialized in nature. We ensure
access to all Medicare covered services through monitoring and
investigating complaints in the CMS Complaint Tracking Module. We
identify which provider and facility specialty types are critical and
necessary to evaluate separately based on a review of Medicare FFS
utilization patterns, utilization of provider/facility specialty types
in Medicare FFS, specialties in other managed care programs, and the
clinical needs of Medicare beneficiaries. For example, we consider the
utilization rate of specific provider types in order to determine if it
justifies the effort of developing specific standards, collecting data
from plans, and analyzing the information. Therefore, we proposed to
codify network adequacy standards for the 27 provider specialty types
and 14 facility specialty types that are currently used in the
evaluation of network adequacy in each service area and have well-
established base time and distance standard associated with them. We
emphasize that MA enrollees are entitled to access to all medically
necessary services from Medicare participating providers and facilities
whether or not the provider or facility type is subject to specific
network adequacy standards under Sec. 422.116.
Comment: In response to our identification of other options we were
considering regarding outpatient dialysis centers, many commenters
supported removing outpatient dialysis from the list of facility
specialty types, and instead, requiring an attestation in its contract
application. These commenters explained that this change would drive
patient-centered innovation in dialysis treatment, encourage
competition, and bring down high reimbursement costs for dialysis
treatment. They also pointed out that this change would be consistent
with how CMS monitors and ensures beneficiary access to durable medical
equipment, home health care, and transplant services. Commenters
suggested that the use of an attestation would ensure patient
protection while also giving plans the flexibility they need to expand
the delivery of innovative solutions to beneficiaries with End Stage
Renal Disease (ESRD) requiring dialysis treatment. A few commenters
that supported the removal of outpatient dialysis also suggested that
providing exceptions for plans covering home dialysis for all
beneficiaries who need such services or customizing time and distance
standards for dialysis facilities would also improve the proposal.
On the other hand, many commenters recommended that CMS finalize
its proposal and maintain maximum time and distance standards for
outpatient dialysis centers without change. These commenters raised
concerns that the removal of outpatient dialysis as a facility type
would result in the discrimination of ESRD patients by MA plans because
the network design would discourage patients with ESRD from enrolling.
A few commenters believed that the removal of outpatient dialysis
centers from the list of facility and specialty types for which we
would use specific standards would conflict with the intent of the 21st
Century Cures Act, which allows ESRD patients to enroll in MA plans in
2021. Some commenters raised access to care concerns and pointed out
barriers to home dialysis,

[[Page 33859]]

such as housing insecurity and a lack of caregiver support, and others
explained the need to have both home dialysis and in-center dialysis
options of care and to leave the treatment choice in the hands of the
patient. Lastly, a couple commenters did not believe that CMS provided
adequate notice in the proposed rule to make any changes to outpatient
dialysis in the final rule.
Response: In our proposal, we explained that we believed that there
is more than one way to access medically necessary dialysis care and we
sought to improve our network adequacy standards as they relate to
measuring and setting minimum standards for access to dialysis
services. We do not agree with commenters that the removal of
outpatient dialysis facilities will result in network designs that
discriminate against or discourage ESRD beneficiaries from enrolling in
MA plans. Regardless of whether a facility or provider specialty type
is subject to network adequacy standards, MA organizations are required
in Sec. 422.112(a)(3) to arrange for health care services outside of
the plan provider network when network providers are unavailable or
inadequate to meet an enrollee's medical needs. Section 422.112(a)(10)
requires MA plans to ensure access and availability to covered services
consistent with the prevailing community pattern of health care
delivery in the areas served by the network. The factors making up
community patterns of health care delivery that CMS considers when
evaluating an MA plan network--and which continue to apply regardless
whether a specific time and distance or minimum number requirement is
established pursuant to Sec. 422.116 for a provider specialty or
facility type--are at Sec. 422.112(a)(10). For example, for any
provider or facility types that are not included in network adequacy
standards at Sec. 422.116, CMS may consider the number and
geographical distribution of eligible health care providers available
to potentially contract with an MA organization to furnish plan covered
services within the service area when deciding if MA plans meet access
and availability requirements. Additionally, we may consider the
prevailing market conditions in the service area of the MA plan and,
more specifically, the number and distribution of health care providers
contracting with other health care plans (both commercial and Medicare)
operating in the service area of the plan. Therefore, if network
providers are incapable of meeting the enrollee's medical needs because
the burden of travel to the in-network dialysis center is inconsistent
with the prevailing community pattern of health care delivery in the
area, the MA plan must arrange for care outside of the network and at
in-network cost-sharing in order to meet the MA plan's obligation under
the MA program rules to furnish covered services. The network adequacy
maximum time and distance standards proposed at Sec. 422.116 are one
way that we quantify prevailing patterns of health care delivery in
areas, but it is not the only way to evaluate a network, as Sec.
422.112(a)(10) provides. Most importantly, it does not mean that MA
organizations do not need to maintain an adequate contracted network of
contracted providers simply because a provider or facility type is not
included in the network adequacy standards at Sec. 422.116. MA
organizations must maintain a network of contracted providers that is
sufficient to provide adequate access to covered services to meet the
needs of the population served and is consistent with the prevailing
community pattern of health care delivery in the areas where the
network is being offered. This critical beneficiary protection ensures
that MA enrollees have similar reasonable access to providers and
facilities as beneficiaries in FFS Medicare. Therefore, we believe that
MA plans will continue to provide adequate access to dialysis
providers. We disagree with commenters that believe that the removal of
outpatient dialysis from the list being finalized in Sec. 422.116 of
facility types that are separately evaluated on time and distance and
minimum number standards would necessarily lead to discrimination
against ESRD patients or would conflict with the intent of the 21st
Century Cures Act. The 21st Century Cures Act removed the prohibition
against beneficiaries with ESRD from enrolling in an MA plan effective
for plan years beginning on or after January 1, 2021. MA organizations
must abide by all existing legal and regulatory anti-discrimination
requirements, which include prohibitions on discrimination on the basis
of health status, for any beneficiaries with ESRD enrolling in an MA
plan.
For CMS performance data collected for Part C Star Ratings, CMS
surveys beneficiaries on the ease of getting needed care and seeing
specialists, as well as getting appointments and care quickly, through
the Consumer Assessment of Healthcare Providers and Systems (CAHPS)
survey questions. MA organizations are incentivized by CMS Star Ratings
policies to maintain high-star ratings by scoring well on these types
of survey measures. Further, if beneficiaries believe that an MA
organization is discriminating against them, complaints may be
submitted into the Complaint Tracking Module (CTM). We monitor and
investigate complaints related to access concerns and work with
regional office caseworkers to resolve any issues with the MA
organizations. We would take compliance or enforcement actions against
an MA organization for failing to provide adequate access to medically
necessary services, as warranted.
Also, we do not believe that the removal of outpatient dialysis as
a facility type would cause access to care concerns. As we pointed out,
MA organizations must maintain a contracted network that is sufficient
to provide adequate access to covered services, and this includes the
ability for enrollees to receive care in-person at an outpatient
dialysis facility. We agree with commenters that this change will drive
patient-centered treatment in dialysis services, which is at the heart
of our intent in considering this change in policy. While we proposed
to codify maximum time and distance standards for the facility type
outpatient dialysis, we also solicited comments about four options to
improve measuring and setting standards for access to dialysis services
because we wanted MA plans to use more than one treatment modality to
address access to dialysis services: (1) Removing outpatient dialysis
from the list of facility types with specific evaluation 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); (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. We believe that by
eliminating the outpatient dialysis facility type from the list in
Sec. 422.116(b)(2), MA organizations have the freedom to enhance their
networks by contracting with dialysis providers that offer dialysis
treatment through home-based modalities. These home based modalities
give enrollees flexibility and control over their lives so that
enrollees can choose the treatments that best meet their needs. We
agree with commenters and understand that beneficiaries undergoing
dialysis treatment often face changes in circumstances that may warrant
movement from one modality to another. We believe this further

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supports our intent to encourage MA organizations to establish networks
that provide the most advanced and available treatment options to
Medicare beneficiaries.
We also agree with commenters that the removal of outpatient
dialysis from the list of facilities for which there are specific time
and distance and minimum provider standards could encourage greater
competition in dialysis treatment and treatment modalities, which will
eventually lead to lower costs for Medicare beneficiaries without
resulting in the denial of, or access to, lesser care. The removal of
outpatient dialysis as a facility type from our network adequacy
standards allows all dialysis treatments to be treated equally, which
will encourage MA organizations to contract with facilities that offer
different forms of dialysis treatments, rather than just dialysis at an
outpatient facility. We believe this increased competition among
treatment modalities could drive down plan and patient costs for
dialysis services. We do not believe that creating exceptions related
to home dialysis or customizing time and distance standards will bring
about the same level of change that CMS is seeking. CMS will continue
to oversee the provision of dialysis services through its monitoring
efforts to ensure that MA beneficiaries have access to medically
necessary care that meets their needs. We routinely monitor access to
care complaints and impose compliance or enforcement actions, when
necessary, to hold MA organizations accountable for the provision of
all medically necessary covered services.
Lastly, a few commenters did not believe that CMS provided adequate
notice and sufficient detail in the proposed rule for the alternative
that we are finalizing here. We disagree and believe that our proposal
and continued consideration of other options for outpatient dialysis
were clear in the proposed rule. We received numerous comments
discussing the four options we identified in the proposed rule (85 FR
9099), as well as the proposal to include outpatient dialysis as a
facility type with maximum time and distance standards. The comments,
as we have previously discussed, weighed these options and clearly
discussed the benefits and drawbacks on the merits of the issues
presented, indicating to us that our consideration of other options for
outpatient dialysis was understood by commenters. We thank commenters
for all of their input in helping to inform us as we considered a final
policy concerning outpatient dialysis.
In this final rule, we are removing outpatient dialysis as a
facility specialty type at Sec. 422.116(b)(2) that is subject to
network adequacy standards. Under our authority in Sec. 422.116(a)(1),
we intend to require that MA organizations submit an attestation that
it has as an adequate network that provides the required access and
availability to dialysis services, including outpatient facilities. We
are finalizing the 27 provider specialty types and the other 13
facility types (that is, the types other than outpatient dialysis
facilities) in Sec. 422.116(b) as proposed.
Comment: A few comments questioned our proposal at Sec.
422.116(b)(3) specifying that CMS may remove a provider 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.
A few commenters recommended that both additions and removals of
provider and facility types be subject to notice and comment
rulemaking.
Response: The HSD reference file is built annually by applying the
rules in Sec. 422.116. We reiterate the importance of the beneficiary
protection at Sec. 422.112(a), that even if a provider or facility
specialty type is not subject to network adequacy standards, that
access to providers at in-network cost-sharing must be provided by the
MA organization. We proposed the ability to remove specialty types in
the HSD reference file to account for circumstances where it may not be
necessary to evaluate the number and accessibility of each of the 27
specialty and 13 facility types in a particular year. Additionally, as
we described in our proposal, Sec. 422.116(a) will permit us to
require an MA plan to complete an attestation that it has an adequate
network that provides the required access to and availability of
provider or facility specialty types even where we do not evaluate
access ourselves. Since network adequacy criteria are measured for each
individual specialty type and do not roll up into an aggregate score,
the removal of a specialty type from the network review will not affect
the outcome of an MA plan's network review and, as discussed throughout
this section of this final rule, we believe that there are adequate
protections available to ensure that enrollee access to services is not
compromised. We are finalizing Sec. 422.116(b)(3) to allow CMS to
remove a provider 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.
Comment: Most commenters supported the proposed base time and
distance standards. There were a few commenters that suggested that CMS
consider alternative approaches to codifying a uniformly applied time
and distance standard. A commenter suggested that CMS allow for the use
of a combination of qualitative and quantitative standards. Others
commenters suggested measures of provider availability (for example,
percentage accepting new patients, timeliness of appointment
availability), performance on access-related quality and patient
experience measures, and degree of physical co-location of services.
Response: We appreciate the recommendations and, because we are
always looking for new ways of improving the network adequacy reviews,
will take them into consideration for potential future policy
development. Our network adequacy methodology, as proposed and as
finalized here, aims to objectively evaluate the networks of various
types of coordinated care plans across a national landscape that
includes urban, suburban, and rural regions. We believe that using
quantitative methods that account for some degree of variance across
these different regions provides a fair and reasonable evaluation that
we can efficiently test against hundreds of MA plans annually.
Therefore, we are finalizing base time and distance standards that vary
by county type designation and take into account the nature of the
provider or facility supply in the health care marketplace. Further,
the customization process, which we are finalizing as proposed at
paragraph Sec. 422.116(d)(3), allows us to adjust the base time and
distance standards, when needed, to take into account the unique
characteristics of specific regions, such as geographic landscape,
which may alter the pattern of care in a county. We also proposed an
exceptions process at Sec. 422.116(f), which allows us to also
consider qualitative characteristics that may serve as the rationale
for a valid exception when an MA network fails to meet time and
distance standards. We have continued to hone and improve our network
adequacy methodology since 2011 and believe our objective and
transparent approach allows for the proper balance of quantitative and
qualitative measures that allows CMS to quickly and efficiently measure
the adequacy of hundreds of MA networks in a given year. We also note
that some of the performance measures (for example, patient experience
and access-related quality measures) suggested are

[[Page 33861]]

already included in CMS's MA plan Star Ratings system, which is used to
measure how well plans perform in several categories, including quality
of care and customer service. We do not believe it is necessary to
duplicate those as part of network evaluations.
Therefore, we are finalizing the general rules for network adequacy
proposed at Sec. 422.116(a), with the exception of Sec.
422.116(a)(3)(ii), which will not be finalized to align with how we are
not finalizing specific standards for Outpatient Dialysis facilities.
Also, we are finalizing the county type designations at Sec.
422.116(c) and the maximum time and distance standards at Sec.
422.116(d) as proposed, with the exception of the maximum time and
distance standards for the Outpatient Dialysis facility type for
reasons previously discussed.
Comment: A number of commenters supported the proposed base time
and distance standards at Sec. 422.116(d). A few commenters
recommended changes to the proposed base time and distance standards in
specific county type designations or due to the plan type. Some
commenters recommended that Institutional Special Needs Plans (I-SNPs)
should have reduced network adequacy standards for specific provider or
facility types like podiatry, primary care, diagnostic radiology,
physical therapy, occupational therapy, and speech therapy, or should
be excepted altogether from the measures. Others recommended that we
reduce time and distance standards for occupational therapy and
dermatology in all county types, and for primary care and psychiatry in
non-metro county types.
Response: We conduct network adequacy reviews at the contract
level, meaning we evaluate the adequacy of the MA organization's
network across all of their plan types (for example, HMOs, PPOs, SNPs);
we do not singularly evaluate the network of a specific plan benefit
package. We believe that conducting network reviews at the contract
level allows us to consider the broadest availability of contracted
providers and facilities for an MA organization while also providing
administrative efficiency for CMS to evaluate fewer HSD network
submissions. Therefore, our network methodology does not change base
time and distance standards based on the plan type being reviewed, such
as an I-SNP. We also do not believe that it would be necessary to
change our network adequacy standards based on the plan types that we
review. For example, while I-SNPs may be unique in that beneficiaries
may receive a number of health care services from a single institution,
there are also I-SNP institutionalized-equivalent beneficiaries that
reside at home. Further, these beneficiaries may still need to travel
to another facility to receive specialized care or the specialty
providers will need to travel to deliver the care. As a result, we
believe that even for plans like I-SNPs, it is important that MA
organizations maintain a contracted network that can deliver medically
necessary care and is compliant with our network adequacy standards.
We have honed and improved its base time and distance standards for
each specific provider and facility type in each county designation
over a period of nine years. For example, we updated maximum time and
distance standards when the new county designation methodology was
implemented (that is, moving from classifying counties based on
metropolitan statistical areas to the current county designations) and
have adjusted some standards based on a significant change in supply.
We proposed base time and distance standards that we believe represent
a fair expectation for health care patterns of delivery in the five
county types based on many years of data and network evaluation.
Additionally, the customization process, as proposed and finalized,
allows us to adjust standards at the county and provider/facility type
level where needed to take into account factors like utilization or
supply patterns that indicate the base time and distance standards are
not reflective of prevailing patterns of community health care
delivery. Therefore, we are not making any changes to our base time and
distance standards in the final rule and are finalizing these standards
as proposed.
Comment: A number of commenters supported the minimum provider
number requirements at Sec. 422.116(e). Commenters supported CMS's
policy that there be at least one contracted provider or facility
specialty type within required time and distance standards that is
accessible to Medicare beneficiaries. A commenter recommended that CMS
use the same minimum provider ratio in the calculation of the minimum
provider number requirement in all county types.
Response: We thank commenters for their support of this policy. As
we described in our proposed rule, 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, U.S. Census
population data, National Ambulatory Medical Care Survey data, AMA data
on physician productivity, and published literature. We proposed
Minimum Ratios for each provider and county type at Sec.
422.116(e)(3)(i). The Minimum Ratio is the number of providers required
per 1,000 beneficiaries. As the overall population and population
density widely varies between large metro and rural county types, so
does the rate of health care utilization in these areas. Health care
utilization patterns are higher in metro areas, and therefore, our
proposed Minimum Ratios are slightly higher in metro county types. In
accordance with our current rules at Sec. 422.112(a)(10), we
considered the prevailing patterns of community health care delivery,
such as whether the service area is comprised of rural or urban areas,
when developing the Minimum Ratios. We are finalizing the minimum
number requirements as proposed in Sec. 422.116(e).
Comment: Many commenters supported our proposed customization
process at Sec. 422.116(d)(3). In particular, commenters supported
that CMS may only use customization to increase time and distance
standards from the base standards. A commenter suggested that CMS allow
health plans to provide feedback on county time and distance standard
changes to ensure appropriate customization is consistent year after
year. Other commenters suggested that geographic barriers like rivers,
mountains, and oceans should trigger customization, in addition to
supply shortages.
Response: We appreciate commenters' support of our customization
process. We agree with commenters that geographic barriers that play a
significant role in utilization patterns are triggering events that may
result in the customization of time and distance standards by CMS. We
clarify here, and in additional regulation text being finalized at
Sec. 422.116(d)(3), that when necessary due to utilization or supply
patterns, CMS may set maximum time and distance standards for specific
provider or facility types for specific counties by customization. We
stated in the proposed rule that customization of base criteria may be
triggered based on provider or facility supply shortages, information
received through exception requests from plans, or from other sources,
such as restrictions or limitations caused by state certificate of need
(CON) laws. When information from these sources shows that utilization
or supply patterns indicate the base time and distance standards are
not reflective of prevailing patterns of community health care
delivery, CMS

[[Page 33862]]

may customize the maximum time and distance standards. In the past, CMS
has only customized maximum time and distance standards by increasing
them above the base time and distance standard and will continue this
policy by finalizing Sec. 422.116(d)(iv). We solicited comment in the
proposed rule about other sources of information that we should
consider as part of the customization analysis, but we do not believe
that it is necessary or appropriate to limit the source or type of
information that could be used to trigger the customization analysis.
By codifying a standard to guide when we will use customization without
limiting the information that would indicate that utilization or supply
standards make it necessary to use customized, instead of the base,
time and distance standards, we are ensuring that the network adequacy
evaluations appropriately reflect access and availability of health
care for each area.
Customization of base time and distance standards occurs narrowly
and is very specific to the provider or facility specialty type and
county where the triggering event occurs. Further, MA organizations
will not be subject to reductions in the time and distance standard
below the base standards at Sec. 422.116(d)(2); CMS will only be
increasing from the base standards through customization to take into
account the information and utilization and supply standards that
trigger the need for customization and make it easier for MA
organizations to comply with network adequacy standards. As such and
because the regulation describes the standards governing the
customization process, we do not believe an opportunity for prior
review and comment on customized time and distance standards before
implementation is the best course of action. As we mentioned, we
consider information from exception requests to help inform our
customization of time and distance standards. Should an MA organization
continue to fail to meet customized time and distance standards, the
organization may submit an exception request and provide further
information about why its network cannot meet the standard. CMS will
take that information under consideration for the current network
review and may make additional adjustments to the customized time and
distance standards in the following year. We believe this is the most
efficient means of receiving MA organization input on customized
standards as circumstances in counties change year over year.
Therefore, we are finalizing the customization process at Sec.
422.116(d)(3), with an addition to clarify that CMS may set maximum
time and distance standards for provider or facility types for specific
counties when necessary due to utilization or supply patterns.
Comment: We received numerous comments expressing support for the
reduction in the percentage of beneficiaries residing within maximum
time and distance standards in Micro, Rural, and CEAC counties from 90
percent to 85 percent. Some commenters described this as a reasonable
adjustment in light of the limited availability of some providers in
rural areas. They explained that this proposal could increase access to
MA plans for beneficiaries residing in rural areas by bringing
competition and better health care choices to beneficiaries. Other
commenters that were supportive of the proposal also requested that CMS
make this reduction applicable to all five county type designations,
rather than limiting it to Micro, Rural, and CEAC counties. A few
commenters suggested that we further reduce the percentage down to 80
percent.
We also received some comments that expressed opposition to this
reduction. Some commenters expressed concern that reducing the
threshold requirement may result in the unintended consequence of
leaving some rural communities without appropriate access to essential
services because it would reduce the incentives for MA plans to
contract with specialists.
Response: We thank commenters for their viewpoints on our proposal
to reduce the percentage of beneficiaries residing within maximum time
and distance to 85 percent at Sec. 422.116(d)(4)(i). We agree that a
reduction is necessary in rural counties (Micro, Rural, and CEAC) due
to the limited availability of providers and the lower population
density in those areas. CMS considers the number and geographical
distribution of eligible providers available to potentially contract
with an MA organization when evaluating a network based on community
patterns of care under Sec. 422.112. The beneficiary population is
typically less dense per square mile than in metro counties so we
believe having a reduced threshold will make the standards more
consistent with the community patterns of care in rural areas. As a
result, we agree with commenters that this adjustment may increase
access to MA plans for beneficiaries residing in rural areas. We do not
believe that this reduction will result in leaving some rural
communities without appropriate access to essential services. Our
minimum number requirements proposed at Sec. 422.116(e) require that
an MA plan contract with at least one provider within maximum time and
distance standards of a beneficiary in the area. Further, CMS rules at
Sec. 422.112(a) require that MA organizations must ensure that all
covered services are available and accessible under the plan,
regardless of how many providers or facilities are contracted with the
MA organization. MA organizations must make arrangements for care
outside the plan provider network, at in-network cost-sharing, when
network providers are unavailable or the network is insufficient.
Therefore, beneficiaries in these rural communities will continue to
have access to specialty providers and facilities because MA
organizations are still required to contract with at least one or must
pay for health care services rendered at non-contracted Medicare
participating providers at the Medicare FFS rate.
We proposed a modest reduction of 5 percent and limited this
reduction to only Micro, Rural, and CEAC counties. We believe this to
be an appropriate adjustment based on our data that shows that existing
failures in MA plans' meeting the time and distance standards
frequently occur at the range between 80 to 89 percent of
beneficiaries. We understand that some commenters would like CMS to see
an increased reduction or expand this reduction to all county types,
however, we believe that the approach we are finalizing will allow us
to observe the impacts of this policy change on MA plans and health
care providers; we may consider further adjustments to the percentage
as needed. Additionally, as this policy change was also intended to
drive more MA plan access in rural areas, we do not believe it is
necessary or appropriate at this time to apply this reduction to the
access standard for metro counties. We are finalizing the reduction in
the percentage of beneficiaries residing within maximum time and
distance to 85 percent for Micro, Rural, and CEAC counties at Sec.
422.116(d)(4)(i).
Comment: We received numerous comments about the 10-percentage
point telehealth credit towards the percentage of beneficiaries
residing within published time and distance standards for applicable
provider specialty types proposed at Sec. 422.116(d)(5). Most
commenters were very supportive and appreciated CMS' support of
telehealth goals and thought that CMS's proposal would incentivize MA
organizations to contract with providers that have adopted telehealth
technology. A few

[[Page 33863]]

commenters were opposed to this ``telehealth credit'' and felt that
telehealth should be implemented into network adequacy in a way that
does not diminish access to in-person care. These commenters believed
that allowing a telehealth credit would make it too easy for MA
organizations to comply with a standard that is set for in-person
access to a provider. Also, opposing commenters believed that this
policy may unintentionally encourage plans to use telehealth services
as substitutes for existing in-person services, even in areas where
provider availability and beneficiary access are strong.
Response: We appreciate commenters support for this proposal as
well as the concerns that were raised by the commenters that opposed
it. We believe the telehealth credit that we proposed upholds maximum
time and distance standards for the applicable provider specialty types
and provides a modest incentive for MA organizations to supplement
their networks with providers that can furnish additional telehealth
benefits. Our proposal does not decrease the maximum time and distance
standards that must be maintained for compliance with our network
adequacy measures for the applicable provider types; it allows for a
reduced portion of the beneficiary population to be within those
maximum time and distance standards. For example, in Metro counties, MA
organizations would still need to ensure that they contract with in-
person providers that are within maximum time and distance standards of
at least 80 percent of the beneficiary population even after the credit
is applied. 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,
in-person networks with telehealth providers. The rules at Sec.
422.135(c) for providing additional telehealth benefits require that
the MA organizations furnish in-person access to the specified Part B
service at the election of the enrollee. This protection preserves the
beneficiary's right to choose when they would prefer to have medically
necessary care provided in-person rather than through electronic
exchange (that is, through electronic information and
telecommunications technology). Further, our telehealth credit proposal
does not count telehealth-only providers as equal to providers that
deliver in-person care. We limited the impact that supplementing a
network with telehealth providers could have on the network adequacy
standards by offering a 10-percentage point credit, while maintaining
the maximum time and distance standards required for the applicable
provider types. We believe this approach appropriately incentivizes MA
organizations to contract with providers that offer additional
telehealth benefits and maintains standards that ensure that in-person
providers are within a reasonable time and distance for most
beneficiaries.
Comment: Some commenters suggested that CMS modify the telehealth
credit by increasing the credit to as high as a 20-percentage point
credit.
Response: Our proposal attempted to strike the proper balance
between incentivizing MA organizations to contract with providers that
offer additional telehealth benefits while also maintaining adequate
access to in-person care for the same provider specialties. Therefore,
we proposed a 10-percentage point credit towards the percentage of
beneficiaries residing within maximum time and distance standards. We
believe a 10-percentage point credit is an appropriate amount that
proportionately supplements a plan's percentage threshold 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 to 89 percent range. We believe an increase to a 20-percentage
point credit would be too significant at this time. We plan to observe
the frequency and impact of this telehealth credit in network adequacy
reviews and will consider adjusting this percentage in the future as
needed.
Comment: A few commenters recommended that CMS add to the
applicable provider list of dermatology, psychiatry, cardiology,
neurology, and otolaryngology proposed at Sec. 422.116(d)(5) by also
including the provider types of ophthalmology, allergy and immunology,
nephrology, primary care, gynecology, endocrinology, infectious
diseases, or making all provider types applicable for the telehealth
credit. Commenters encouraged CMS to expand the list of specialty
providers to account for advances in medical technology and promote
beneficiary choice in how to receive medical services.
Response: We appreciate commenters' suggestions on expanding the
list of applicable provider types for this telehealth credit. As we
explained in the previous comment response, we believe the telehealth
credit amount is properly balanced to maintain adequate access to in-
person care while also incentivizing MA organizations to contract with
telehealth providers. We note that in the proposed rule, we did not
believe it was necessary to take telehealth into account for primary
care providers. 85 FR 9099. However, the use of and access to primary
care doctors via telehealth, as well as other provider specialties
highlighted by commenters (whose comments referred to circumstances
outside the Public Health Emergency), has been critically important in
delivering medical care to Medicare beneficiaries during the during the
COVID-19 pandemic Public Health Emergency. Based on our experience
during this emergency, we observed how important it is to have policies
that encourage the widespread availability of telehealth services at
all times. Additionally, President Trump's Executive Order 13890 on
Protecting and Improving Medicare for Our Nation's Seniors (October 3,
2019) called for enhanced access to health outcomes made possible
through telehealth services or other innovative technologies as a way
to secure and improve Medicare. In light of the COVID-19 pandemic and
this Executive Order, we now believe that we should expand the list of
specialty provider types finalized at Sec. 422.116(d)(5) and there is
no reason to restrict this credit to only provider types that are the
most apt to provide telehealth services or for which we have seen
potential for failing to meet the specific time and distance standards.
New medical technologies and treatments are rapidly evolving across
various providers and we would like to broaden the scope of eligible
providers to account for these developments by implementing
recommendations from commenters on the provider types in Sec.
422.116(b)(1) that should be eligible for the telehealth credit.
However, we also do not believe that it is appropriate to make this
credit available to all provider types at this time. Therefore, based
on the comments received, we are adding the following provider types to
the list finalized at Sec. 422.116(d)(5): Ophthalmology, Allergy and
Immunology, Nephrology, Primary Care, Gynecology/OB/GYN, Endocrinology,
and Infectious Diseases.
Comment: A few commenters recommended that we modify CMS's proposal
at Sec. 422.116(d)(5) to include 1876 cost plan telehealth providers
that provide telehealth services through supplemental benefits.
Response: Our proposal at Sec. 422.116(d)(5) limited the credit to

[[Page 33864]]

providers that provide additional telehealth benefits, as defined in
Sec. 422.135, in its contracted networks. As we pointed out in the
proposed rule, additional telehealth benefits described at Sec.
422.135 only apply to MA plans. For that reason, our proposal did not
extend the 10-percentage point credit to cost plans. We believe this is
appropriate because of the protections and rules that exist for
additional telehealth benefits that that require access to in-person
care at the election of the enrollee. Telehealth services offered
through supplemental benefits are not subject to these rules and may be
too limited in scope to warrant a credit for network adequacy.
Therefore, we are finalizing this telehealth credit as proposed at
Sec. 422.116(d)(5).
Comment: We received numerous comments in support of our proposal
at Sec. 422.116(d)(6) 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 anticompetitive restrictions, that limit the number of
providers or facilities in a county or state. Some commenters expressed
agreement with our discussion in the proposed rule that CON laws have a
negative impact on network adequacy, reduce competition, result in
higher prices and lower patient access. Other commenters opposed the
``CON law credit'' and disagreed with our viewpoint on the impact that
CON laws. Opposing commenters suggested that CON laws are not a
significant barrier to providers in underserved areas and help assure
that there is not an overabundance of specialized facilities that need
to treat patients in order to remain in business, which causes an
overutilization of services. These commenters were concerned that a 10-
percentage point credit may hinder enrollee access to providers. We
received some comments seeking clarification on the term ``other
anticompetitive restrictions'' and the conditions under which the CON
law credit will be available.
Response: We appreciate commenters' varying viewpoints on CON laws
and their impact on network adequacy. We continue to believe that CON
laws adversely affect competition and free market entry, and therefore,
MA organizations must pay more for benefits when there is a limited
supply of providers or facilities. We believe the 10-percentage point
credit is an appropriate adjustment to make for MA organizations that
contract with providers or facilities that are affected by CON laws in
counties and states. As previously mentioned, prior network adequacy
reviews show that many failures in meeting time and distance standards
occur in the 80 to 89 percent range. Like the telehealth credit, this
credit does not reduce the maximum time and distance criteria required
for specific providers or facilities; it reduces the compliance
threshold that MA organizations must meet in order to meet our network
adequacy standards. Even when this credit applies, MA organizations
must still contract providers and facilities where a majority of
beneficiaries reside within maximum time and distance standards.
We proposed 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
anticompetitive restrictions, that limit the number of providers or
facilities in a county or state. We are implementing this network
adequacy policy in furtherance of President Trump's Executive Order
13890 on Protecting and Improving Medicare for Our Nation's Seniors
(October 3, 2019), which called 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.
We clarify here that the term ``anticompetitive restrictions'' at Sec.
422.116(d)(6) is meant to encompass state laws that restrict the
provider or facility supply of specialty types listed at Sec.
422.116(b), even if the state does not formally call them CON laws. For
example, Wisconsin does not have a CON law, but has a limit on the
maximum number of approved hospital beds .\52\
---------------------------------------------------------------------------

\52\ https://docs.legis.wisconsin.gov/statutes/statutes/150/VII/93.
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Additionally, we clarify that CMS will identify the states,
counties and provider/facility specialty types where the CON law credit
will be available for MA organizations. CMS has conducted comprehensive
research on every state to determine whether the state uses CON laws or
other anticompetitive restrictions and whether those laws affect the
provider or facility types in our network adequacy standards at Sec.
422.116(b). As we have described in regulation text, CMS may customize
base time and distance standards in states with CON laws in lieu of
allowing for the 10-percentage point credit. We clarify here and in
regulation text at Sec. 422.116(d)(6), that CMS may use customization
when necessary due to utilization or supply patterns. Therefore, the
10-percentage point credit will not be allowable in counties where the
specific provider or facility type maximum time and distance standards
have already been customized. CMS will use the HPMS Network Management
Module to identify the county and provider/facility combinations that
are eligible for this 10-percentage point credit and MA organizations
will need to submit a credit request for each provider or facility type
they believe has been affected by the CON or anticompetitive laws.
Therefore, we are finalizing at Sec. 422.116(d)(6) that 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 will either 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, when
necessary due to utilization or supply patterns, customize the base
time and distance standards.
Comment: We received some comments about the cumulative effect of
the telehealth and CON law credits on the percentage of beneficiaries
residing within published time and distance standards. Some commenters
questioned whether it was allowable to combine the two credits and
others expressed concern with the effect of combining the two credits.
Commenters were concerned that the combined change in the compliance
percentage would likely have adverse impacts on provider access and
choice.
Response: When discussing the CON law credit in the proposed rule,
we stated that the CON law credit could be ``in addition to'' the
telehealth credit, when applicable. We confirm that interpretation here
and reiterate that both of these credits may be applied together to the
percentage of beneficiaries residing within maximum time and distance
standards at Sec. 422.116(d)(4). We note that these credits do not
reduce the actual maximum time and distance standards themselves, and
that CMS still requires that MA organizations contract with providers
where a majority of beneficiaries (that is, no less than 65 percent in
rural counties, and 70 percent in non-rural counties, when both credits
apply) reside within maximum time and distance standards for in-person
access to care when

[[Page 33865]]

needed. Additionally, we reiterate that Sec. 422.112(a) requires that
MA organizations must ensure that all covered services are available
and accessible under the plan and that MA organizations must maintain a
network of providers to provide adequate access to covered services and
must make arrangements for care outside the plan provider network, at
in-network cost-sharing, when network providers are unavailable or the
network is inadequate.
Comment: A few commenters recommended changes to our proposed
exceptions process. Some commenters recommended that CMS shift from
categorically treating an ``inability to contract'' as an invalid
rationale for an exception and instead consider it a valid rationale
relating to consolidated or concentrated provider markets. Others
recommended that CMS consider exceptions based on documented provider
activities that have resulted in anticompetitive practices impeding
efforts to meet network adequacy standards. Another commenter suggested
that where there may be repeated exception requests based on
geographical barriers, CMS should consider granting permanent
exceptions. Finally, a commenter requested that CMS revise its language
in Sec. 422.116(f) to expressly provide for exceptions for I-SNPs
because they commonly furnish services in long-term care facilities.
Response: Under our proposal, an MA organization may request an
exception when two criteria are met. First, 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; second, 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. We explained in the proposed rule the meaning of
``available'' by providing examples, such as when the provider has
moved or retired, or when the provider/facility does not contract with
any organizations or exclusively with another organization. (85 FR
9102-9103). However, we distinguish these examples from situations
where an MA organization is unable to successfully negotiate and
establish a contract with a provider or facility, which we refer to as
the ``inability to contract.'' The non-interference provision at
section 1854(a)(6) of the Act prohibits us from requiring any MA
organization to contract with a particular hospital, physician, or
other entity or individual to furnish items and services or require a
particular price structure for payment under such a contract. As such,
we cannot assume the role of arbitrating or judging the bona fides of
contract negotiations between an MA organization and available
providers or facilities. With respect to comments about ``documented
provider activities that have resulted in anticompetitive practices,''
we believe that commenters are also referring to price negotiations
between MA organizations and providers. We maintain that the
``inability to contract'' with an available provider or facility is not
a valid justification for an exception at Sec. 422.116(f). Therefore,
we will generally not accept an organization's assertion that it cannot
meet our network adequacy criteria because providers/facilities are not
willing to contract with it.
With respect to comments about permanent exceptions for geographic
barriers, we clarify here that we would not create a ``permanent''
exception, as this would unnecessarily burden the exception process.
Instead, we would utilize our customization process to recalibrate
maximum time and distance requirements in accordance with the local
pattern of care. As mentioned in our discussion about customization, we
use information received through exception requests to stay informed
and determine which counties or provider/facility types require a
permanent adjustment in maximum time and distance standards through
customization to account for things such as geographic characteristics
or changes in supply.
Finally, we reiterate here that we do not believe it is necessary
to change network adequacy standards based on the plan types that we
review. Beneficiaries may still need to travel to another facility to
receive specialized care or the specialty providers may need to travel
to deliver the care to the long-term care facility. As a result, we do
not believe any specific exceptions are needed for I-SNPs.
We proposed to codify the three criteria that we consider when
evaluating exception requests at paragraphs (f)(2)(i), (ii) and (iii);
that CMS considers whether the current access to providers and
facilities is different from the HSD reference and Provider Supply
files for the year; 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 approval of the exception is in the best interests of
beneficiaries. We reiterate that all three criteria must be met for CMS
to approve an exception. We are finalizing the exceptions process and
these criteria at Sec. 422.116(f) as proposed.
Comment: Some commenters, in connection with a proposal to revise
Sec. 422.502 to address how CMS would use an entity's past performance
on an MA contract in evaluating applications for new plans or service
area expansions, stated that CMS should be more specific about what is
and is not a basis for denying applications in connection with network
adequacy in order to minimize uncertainty and unpredictability for MA
organizations. Commenters suggested that CMS should add other and more
specific criteria for use in considering applications.
Response: Although we are not addressing in this final rule the
proposal to revise Sec. 422.502 to address our use of information
about past performance in evaluating an application, we understand that
our statement in the proposed rule about how we would require an entity
applying for a new MA contract to provide an attestation about the
adequacy of its network could be seen as touching on that topic. We
will address our proposal about Sec. 422.502 in a future final rule,
but believe that additional clarity regarding attestations about
meeting the network adequacy regulation and how they would be used in
the context of applications for new MA contracts or service area
expansions should be addressed as part of our network evaluation
regulation.
We proposed specific regulation text (which we are finalizing) in
Sec. 422.116(a) that each network-based MA plan must demonstrate that
it has an adequate contracted provider network. In addition, we
proposed 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 (85 FR 9093). We explained that we anticipated requiring
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.
Under our current network adequacy policy, as described in the PRA
approved collection of information titled, ``Triennial Network Adequacy
Review for Medicare Advantage Organizations and 1876 Cost Plans'' (CMS-
10636) and referenced in our

[[Page 33866]]

proposed rule, we removed network reviews from the application process
beginning in 2018 for contract year 2019. Therefore, failures detected
during network reviews are no longer used as a basis to deny an MA
application. In the proposed rule, we made clear that an attestation
could be used in connection with applications. In light of the comments
discussed above, and to address the intersection of our regulations
regarding network adequacy and the bases for denying applications, we
are finalizing regulatory text to explicitly provide that we do not
require information other than an attestation regarding compliance with
network adequacy requirements as part of the application for a new or
expanding service area and will not deny such an application on the
basis of such requirements. This provides greater clarity regarding how
network adequacy and the application process intersect by codifying the
current practice of relying on other mechanisms, such as our triennial
reviews, to evaluate compliance with the specific network adequacy
standards finalized in Sec. 422.116 and to enforce those standards.
The provision we are finalizing here at Sec. 422.116(a)(1)(ii),
however, does not prohibit CMS from considering or using information
about an entity's failure to comply with a MA contract for purposes of
an application denial when or if that compliance failure was associated
with access to services or network adequacy evaluations and resulted in
the imposition of an intermediate sanction or civil money penalty under
to part 422 subpart O, with the exception of a sanction imposed under
Sec. 422.752(d). Therefore, we are finalizing regulatory text at Sec.
422.116(a)(1)(ii) that CMS does not require information, other than an
attestation, regarding compliance with Sec. 422.116 as part of an
application for a new or expanding service area and will not deny
application on the basis of an evaluation of the applicant's network
for the new or expanding service area.
After careful consideration of all comments received, and for the
reasons set forth in the proposed rule and in our responses to the
related comments summarized earlier, we are finalizing the proposed
changes to Sec. Sec. 417.416(e)(3) and 422.116 with the following
modifications:
We are finalizing regulatory text at Sec.
422.116(a)(1)(ii) that CMS does not require information, other than an
attestation, regarding compliance with Sec. 422.116 as part of an
application for a new or expanding service area and will not deny
application on the basis of an evaluation of the applicant's network
for the new or expanding service area. Accordingly, we are designating
the text we proposed at paragraph (a)(1) as paragraph (a)(1)(i) in the
final regulation.
We are not finalizing Sec. 422.116(a)(3)(ii), which
clarified the definition of the facility type Outpatient Dialysis.
We are not finalizing Outpatient Dialysis in the list of
facility specialty types at Sec. 422.116(b)(2) and are finalizing the
list of other facility-types as proposed but with different numbering,
accordingly.
We are not finalizing the base maximum time and distance
standards for Outpatient Dialysis for all county designations at Sec.
422.116(d)(2).
We are finalizing the customization process at Sec.
422.116(d)(3) with a modification that describes what triggers
customization by CMS.
We are finalizing Sec. 422.116(d)(5) as proposed with the
addition of Ophthalmology, Allergy and Immunology, Nephrology, Primary
Care, Gynecology/OB/GYN, Endocrinology, and Infectious Diseases
provider specialty types to the list of provider types for which the
telehealth credit is available.
We are finalizing Sec. 422.116(d)(6) with a modification
that describes when CMS may use the customization process as it relates
to Certificate of Need or other anticompetitive laws.

M. Special Election Periods (SEPs) for Exceptional Conditions
(Sec. Sec. 422.62, 422.68, 423.38, and 423.40)

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:
SEP for Non-renewals or Termination.
SEP for Changes in Residence.
SEP for Contract Violation.
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 proposed to codify a number of SEPs that we have adopted and
implemented through subregulatory guidance as exceptional circumstances
SEPs. Consistent with Sec. 422.68(c), we also proposed 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.
The proposed MA SEPs are summarized below. (Readers should refer to
the proposed rule for more detail on these SEPs.):
SEP for Employer/Union Group Health Plan (EGHP) Elections. We
proposed 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.
SEP for Individuals Who Disenroll in Connection with a CMS
Sanction. At new Sec. 422.62(b)(5), we proposed to codify the SEP for
individuals enrolled in an MA plan offered by an MA organization that
is sanctioned by CMS.
SEP for Individuals Enrolled in Cost Plans that are Non-renewing
their Contracts. At new Sec. 422.62(b)(6), we proposed to codify the
SEP for individuals enrolled in cost plans that are non-renewing their
contracts for the area in which the enrollee lives.
SEP for Individuals in the Program of All-inclusive Care for the
Elderly (PACE). At new Sec. 422.62(b)(7), we proposed to codify the
SEP allowing an MA plan enrollee to disenroll from an MA plan at any
time in order to enroll in PACE.
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. We proposed, 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.
SEP for Individuals With ESRD Whose Medicare Entitlement
Determination Was Made Retroactively. We proposed to codify at new
Sec. 422.62(b)(9) that individuals whose Medicare entitlement
determination based on ESRD was made retroactively would have a SEP to
prospectively elect an MA plan offered

[[Page 33867]]

by the MA organization, provided they met certain requirements.
SEP for Individuals Whose Medicare Entitlement Determination Was
Made Retroactively. We proposed, at new Sec. 422.62(b)(10), to codify
a SEP for individuals whose Medicare entitlement determination was made
retroactively.
SEP for Individuals Who Lose Special Needs Status. At new Sec.
422.62(b)(11), we proposed 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.
SEP for Individuals Who Belong to a Qualified SPAP or Who Lose SPAP
Eligibility. At new Sec. 422.62(b)(12), we proposed 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.
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
proposed 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.
SEP for Disenrollment from Part D to Enroll in or Maintain Other
Creditable Coverage. At new Sec. 422.62(b)(14), we proposed 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).
SEP to Enroll in an MA Plan with a Star Rating of 5 Stars. At new
Sec. 422.62(b)(15), we proposed 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.
SEP for Non-U.S. Citizens who Become Lawfully Present. At new Sec.
422.62(b)(16), we proposed to codify the SEP for non-U.S. citizens who
become lawfully present in the United States.
SEP for Providing Individuals who Requested Materials in Accessible
Formats Equal Time to Make Enrollment Decisions. We proposed to codify,
at new Sec. 422.62(b)(17), a SEP for situations where an 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.
SEP for Individuals Affected by a FEMA-Declared Weather-Related
Emergency or Major Disaster. We proposed 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.
SEP for Significant Change in Provider Network. At new Sec.
422.62(b)(23), we proposed 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.
SEP for Individuals Enrolled in a Plan Placed in Receivership. We
proposed 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.
SEP for Individuals Enrolled in a Plan that has been Identified by
CMS as a Consistent Poor Performer. We proposed 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).
SEP for Individuals Affected by a Federal Employee Error. At new
Sec. 422.62(b)(21), we proposed 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.
SEP for Other Exceptional Circumstances. Lastly, we proposed 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).
Also based on the Secretary's authority to create SEPs for
individuals who meet exceptional conditions, we proposed 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
proposed 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.
SEP for Individuals Who Are Not Adequately Informed of a Loss of
Creditable Prescription Drug Coverage. At new Sec. 422.62(b)(20), we
proposed 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.
SEP for Individuals Eligible for an Additional Part D IEP. At new
Sec. 422.62(b)(22), we proposed 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.
These 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
also proposed minor editorial changes in Sec. 422.62(b) and (c), such
as changing ``Original Medicare'' to ``original Medicare.''
In general, we received support for the proposed SEPs. We received
specific comments on the following proposed SEPs. (Comments that apply
to SEPs proposed for both MA and Part D will be addressed in this
section and not repeated in the Part D SEP section.) The comments on
those proposals and our responses follow:
SEP for Employer/Union Group Health Plan (EGHP) Elections
Comment: A commenter recommended that we revise the current
description of this SEP, which is that it is available to individuals
who have (or are enrolling in) an employer or union sponsored MA plan,
and change it to indicate that it is available to individuals who have
(or are enrolling in) an employer or union sponsored plan.
Response: We interpret this comment as a request to ensure that
this SEP is available to individuals who have (or are enrolling in) an
employer or union sponsored plan that is not an MA plan. As proposed,
this SEP is available to individuals who are moving from employer or
union coverage of any kind to an employer or union sponsored MA plan.
In addition, the SEP is available to individuals who wish to disenroll
from an MA plan to take employer or union sponsored coverage of any
kind. As such, we believe the comment is addressed by the SEP, as
proposed.

[[Page 33868]]

Comment: A commenter recommended that CMS codify the retroactive
effective date guidelines related to this SEP, which are referenced in
subregulatory guidance. Specifically, where there is a delay between
the time in which the member completes the enrollment or disenrollment
request with the EGHP and when it is ultimately received by the health
plan, the current guidelines indicate that the effective date may be
retroactive up to, but may not exceed, 90 days from the date the MA
organization received the request from the employer or union group. The
disenrollment effective date guidelines indicate up to 90 days'
retroactive payment adjustment is possible in cases where the EGHP does
not provide the plan with timely notification of a member's requested
disenrollment.
Response: We did not propose to codify a provision for retroactive
payment adjustment due to employer or union delays in providing the MA
organization with timely notification of a member's requested
disenrollment, and we decline to adopt such a provision at this time.
It has been CMS' longstanding expectation that in the event an MA
organization chooses to delegate to an employer or union the collection
and initial processing of beneficiary enrollment and disenrollment
requests, the MA organization's agreement with the employer or union
would require the employer or union to meet enrollment and
disenrollment processing timeliness requirements that ensure the timely
submission of enrollment and disenrollment requests. As such,
retroactivity is necessary when the employer or union fails to meet
these processing timeliness requirements.
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
Comment: A commenter who expressed support for this proposal urged
CMS to ensure that beneficiaries under age 65 with ESRD who have
guaranteed issue rights under state laws and rules are aware of them.
Response: We appreciate the commenters' support and agree that
education and outreach are essential for individuals to understand
their enrollment options. We will continue to partner with existing
stakeholders to ensure that clear and comprehensive information is
provided to beneficiaries so they are able to make an informed coverage
choice.
SEP for Individuals Affected by a Federal Employee Error
Comment: A commenter, citing some stakeholder concerns regarding
the 2019 redesign of the Medicare Plan Finder (MPF) tool, requested
that CMS articulate in regulatory language (either in the SEP for
individuals affected by a federal employee error or a separate entry)
that a SEP for exceptional circumstances may exist when there are
errors in the MPF or other CMS-issued or managed information platforms
that beneficiaries used when making their decisions.
Response: We appreciate the comment. As the MPF and other CMS-
issued or managed information platforms are the responsibility of the
federal government, a beneficiary who relied on erroneous information
on these platforms would be eligible for this SEP. As a result, we do
not see a need to revise the current regulatory text or establish a
new, separate SEP.
SEP for Individuals Affected by a FEMA-Declared Weather-Related
Emergency or Major Disaster
Comment: A number of commenters supported the proposal to codify
this SEP and many of them recommended that it be expanded to address
State-declared emergencies and public health emergencies such as COVID-
19. A commenter questioned if the SEP would apply when FEMA provides
fire management assistance. Commenters also requested that the end date
should be revised so that the SEP is available to eligible individuals
in cases where the emergency is declared with a retroactive effective
date and/or lasts for more than 4 months.
Response: We appreciate the comments and agree that eligibility for
this SEP should not be solely contingent upon a FEMA declaration. Based
on these comments and consistent with our goal of providing an
enrollment or disenrollment opportunity to an individual who missed an
election period due to circumstances beyond his or her control, we will
revise the proposed SEP to include any emergency declaration issued by
a Federal, state, or local government entity in response to a disaster
or other emergency. This would not include instances in which fire
management assistance is provided by FEMA, as this occurs prior to the
declaration of an emergency or major disaster as part of state and/or
local government efforts to stop the spread of fire and mitigate fire
risk to the built environment, and is not itself an emergency
declaration. We also agree with the comment that the SEP end date
should be revised so that the SEP is available to eligible individuals
in cases where the emergency is declared with a retroactive effective
date and/or lasts for more than four months. We believe that the SEP
end date should be related to the end of the emergency period, not the
start of the emergency period.
As such, in Sec. Sec. 422.68(b)(18) and 423.38(c)(23) we will
change the scope of the SEP so that it applies to FEMA-declared
emergencies/disasters, as well as disaster or other emergency
declarations issued by a federal, state or local government entity. It
will be available in the geographic areas identified in the emergency/
disaster declaration. We also specify in this paragraph that the SEP
will--
Start as of the date the declaration is made, the incident
start date or, if different, the start date identified in the
declaration, whichever is earlier; and
End 2 full calendar months following the end date
identified in the declaration or, if different, the date the end of the
incident is announced, whichever is later. This 2-month period is
consistent with other longstanding SEPs such as the SEP for Significant
Change in Provider Network and the SEP for Individuals Whose Medicare
Entitlement Determination Made Retroactively.
In finalizing the SEP with these revisions, we will retain the
requirement that the individual was eligible for an election period at
the time of the incident period and did not make an election during
that election period because he or she was prevented from doing so due
to the incident. We will refer to this SEP as the SEP for Government
Entity-Declared Disaster or Other Emergency.
SEP for Individuals Enrolled in a Plan Placed in Receivership
Comment: A commenter stated that it is unclear how an MA
organization might know if another MA organization is having financial
problems during the enrollment period and, therefore, would not know if
a beneficiary is eligible for this SEP.
Response: The SEP is available only to individuals enrolled in a
plan offered by an organization that has actually been placed into
receivership, which, in our experience, is always a well-publicized
event in the impacted area, usually involving a high level of media
attention. We believe that MA organizations offering plans in the area
in which another MA organization has been placed into receivership will
be aware of such an event through its normal course of business in the
areas it serves. When a beneficiary requests

[[Page 33869]]

enrollment on the basis of their current plan being placed into
receivership, the new plan can accept the beneficiary's verbal or
written attestation as proof of their eligibility for this SEP.
Comment: Two commenters suggested that CMS allow MA plans and Part
D sponsors to accept verbal beneficiary attestation as proof of
eligibility for this SEP and not require additional proof of election
eligibility. They believed that allowing verbal beneficiary attestation
will expedite enrollment processing and may reduce enrollment denials.
Additionally, they believed it would be consistent with current SEPs
permitting verbal attestation for election period eligibility, such as
the SEPs for Change in Residence, EGHP, etc.
Response: We did not propose that additional proof of eligibility
for this SEP be required. Consistent with longstanding policy regarding
eligibility for any SEP, an applicant's written or verbal attestation
of SEP eligibility is sufficient.
SEP for Individuals Enrolled in a Plan That Has Been Identified by CMS
as a Consistent Poor Performer
Comment: A commenter, who expressed support for this new SEP and
the new SEP for Individuals Enrolled in a Plan Placed in Receivership,
requested that if a beneficiary who is eligible for these new SEPs or
any other SEP has an agent of record, that a pathway be created for the
agent of record to make the plan change.
Response: Beneficiaries are not precluded from using an agent/
broker or any other available means to enroll in a plan when the
beneficiary qualifies for a SEP.
Comment: Another commenter who expressed support for this new SEP
and the new SEP for Individuals Enrolled in a Plan Placed in
Receivership stated that impacted beneficiaries should be able to make
elections utilizing these new SEPs only through contacting CMS
directly, adding that to include these two new SEPs on plan enrollment
forms, enrollment websites and other enrollment mechanisms is an
unnecessary burden. The commenter believed that adding two new SEPs
would be confusing for beneficiaries, as there are already numerous
SEPs for beneficiaries to understand. This commenter also stated that
the two new SEPs should be available to beneficiaries only outside of
the Annual Enrollment Period (AEP) and only until such time as CMS
terminates its contract with the plan. The commenter stated that an MA
parent organization would not be able to identify a plan that has been
identified by CMS as a consistent poor performer or a plan that has
been placed in receivership and requested that CMS not require plans to
offer these two new SEPs until contract year 2022.
Response: We appreciate the comment and believe that any potential
beneficiary confusion can be minimized by presenting these two new
election opportunities to beneficiaries in a clear and accurate manner.
We believe that it is important that the SEPs be available throughout
the year, not just outside of the AEP, given the effective date
implications. That is, if a beneficiary finds it necessary to change
plans during October or November using one of these SEPs, their new
coverage should be effective the next month and they should not have to
wait until January 1 or later. We disagree with the commenter and do
not believe that it is an unnecessary burden to mention these two SEPs
in plan materials where other SEPs are listed, such as the Attestation
of Eligibility for an Enrollment Period. Exclusion of the two new SEPs
would result in beneficiaries not being fully aware of all potential
election periods available to them. With regard to the comment that an
MA parent organization would not be able to identify a plan that has
been identified by CMS as a consistent poor performer, we note that
since plans are able to accept a verbal or written attestation from the
beneficiary that they are eligible for a SEP, plans are able to accept
a verbal or written attestation regarding eligibility 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. In addition, plans are able to verify
another organization's LPI status via the Medicare Plan Finder or the
released Star Rating summary report. As a result, we do not see a
reason to delay the offering of these two new SEPs until contract year
2022.
SEP for Significant Change in Provider Network
Comment: A commenter suggested that CMS revise this SEP so that it
may be used when an individual plan enrollee's provider is terminated
without cause, adding that while there is an existing SEP for
significant change in an MA provider network, it is only triggered when
a threshold of terminations is met. The commenter states that an
individual may have joined a plan specifically because their provider
contracts with it, or have developed a relationship with that provider
they wish to maintain.
Response: We appreciate the comment. As stated in the proposed
rule, 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. CMS appreciates
that an individual would want to maintain a relationship with an
individual provider, however, an individual provider's termination from
a plan would not disrupt or affect that enrollee's continued access to
covered benefits. CMS continues to believe this SEP is best reserved
for network changes that are significant and have the potential to
affect the access of covered benefits for a large number of enrollees.
SEP for Individuals with ESRD Whose Medicare Entitlement Determination
Was Made Retroactively
Comment: Two commenters supported the proposal to codify a SEP for
individuals with ESRD whose Medicare entitlement determination was made
retroactively because it would allow beneficiaries to enroll who were
not able during the customary period, as well as ensure that
beneficiaries may enroll into an MA plan if certain conditions are met
prior to the MA ESRD enrollment rule taking effect in 2021. Both
commenters recommended that educational outreach be made to individuals
with ESRD.
Response: We appreciate the commenters' support and agree that
education and outreach are essential for individuals to understand
their enrollment options. We will continue to partner with existing
stakeholders to ensure that clear and comprehensive information is
provided to beneficiaries so they are able to make an informed coverage
choice.
SEP for Other Exceptional Circumstances
Comment: A commenter expressed strong support for CMS' statement
that it retains the ability to grant case-by-case exceptional
circumstance SEPs, and that the list at Sec. 422.62(b)(26) is not
exhaustive. The commenter expressed concern that leaving the creation
of new SEPs solely to rulemaking will mean that it will take longer to
implement new, necessary SEPs should the need arise and will make the
agency's response less nimble and may hinder its ability to quickly
meet the needs of beneficiaries. The commenter urges CMS to reiterate,
or otherwise educate, plan sponsors, 1-800-MEDICARE counselors and CMS
staff that despite exceptional circumstance SEPs now being codified,
that such discretion still exits.

[[Page 33870]]

Response: We appreciate the commenters' support and continue to
believe that it is important to retain the discretion to establish SEPs
on a case-by-case basis. As such, at newly redesignated Sec.
422.62(b)(26) and newly redesignated Sec. 423.38(c)(34), we are
finalizing our proposal to codify a SEP for other exceptional
circumstances, which are, as stated in the proposed rule, situations in
which it is in the best interest of the beneficiary that she or he be
provided an enrollment (or disenrollment) opportunity. To date, CMS has
used the existing authority at Sec. Sec. 422.62(b)(4) and
423.38(c)(8)(ii) to assist individuals whose unique situations are
outside the parameters of the existing SEPs, in order to address an
individual's exceptional circumstances related to new enrollments or
enrollment/disenrollment from an MA or Part D plan. These SEPs, which
we also refer to as enrollment exceptions, are utilized when the reason
is not captured in an existing SEP or specific circumstances require an
exception to the predefined criteria. Consistent with current practice,
CMS will consider granting an enrollment exception when one or more of
the following factors is present:
++ Extraordinary Circumstances--Circumstances beyond the
beneficiary's control that prevented him or her from submitting a
timely request to enroll or disenroll from a plan during a valid
enrollment period. This is inclusive of, but not limited to, a serious
medical emergency of the beneficiary or their authorized representative
during an entire election period, a change in hospice status, or mailed
enrollment forms returned as undeliverable on or after the last day of
an enrollment period.
++ Erroneous Election--Situations in which a beneficiary provides a
verbal or written allegation that his or her enrollment in a MA or Part
D plan was based upon misleading or incorrect information provided by a
plan representative or State Health Insurance Assistance Program (SHIP)
counselor, including situations where a beneficiary states he or she
was enrolled into a plan without his or her knowledge or consent, and
requests cancellation of the enrollment or disenrollment from the plan.
++ Plan Accessibility--A SEP may be warranted to ensure beneficiary
access to services and where without the approval of an enrollment
exception, there could be adverse health consequences for the
beneficiary. This is inclusive of, but not limited to, maintaining
continuity of care for a chronic condition and preventing an
interruption in treatment.
CMS will review supporting details and documentation to determine
eligibility for the SEP for exceptional circumstances, which, as
currently implemented, can be in response to an individual
beneficiary's request for an exception to the current enrollment rules,
as well as CMS' determination that an exception is warranted for a
group of beneficiaries. The SEP would take effect once CMS makes its
determination and the enrollee has been notified. The effective date
for an enrollment or disenrollment election using an approved
enrollment exception would be based on the beneficiary's circumstances
and may either be prospective or retroactive.
In addition to proposing to codify SEPs established in sub-
regulatory guidance, as well as proposing two new SEPs (related to
plans placed into receivership or being identified as a consistent poor
performer), we requested comments on other SEPs that should be
considered for codification. In response to that request, we received
the following feedback:
Comment: A commenter urged us to establish a SEP for individuals in
MA or Part D plans who are impacted by significant changes in their
plan benefits from one year to the next, for example, significantly
higher premiums or reduced benefits. They believed that this was
particularly important for individuals with standalone PDPs since they
do not have the same option to change plans during the first three
months of the year afforded to those who begin the year enrolled in an
MA plan (pursuant to the MA OEP). The commenter stated that most people
who are enrolled in a given plan tend to rely on that plan remaining
more or less the same, and, as a consequence, many people do not
carefully scrutinize their Annual Notice of Change (ANOC) or other plan
documents describing annual changes.
Response: Every Fall, CMS conducts a robust educational campaign
that urges beneficiaries to review their plan benefits and make changes
if their plan no longer meets their needs or if there are other options
that could lower their out-of-pocket expenses. The ANOC is an important
resource that plans are required to send to members detailing how
benefits will change in the next plan year. Ultimately, it is the
beneficiary's responsibility to assess their own drug and healthcare
needs and determine if there is a better plan for them. We appreciate
the commenter's concern, but will not be finalizing the suggested SEP.
Comment: Two commenters recommended that we establish a SEP for
beneficiaries who have been accepted for admission to, or have been
admitted to, an extended neoplastic disease care hospital and a
physician has noted that the individual has life expectancy of ninety
days or less. The commenters stated that this was important because
individuals who are diagnosed with advanced cancer are often at the end
of their lives and should be able to disenroll from their MA plan to
Original Medicare if the hospital where they choose to receive their
care is outside of the plan's network. The commenters also noted that,
as an alternative or an addition, CMS should determine extended
neoplastic disease care hospitals to be ``institutions'' so that
beneficiaries would be eligible for the Open Enrollment Period for
Institutionalized Individuals (OEPI). The commenters noted that if this
change was made, an additional revision should be made to waive the 90-
day length of stay requirement.
Response: While we understand and are sympathetic to beneficiaries
diagnosed with advanced cancer, we do not believe that the
establishment of a new SEP is an appropriate remedy to this very
specific situation. When establishing (and now codifying) SEPs, we look
for broad scenarios where we believe it is imperative that
beneficiaries have opportunities to join, change, or disenroll from
plans. Beneficiaries who are not able to disenroll from their MA plan
to return to Original Medicare still have access to Medicare Part A and
Part B benefits. MA plans are required to cover all services covered by
Original Medicare and if a member needs covered medical care that the
providers in the plan's network cannot provide, the plan must cover
care from an out-of-network provider.
The absence of neoplastic disease care hospitals from the list of
facilities considered to be institutions is outside the scope of this
proposal.
Comment: A commenter requested that we codify two SEPs that are in
Chapter 2 of the Medicare Managed Care manual that were not included in
the proposed SEPs in 42 CFR part 422: The SEP for Dual-Eligible
Individuals and Other LIS Eligible Individuals and the SEP for CMS and
State-Initiated Enrollments. Similarly, they also requested that we
codify two SEPs in Chapter 3 of the Medicare Prescription Drug Benefit
Manual that were not included in the proposed SEPs in 42 CFR part 423:
The SEP for Full-Benefit Dual Individuals with Retroactive Uncovered
Months and the SEP for Individuals Involuntarily Disenrolled

[[Page 33871]]

from an MA-PD plan due to loss of Part B.
Response: We appreciate the comments. The commenter requests that
we codify in the Part C regulations the SEP for Dual-Eligible
Individuals and Other LIS Eligible Individuals that is included in
Chapter 2 of the Medicare Managed Care Manual. We disagree that this
SEP should be codified as a Part C SEP, as it is included in the Part C
enrollment guidance merely as a reiteration of an already existing Part
D SEP at Sec. 423.38(c)(4). To codify this in the Part C regulations
would result in the establishment of additional election periods that
we did not intend to establish. The basis for the existing SEP for
Dual-Eligible Individuals and Other LIS Eligible Individuals is the
fact that the beneficiary is (or has been) receiving the Part D low
income subsidy, which is specific to Part D and why the SEP is codified
in 42 CFR part 423 and not proposed as a SEP in part 422. Therefore, we
decline to codify a SEP for Dual-Eligible Individuals and Other LIS
Eligible Individuals in the Part C regulations.
The commenter also requests that we codify in the Part C
regulations the SEP for CMS and State-Initiated Enrollments that is
included in Chapter 2 of the Medicare Managed Care Manual. This SEP is
based on Sec. 422.60(g)(5), which states that individuals who are
passively enrolled by CMS into an MA-PD plan are eligible for the Part
D SEP described in Sec. 423.38(c)(10). To codify a new Part C SEP
would be redundant; therefore, we decline the commenter's request to do
so.
The commenter also requests that we codify in the Part D
regulations the SEP for Full-Benefit Dual Eligible Individuals with
Retroactive Uncovered Months that is included in Chapter 3 of the
Medicare Prescription Drug Benefit Manual. As described in guidance,
this SEP addresses the scenario in which a Part D eligible individual
needs prescription drug coverage through the Limited Income Newly
Eligible Transition (LI NET) program prior to his or her enrollment in
a Part D plan, either by submitting an application to a plan or by
being auto-enrolled by CMS into a plan for a future date. Since the
process for establishing retroactive drug coverage through LI NET is a
CMS-directed process, and does not involve an individual taking action
to request enrollment in a plan, we did not propose to codify this SEP,
and we decline to do so in this final rule.
Lastly, the commenter requests that we codify in the Part D
regulations the SEP for Individuals Involuntarily Disenrolled from an
MA-PD plan due to loss of Part B that is included in Chapter 3 of the
Medicare Prescription Drug Benefit Manual. As described in
subregulatory guidance, individuals who are involuntarily disenrolled
from an MA-PD plan due to loss of Part B but who continue to be
entitled to Part A have a SEP to enroll in a PDP. The SEP begins when
the individual is advised of the loss of Part B and continues for two
additional months. We agree with the commenter that this SEP should be
codified; the fact that it was not included in the proposed rule was an
oversight. In response to this comment, we will codify at Sec.
423.38(c)(33) the SEP for Individuals Involuntarily Disenrolled from an
MA-PD plan due to loss of Part B.
In addition to comments received on specific SEPs and suggested
SEPs, we also received the general comments discussed below.
Comment: A commenter recommended that CMS codify its guidance from
Chapter 2 of the Medicare Managed Care Manual (MMCM), section 30.4,
that an organization is not required to contact an applicant to confirm
SEP eligibility if the enrollment request includes the applicant's
attestation of SEP eligibility. The commenter stated that codifying
this guidance would be particularly helpful in instances where the SEP
is based on factual circumstances such as the beneficiary's former plan
is placed in receivership or has been consistently poor performing, and
the beneficiary attestation is the easiest source of the information.
Response: In codifying these SEPs, we focused on what the SEPs were
and detailed the situations when they would be applicable. We did not
include in the proposed rule the codification of subregulatory guidance
regarding attestation of SEP eligibility. We believe that details
concerning the operational processing of enrollment requests are better
suited for sub-regulatory guidance where we are able to go into more
detail and provide examples and context. As such, we are declining the
commenter's recommendation to codify guidance related to beneficiary
attestations.
Comment: A commenter urged CMS to also consider that some
beneficiaries may experience financial or enrollment difficulties
stemming from the COVID-19 disruption. Concerned that some
beneficiaries who have temporarily lost their Part B coverage for non-
payment of premium may miss their opportunity to enroll through the
open enrollment that ended in March 2020 due to staffing disruptions at
local social security offices.
Response: We are aware that given the ongoing COVID-19 pandemic,
stakeholders are looking for flexibilities for all aspects of Medicare
enrollment and entitlement. However, it appears that the commenter is
providing feedback regarding Medicare Part B enrollment and associated
rules in 42 CFR part 407. We did not include in the proposed rule any
new or revised regulations regarding Part B enrollment periods or loss
of Part B coverage for non-payment of premium. We thank the commenter
for their insights, but decline to address or modify any Part B
enrollment rules given that they are outside the scope of this
rulemaking.
Comment: A commenter stated that CMS should clarify whether the
effective date for certain SEPs should be the first of the month
following when the request is made. The commenter referenced SEPs such
as the SEP for Individuals Who Disenroll in Connection with a CMS
Sanction, the SEP for Individuals in PACE or the SEP for Individuals
Who Dropped a Medigap Policy When They Enrolled For the First Time in
an MA Plan and Who are Still in a ``Trial Period.'' In addition,
another commenter requested that we clarify the effective date for
enrollment requests the organization receives from individuals eligible
for the SEP for Individuals Whose Medicare Entitlement Determination
Made Retroactively. As stated in the proposed rule, the effective date
is the first day of the month following the MA organization's receipt
of the election, but cannot be earlier than the first day of the month
in which the notice of the Medicare entitlement determination is
received by the individual. The commenter recommends that CMS permit
retroactive enrollment based on when the beneficiary receives the
notice of entitlement.
Response: We proposed to specify at Sec. Sec. 422.68(d) and
423.40(c) that the effective date for elections made using SEPs
described in Sec. Sec. 422.62(b) and 423.38(c) is the first day of the
calendar month following the month in which the election is made,
unless otherwise noted. This applies to the SEP for Individuals Whose
Medicare Entitlement Determination Made Retroactively as well, since it
is not until an individual is notified of the Medicare entitlement
determination that he or she, or an MA or Part D plan sponsor for that
matter, would be aware of the determination and the Part A and/or Part
B effective dates. We therefore disagree with the commenter that CMS
should permit an enrollment to be retroactive to a date prior to when
an individual received notification of

[[Page 33872]]

Medicare entitlement or prior to the date the individual requests
enrollment in the plan.
After considering the public comments, we are finalizing all MA
SEPs as proposed, with the exception of the SEP for Individuals
Affected by a FEMA-Declared Weather-Related Emergency or Major Disaster
at Sec. 422.68(b)(18), which will be renamed the SEP for Government
Entity-Declared Disaster or Other Emergency. This paragraph is being
revised to change the scope of the SEP so that it applies to FEMA-
declared emergencies, as well as emergency declarations issued by a
federal, state or local government entity. We are also specifying in
this paragraph that the SEP will--
Start as of the date the declaration is made, the incident
start date or, if different, the start date identified in the
declaration, whichever is earlier; and
End 2 full calendar months following the end date
identified in the declaration or, if different, the date the end of the
incident is announced, whichever is later.
In addition, we are adopting without modification the minor
editorial changes in Sec. 422.62(b) and (c) and the changes proposed
at Sec. 422.68 regarding effective dates of the SEPs.
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:
SEP for Involuntary Loss of Creditable Prescription Drug
Coverage.
SEP for Individuals Not Adequately Informed about
Creditable Prescription Drug Coverage.
SEP for Enrollment/Non-enrollment in Part D due to an
Error by a Federal Employee.
SEP for Dual- and Other LIS-Eligible Individuals.
SEP for MA-PD enrollee using the MA SEP65.
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:
SEP for Non-renewals or Terminations.
SEP for Changes in Residence.
SEPs for Contract Violation.
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:
SEP for Individuals Who Gain, Lose, or Have a Change in
their Dual or LIS-Eligible Status.
SEP for CMS and State-Initiated Enrollments.
CMS proposed to codify the following SEPs for exceptional
circumstances, which are currently outlined in subregulatory guidance.
Except as was noted in the proposed rule, our intent was to codify the
current policy, and we solicited specific comment as to whether we
overlooked any feature of the current policy that should be codified
and if there were other exceptional circumstances we did not identify
for which we should consider establishing a special election period.
We also proposed 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 noted
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.
The proposed Part D SEPs are summarized below. (Readers should
refer to the proposed rule for more detail on these SEPs.
SEP for Employer/Union Group Health Plan (EGHP) elections. At new
Sec. 423.38(c)(11), we proposed 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.
SEP for Individuals Who Disenroll in Connection with a CMS
Sanction. At new Sec. 423.38(c)(12), we proposed to codify the SEP for
individuals enrolled in a PDP offered by a Part D plan sponsor that is
sanctioned by CMS.
SEP for Individuals Enrolled in Cost Plans that are Non-renewing
their Contracts. At new Sec. 423.38(c)(13), we proposed to codify the
SEP for individuals enrolled in cost plans that are non-renewing their
contracts for the area in which the enrollee lives.
SEP for Individuals in the Program of All-inclusive Care for the
Elderly (PACE). At new Sec. 423.38(c)(14), we proposed to codify the
SEP allowing individuals to disenroll from a PDP at any time in order
to enroll in PACE.
SEP for Institutionalized Individuals. At new Sec. 423.38(c)(15),
we proposed 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.
SEP for Individuals Who Enroll in Part B during the Part B General
Enrollment Period (GEP). At new Sec. 423.38(c)(16), we proposed 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.
SEP for Individuals Who Belong to a Qualified SPAP or Who Lose SPAP
Eligibility. At new Sec. 423.38(c)(17), we proposed 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.
SEP for Disenrollment from Part D to Enroll in or Maintain Other
Creditable Coverage. At new Sec. 423.38(c)(18), we proposed 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).
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 proposed 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.
SEP to Enroll in a PDP with a Star Rating of 5 Stars. At new Sec.
423.38(c)(20), we proposed 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.
SEP for Non-U.S. Citizens who become Lawfully Present. At Sec.
423.38(c)(21), we proposed to codify the SEP for non-U.S. citizens who
become lawfully present in the United States.
SEP for Providing Individuals who Requested Materials in Accessible
Formats Equal Time to Make Enrollment

[[Page 33873]]

Decisions. At Sec. 423.38(c)(22), we proposed 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.
SEP for Individuals Affected by a FEMA-Declared Weather Related
Emergency or Major Disaster. At Sec. 423.38(c)(23), we proposed to
codify 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.
SEP for Individuals Enrolled in a Plan Placed in Receivership. We
proposed to establish a new SEP, at new Sec. 423.38(c)(31), for
individuals enrolled in a Part D plan 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.
SEP for Individuals Enrolled in a Plan that has been Identified by
CMS as a Consistent Poor Performer. We proposed 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).
SEP for Other Exceptional Circumstances. We proposed 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)(34).
Also based on the Secretary's authority to create SEPs for
individuals who meet exceptional conditions, we proposed 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. We proposed to codify at new Sec. 423.38(c)(24) a coordinating
Part D SEP for individuals who disenrolled from their MA plan during
their trial period (and have guaranteed issue rights).
SEP for an Individual using the MA Open Enrollment Period for
Institutionalized Individuals (OEPI) to Disenroll from a MA-PD plan. At
new Sec. 423.38(c)(25), we proposed to codify that an individual
disenrolling from an MA-PD plan has a SEP to request enrollment in a
PDP.
Medicare Advantage Open Enrollment Period (MA OEP). At new Sec.
423.38(c)(26), we proposed to codify that MA enrollees using the MA OEP
would have a SEP to add or change Part D coverage.
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. At
new Sec. 423.38(c)(27), we proposed 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.
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 proposed 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.
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 proposed to
codify that individuals who use the 5-star SEP we 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.
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 proposed 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.
The revisions we proposed 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
also proposed a few minor editorial changes in Sec. 423.38(c), such as
changing ``3'' to ``three.''
While most of the comments received on our SEP proposals related to
SEPs that are applicable to both MA and Part D and, thus, were
addressed above, we did receive one Part D-specific SEP comment.
Comment: While commenting on the proposed SEPs, a few commenters
requested that we revisit the changes to the dual SEP finalized in
April 2018 (83 FR 16514), when this SEP was changed from a monthly SEP
to one that allows an individual to enroll in, or disenroll from, an MA
plan once per calendar quarter during the first nine months of the
year. A commenter stated that an ongoing SEP for dual eligible
individuals to enroll in either a FIDE SNP or a HIDE SNP would provide
greater choice and access to integrated care options. Other commenters
believed these beneficiaries needed the flexibility to change their
healthcare coverage at any time during the year and viewed the previous
ongoing dual SEP as an important beneficiary protection.
Response: As we noted in the April 2018 final rule, we understood
that many commenters preferred an ongoing dual SEP, but we believed
that adopting limitations was an appropriate step toward encouraging
care coordination, achieving positive health outcomes, and discouraging
extraneous beneficiary movement during the plan year. We were--and
continue to be--mindful of the unique health care challenges that dual
and other LIS-eligible beneficiaries may face. Under the revised rules,
dual and other LIS-eligible beneficiaries continue to have additional
flexibilities not afforded to other Part D-eligible beneficiaries and
are able to make elections during the year. Given that our overall
goals of improving administration of benefits and coordination of care
have not changed, and we believe that continuity of enrollment helps us
achieve these goals, we will not be revising the dual SEP at this time.
After considering the public comments, we are finalizing all SEPs
as proposed, with the exception of the following:
The SEP for Individuals Affected by a FEMA-Declared
Weather-Related Emergency or Major Disaster at Sec. 423.38(c)(23) will
be renamed the SEP for Government Entity-Declared Disaster or Other
Emergency. This paragraph is being revised to change the scope of the
SEP so that it applies to FEMA-declared emergencies/disasters, as well
as disaster or other emergency declarations issued by a federal, state
or local government entity. We are also specifying in this paragraph
that the SEP will--
[cir] Start as of the date the declaration is made, the incident
start date or, if different, the start date identified in the
declaration, whichever is earlier; and
[cir] End 2 full calendar months following the end date identified
in the declaration or, if different, the date the end of the incident
is announced, whichever is later. This 2 month period

[[Page 33874]]

is consistent with other longstanding SEPs.
As discussed in the MA SEP section, at Sec. 423.38(c)(33)
we are codifying the SEP for Individuals Involuntarily Disenrolled from
an MA-PD plan due to loss of Part B. This SEP is currently in
subregulatory guidance, but was inadvertently omitted from the proposed
rule.
We are designating the SEP for Other Exceptional
Circumstances from proposed Sec. 423.38(c)(33) to Sec. 423.38(c)(34).
In addition, we are adopting without modification the minor
editorial changes in Sec. 423.38(c) and the changes proposed at Sec.
423.40 regarding effective dates of the SEPs.

VI. Technical Changes

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

The Part D statute, and the regulations implementing the statute,
specify that we 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)). We proposed to
amend Sec. 423.329(b)(4) to stipulate our intention to publish Part D
risk adjustment factors using the process through which we would adopt,
and announce the capitation rates and risk adjustment methodology for
the MA program (section 1853(b)(1)(B) of the Act and Sec.
422.312(a)(1)(ii)).
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. In the vein of the MMA,
which added a new ``Part D'' to the Medicare statute (sections 1860D-1
through 42 of the Act), and 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 (section
1853(b)(1)(B) of the Act and Sec. 422.312(a)(1)(ii)). This 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. This
final rule codifies the current interpretation of the statutory
requirement and will not change how we propose and finalize the Part D
risk adjustment model.
We did not receive comments on this proposal and therefore are
finalizing this provision without modification.

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

In the February 18, 2020 proposed rule, we proposed a technical
change to align the timeframes identified in Sec. 422.312(b)(1) and
(2) with the current statutory text (section 1853(b) of the Act).
Section 1853(b) of the Act specifies the process through which we
propose, adopt, and announce changes in risk adjustment methodology and
capitation rates for the MA program. 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, the Securing Fairness in Regulatory Timing Act of 2015 (Pub.
L. 114-106) (SFRTA) amended section 1853(b) of the Act to require a 60-
day advance notice period and a 30-day comment period.
The regulation implementing the advance notice and comment period,
as written, mirrors the statute's original timeframe for issuance of
the advance notice and requires only a 15-day comment period. While CMS
adjusted operational practices to comply with current statutory
requirements, we did not update the CFR provision. In this final rule,
we update the advance notice of changes in methodology requirements at
Sec. 422.312(b)(1) and (2) by revising paragraph (b)(1) to refer to 60
days and paragraph (b)(2) to refer to 30 days, as stated in statute.
Comment: A commenter supported the proposal to revise the
timeframes to follow the current statute to provide a 60-day advance
notice period and a 30-day comment period. The commenter believes the
60-day timeframe allows more time for analysis and comment on
methodology changes, including risk adjustment in MA.
Response: We thank the commenter for their support. We are
finalizing this provision as proposed without modification.

VII. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), we are required to provide 60-day notice in the Federal Register
and solicit public comment before a ``collection of information,'' as
defined under 5 CFR 1320.3(c) of the PRA's implementing regulations, is
submitted to the Office of Management and Budget (OMB) for review and
approval. To fairly evaluate whether an information collection
requirement should be approved by OMB, section 3506(c)(2)(A) of the PRA
requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In our February 18, 2020, proposed rule (85 FR 9002), we solicited
public comment on our proposed information collection requirements,
burden estimates, and assumptions. We did not receive any such public
comments as it pertains to the proposed information collection
requirements, burden estimates, and assumptions that are being
finalized in this rule.
However, five changes were made to this section based on our
further consideration of these issues:
We have added section VII.B.1. of this final rule
specifically addressing information collection requirements regarding
SSBCI.
Section VII.A. of this final rule reflects wage updates
for 2019 as well as the differences between the 2019 and 2018 rates.
The changes in Table 2 were then used to update the estimates for each
of the provisions.
As discussed more fully in section VII.B.3. of this final
rule regarding the impact of the ESRD provision, CMS expects a
shortened enrollment form to be available starting in 2021. This
enrollment form is expected to reduce the time burden for completing an
enrollment form from 30 minutes to 20 minutes. This reduction affects
the impacts of several provisions in this section.
As discussed in the next few paragraphs, and as further
detailed in the provisions whose impact is estimated in this section,
the implementation of certain provisions finalized in this rule will be
delayed compared to the proposal. This has resulted in recalculations
that are specific to several provisions and discussed as appropriate in
the respective sections.
The implementation date for the contract limitation on
existing D-SNP look-alikes finalized in Sec. 422.514(d) has been
delayed one year, as discussed in

[[Page 33875]]

section II.B of this final rule. As a result, we assume that the burden
related to this provision will take place over the two years prior to
the implementation rather than one year, as we assumed in the proposed
rule. The details are provided later in this section.
This final rule does not finalize all provisions in the
proposed rule. Given the need to focus our attention on more immediate
regulatory actions, this final rule implements a subset of the
provisions that were proposed in the February 2020 proposed rule. In
this regard, we are limiting this rule to this set of provisions. The
remaining proposals will be addressed in a separate final rule that we
expect to publish later in 2020. Thus, the collection of information
requirements are expected to be addressed as follows:
Rule Number 1: PRA-related Requirements/Burden Finalized
in this Rule
++ Special Supplemental Benefits for the Chronically Ill (SSBCI)
(Sec. 422.102)
++ Contracting Standards for Dual Eligible Special Needs Plan (D-
SNP) Look-Alikes (Sec. 422.514)
++ Medicare Advantage (MA) Plan Options for End-Stage Renal Disease
(ESRD) Beneficiaries (Sec. Sec. 422.50, 422.52, and 422.110)
++ Medical Loss Ratio (MLR) (Sec. 422.2440)
++ Special Election Periods (SEPs) for Exceptional Conditions
(Sec. Sec. 422.62 and 423.38)
Rule Number 2: PRA-related Requirements to be Addressed
Later in 2020
++ Improvements to Care Management Requirements for Special Needs
Plans (SNPs) (Sec. 422.101)
++ Mandatory Drug Management Programs (DMPs) (Sec. 423.153)
++ Beneficiaries with History of Opioid-Related Overdose Included
in Drug Management Programs (DMPs) (Sec. 423.100)
++ Eligibility for Medication Therapy Management Programs (MTMPs)
(Sec. 423.153) and Information on the Safe Disposal of Prescription
Drugs
++ Beneficiaries' Education on Opioid Risks and Alternative
Treatments (Sec. 423.128)
++ 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)
++ Beneficiary Real Time Benefit Tool (RTBT) (Sec. 423.128)
++ Establishing Pharmacy Performance Measure Reporting Requirements
(Sec. 423.514)
++ Service Delivery Request Processes under PACE (Sec. Sec.
460.104 and 460.121)
++ Appeals Requirements under PACE (Sec. Sec. 460.122 and 460.124)
++ Documenting and Tracking the Provision of Services under PACE
(Sec. 460.98)
++ Documentation in Medical Records under PACE (Sec. 460.210)
++ PACE Participant Rights: Contact Information and Access
Requirements (Sec. 460.112)
++ Stipulated Decisions in Part C (Sec. 422.562)

A. Wage Data

To derive average costs, we are using data from the U.S. Bureau of
Labor Statistics' (BLS's) May 2019 National Occupational Employment and
Wage Estimates for all salary estimates (https://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 1 presents the mean hourly
wage, the cost of fringe benefits and overhead (calculated at 100
percent of salary), and the adjusted hourly wage.

Table 1--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe
Mean hourly benefits and Adjusted
Occupation title Occupation code wage ($/hr) overhead ($/ hourly wage
hr) ($/hr)
----------------------------------------------------------------------------------------------------------------
Actuaries............................. 15-2011................. 58.16 58.16 116.32
All Occupations [used for impact on 00-0000................. 25.72 n/a n/a
enrollees filling out forms].
Business Operations Specialist, all 13-1198................. 38.57 38.57 77.14
others.
Compliance Officer.................... 13-1041................. 35.03 35.03 70.06
Computer Programmers.................. 15-1251................. 44.53 44.53 89.06
General Operations Manager............ 11-1021................. 59.15 59.15 118.30
Health Technician, All Other.......... 29-9098................. 28.17 28.17 56.34
Office Support and Administrative 43-9199................. 18.41 18.41 36.82
Support.
Physician............................. 29-1216................. 96.85 96.85 193.70
----------------------------------------------------------------------------------------------------------------

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 $25.72/hr) since the
group of individual respondents varies widely from working and
nonworking individuals and by respondent age, location, years of
employment, and educational attainment, etc. Unlike our private sector
wage adjustment, we are not adjusting this figure for fringe benefits
and overhead since the individuals' activities will occur outside the
scope of their employment.
Revised Wage and Cost Estimates: While our proposed rule's costs
were based on BLS's May 2018 wages, this final rule uses BLS's May 2019
wages which are the most current as of the publication date of this
rule. Changes to the adjusted wages represent shifts in average wages
of occupations between 2018 and 2019 and are presented in Table 2. This
table only contains wage estimates for occupations used in both the
proposed rule and this final rule. However, provisions which were not
estimated in the proposed rule but were estimated in the final rule
require consideration of additional occupational titles beyond those in
this table.

[[Page 33876]]

Table 2--Comparison of Proposed and Finalized Adjusted Hourly Wages
----------------------------------------------------------------------------------------------------------------
CMS-4190-P: CMS-4190-F:
Occupation title Occupation code May 2018 ($/ May 2019 ($/ Difference ($/
hr) hr) hr)
----------------------------------------------------------------------------------------------------------------
Actuaries............................. 15-2011................. 111.78 116.32 +4.54
All Occupations *..................... 00-0000................. 24.98 25.72 +0.74
Business Operations Specialist, all 13-1198................. 74.00 77.14 +3.14
others.
Compliance Officer.................... 13-1041................. 69.72 70.06 +0.34
Computer Programmers.................. 15-1251................. 86.14 89.06 +2.92
General Operations Manager............ 11-1021................. 119.12 118.30 -0.82
Health Technician, All Other.......... 29-9098................. 50.90 56.34 +5.44
Office Support and Administrative 43-9199................. 36.04 36.82 +0.78
Support.
Physician............................. 29-1216................. 202.86 193.70 -9.16
----------------------------------------------------------------------------------------------------------------
* Represents the mean hourly rate for individuals which, as explained above, is not adjusted for fringe benefits
and overhead.

B. Information Collection Requirements (ICRs)

The following ICRs are listed in the order of appearance within the
preamble (see sections II through VI) of this final rule.
1. ICRs Regarding Special Supplemental Benefits for the Chronically Ill
(SSBCI) (Sec. 422.102)
As explained in section II.A. of this final rule, CMS is finalizing
provisions for furnishing SSBCI. In section II.A. of this final rule,
CMS adopts a regulation to implement section 1852(a)(3)(D) of the Act,
which authorizes MA plans to furnish special supplemental benefits
exclusively to chronically ill enrollees, as defined in the statute.
SSBCI are currently allowed in 2020.
In this final rule, we are finalizing four SSBCI provisions with
paperwork burden. We are finalizing the proposed requirements at Sec.
422.102(f)(3) requiring MA plans offering SSBCI to: (i) Develop written
policies for determining enrollee eligibility and document the
determination that an enrollee is a chronically ill enrollee based on
the definition in statute and regulation; (ii) make information and
documentation related to determining enrollee eligibility available to
CMS upon request; (iii) have written policies based on objective
criteria for determining a chronically ill enrollee's eligibility to
receive a particular SSBCI and document these criteria; and (iv)
document each determination that an enrollee is eligible to receive an
SSBCI and make this information available to CMS upon request. We
address the collection of information in a reorganized fashion to
address the functions that are required by the regulation as a whole
rather than by how the regulation is structured and codified. We
address these required MA organization functions and activities as
follows:
In this final rule, we are finalizing four SSBCI provisions with
paperwork burden. We are finalizing the proposed requirements at Sec.
422.102(f)(3)(i) through (iv) requiring MA plans offering SSBCI to:
(1) Have written policies for determining enrollee eligibility to
be considered chronically ill and must have written policies based on
objective criteria for determining a chronically ill enrollee's
eligibility to receive a particular SSBCI;
(2) document in writing the criteria for determining enrollee
eligibility for being considered chronically ill and must also document
in writing the enrollee's eligibility to receive a particular SSBCI;
(3) Make information and documentation related to determining
enrollee eligibility available upon request;
(4) document each determination that an enrollee is eligible to
receive an SSBCI, and make information concerning enrollee eligibility
criteria available to CMS.
In this section, we estimate the paperwork burden of each of these
four functions required by the final regulation. The following changes
will be submitted to OMB for approval under control number 0938-0763
(CMS-R-262).
a. Per Sec. 422.102(f)(3)(i), plans must have written policies for
determining enrollee eligibility to be considered chronically ill and,
per paragraph (f)(3)(iii), must have written policies based on
objective criteria for determining a chronically ill enrollee's
eligibility to receive a particular SSBCI.
Since the authority to offer and cover SSCBI is already being
implemented, we assume most MA organizations already have developed the
required policies since it would be difficult to score the cost in
their bids without having such policies. We similarly assume that most
plans have internal written memos documenting these criteria and that
they have updated their systems to record enrollee eligibility for
SSBCI (since without such documentation they would have no way of
knowing when to reimburse providers for furnishing SSBCI to enrollees).
Therefore, this provision codifies existing practice.
However, even though we expect that the policies have already been
developed, we have inadvertently neglected to account for the
requirement and burden in any of our collection of information
requests. We are correcting this oversight via this proposed and final
rulemaking activity.
We estimate that it will take a team of one compliance officer (at
$70.06/hr), one physician (at $193.70/hr), and one general operations
manager (at $118.30/hr) a total of 5 hours to develop the necessary
policies. The team's hourly cost is $382.06/hr ($70.06/hr + $193.70/hr
+ $118.30/hr). In aggregate, the annual burden for 234 parent
organizations is 1,170 hours (234 plans * 5 hrs) at a cost of $447,010
(1,170 hr * $382.06/hr) or $1,910 ($447,010/234) per organization.
This is an annual requirement/burden since plan packages renew each
year and the SSBCI criteria must therefore be reevaluated, including
confirmation of existing criteria, each year.
b. Per Sec. 422.102(f)(3)(i), plans must also document in writing
those criteria for determining enrollee eligibility for being
considered chronically ill and, per Sec. 422.102(f)(3)(iii), must also
document in writing the enrollee's eligibility to receive a particular
SSBCI.
We estimate it will take 2 hours at $56.34/hr for a health
technician to document in writing the objective criteria for
determining an enrollee's eligibility to be considered chronically ill
and to be eligible to receive a particular SSBCI. In aggregate, we
estimate an annual burden of 468 hours (234 plans * 2 hr/plan) at a
cost of $26,367 (468 hrs * $56.34/hr) or $113 per plan.

[[Page 33877]]

This is an annual requirement/burden since documentation must be
performed each contract year.
c. Per Sec. 422.102(f)(3)(iv), plans must also document each
determination that an enrollee is eligible to receive an SSBCI and make
this information available to CMS upon request. To date, MA
organizations have only been able to include non-primarily health
related SSBCI in the plan offerings since January 1, 2020, during one
contract 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. Thus, our data is not indicative of future usage.
To offer SSBCI, a plan must determine, as defined in legislation,
that an enrollee is chronically ill and that the items or services
furnished under the SSBCI have a reasonable expectation of improving or
maintaining the health or overall function of the chronically ill
enrollee. This determination would require a review of the enrollee's
health records (for example, diagnosis codes, frequency of
hospitalizations, and doctor's notes) as well as a determination and
review by plan medical staff that the SSBCI has a reasonable
expectation of improving or maintaining the health or overall function
of the chronically ill enrollee.
Thus the process may be partially automated with the remainder of
the process requiring medical review. We accordingly must account for
three contributions to total impact:
(1) Initial creation of software, annualized over 3 years:
Initially, software will be created to collect basic data elements
(claims, diagnoses, hospitalizations, drug utilization) for physician
review. We expect a team of three professionals: A compliance officer
would identify categories of eligible SSBCI, the physician would
identify needed data elements for review, and the computer programmer
would automate this part of the process. We expect a burden of 2,808
hours (234 parent organizations times 12 hours (8 hours for a
programmer plus 2 hours for a compliance officer plus 2 hours for a
physician)) at an annualized cost of $96,717 ((\1/3\) times 2808 hours
times a team wage of $103.33/hr ([8 hours times $89.06 (computer
programmer) + (2 hours times 70.06 (compliance officer) + (2 hours
times $193.70 (physician))]/12).
(2) Annual physician review of cases: We expect ongoing plan
physician review in all years (including the first) to ascertain if the
SSBCI is expected to have the desired impact on enrollees. We assume 3
hours of review per month per parent organization, resulting in 36
hours per parent organization per year. In aggregate, we expect a
burden of 8,424 hours (234 parent organization times 36 hours per
parent organization) at an annual burden of $1,631,729 (8,424 hours
times $193.70/hr, physician wage).
(3) Annual update of software: It would clearly be overly
burdensome to review each SSBCI case. Thus as cases are reviewed, we
expect the continual review of new cases to generate additional
criteria that can be automated. We assume half the time for updates as
for the initial first-year creation. We assume a burden of 1,170 hours
(234 parent organizations times 5 hours (1 hour for a compliance
officer plus 4 hours for a computer programmer) at a cost of $99,754
(1170 hours times a team wage of $85.26/hr ([4 hours times $89.06
(computer programmer) plus 1 hour times $70.06 (compliance officer)]/
5). Table 3 summarizes all burdens connected with SSBCI.
(4) Make information concerning enrollee eligibility criteria
available to CMS.
We are not requiring MA plans to report or submit this information
on a regular or consistent basis to CMS. We do not intend to closely
monitor or regularly request this documentation and reiterate that MA
plans will have discretion in designing which items and services to
offer as SSBCI and for which chronically ill enrollees to cover them,
so long as the statutory and regulatory standards are met. CMS intends
to use this authority to collect information as necessary for program
oversight, such as if there are specific, consistent, and/or severe
complaints that an MA plan is violating the rules set forth in Sec.
422.102(f). Based on our experience with serious plan complaints, we
anticipate requesting no more than 5 plans per year to complete this
task. Consequently, since this provision is expected to affect less
than 10 entities per year, it is exempt from paperwork burden (5 CFR
1320.3(c)(4)). Table 3 summarizes the various burdens associated with
SSBCI.

Table 3--Summary of Burden for SSBCI at Sec. 422.102
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Time per
Provision Regulatory OMB Control Subject Number of number of response Total time Labor cost Annual cost
citation No. respondents responses (hr) (hr) ($/hr) ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
SSBCI............ 422.102(f)(3)(i)... .............. SSBCI: Criteria 234 1 12 2808 103.33 96,717
(Initial
Software).
SSBCI............ 422.102(f)(3)(i)... .............. SSBCI: Criteria 234 1 36 8424 193.7 1,631,729
(Physician
review).
SSBCI............ 422.102(f)(3)(i)... .............. SSBCI: Criteria 234 1 5 1170 85.26 99,754
(Software
updates).
SSBCI............ 422.102(f)(3)(ii).. .............. Written criteria.. 234 1 2 468 56.34 26,367
SSBCI............ 422.102(f)(3)(iii). .............. Enrollee 234 1 9 2106 86.95 179,465
eligibility.
--------------------------------------------------------------------------------------------------------------------------------------
Total........ ................... .............. .................. 234 ........... Varies 14,976 ........... 2,034,032
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. ICRs Regarding Contracting Standards for Dual Eligible Special Needs
Plan (D-SNP) Look-Alikes (Sec. 422.514)
The following changes will be submitted to OMB for approval under
control numbers 0938-0753 (CMS-R-267) and 0938-NEW (CMS-10718). The
requirements under CMS-R-267 are associated with burden on MA plans
identified as D-SNP look-alikes under Sec. 422.514(d) and (e) (see
section VII.B.1.a. of this final rule). The requirements under CMS-
10718 are associated with burden on the enrollees in these MA plans
(see section VII.B.1.b. of this final rule).
We did not receive any comments on our proposed collection of
information requirements and burden estimates; however, we are updating
our proposed burden estimates to reflect the change in this final rule
delaying the prohibition on the renewal of existing D-SNP look-alikes
by one year. As indicated above in section VII.A. of this final rule,
we have also revised our proposed cost figures based on more recent BLS
wage estimates.

[[Page 33878]]

As described in section II.B. of this final rule, we are
establishing new contract requirements that we believe are necessary to
fully implement federal 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
finalizing a prohibition on CMS entering into a new contract for plan
year 2022 and future years for any non-SNP MA plan 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. Additionally, we are finalizing
a prohibition for plan year 2023 and future years on CMS renewing an
existing contract for any non-SNP MA plan that an MA organization
offers that 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 dually eligible enrollment threshold at Sec. 422.514(d) will
apply to any plan that is not a SNP as defined in Sec. 422.2. We are
applying this requirement only to non-SNP plans to allow for the
disproportionate dually eligible enrollment that characterizes D-SNPs,
institutional SNPs, and some chronic or disabling condition SNPs by
virtue of the populations that the statute expressly permits each type
of SNP to exclusively enroll. The requirement is also limited to states
where there is a D-SNP or any other plan authorized by CMS to
exclusively enroll dually eligible individuals, such as a Medicare-
Medicaid Plan (MMP). We are establishing this limitation because it is
only in such states that the implementation of D-SNP requirements
necessitates our 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 does not have any material impact on the full
implementation of federal D-SNP requirements.
The contract requirement based on the projected enrollment in the
plan bid at Sec. 422.514(d)(1) will prevent MA organizations from
designing new D-SNP look-alikes. Under at Sec. 422.514(d)(2), we will
make the determination whether an MA organization has an existing non-
SNP MA plan with actual enrollment exceeding the established threshold
using the enrollment in January of the current year. Using data from
the most recently available contract year, the 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 19 states \53\ where
there are D-SNPs or comparable managed care plans and will be subject
to Sec. 422.514(d). These 62 plans projected a total enrollment of
180,758 for contract year 2020.
---------------------------------------------------------------------------

\53\ These 62 plans are located in Arizona, Arkansas,
California, Hawaii, Idaho, Illinois, Indiana, Louisiana, Michigan,
Mississippi, New Jersey, New Mexico, North Carolina, Ohio, Oregon,
South Carolina, Tennessee, Utah, and Washington.
---------------------------------------------------------------------------

MA organizations will likely non-renew for plan year 2022 or 2023
those plans that exceed our criteria in Sec. 422.514(d)(1) and (2).
The MA organization has the opportunity to make an informed business
decision to transition enrollees into another MA-PD plan (offered by it
or by its parent organization) by: (1) Identifying, or applying and
contracting for, a qualified MA-PD plan, including a D-SNP, in the same
service area; or (2) creating a new D-SNP through the annual bid
submission process. We expect the vast majority of D-SNP look-alike
enrollees to be transitioned into a plan offered by the same parent
organization as the D-SNP look-alike, and we expect in rare instances
that the non-renewing plan may choose to not transition enrollees.
The changes required of MA organizations based on this final rule
impact D-SNP look-alikes (see section VII.B.1.a. of this final rule)
and their enrollees (see section VII.B.1.b. of this final rule). While
we cannot predict the actions of each affected MA organization with 100
percent certainty, we base our burden estimates on the current
landscape of D-SNP look-alikes, the availability of D-SNPs or MA-PD
plans under the same parent organization in the same service area, and
the size and resources of the MA organization.
a. MA Plan Requirements and Burden
As indicated, the following 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.
At Sec. 422.514(e), we are finalizing a process for an MA
organization with a D-SNP look-alike to transition individuals who are
enrolled in its 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 this final rule, an MA organization with a non-SNP MA plan
determined to meet the enrollment threshold in Sec. 422.514(d)(2)
could transition enrollees into another MA-PD 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 receiving MA-PD
plan meets certain criteria specified in Sec. 422.514(e)(1)(i)-(iv).
The process finalized at Sec. 422.514(e) allows, but does not require,
the MA organization to transition dually eligible enrollees from D-SNP
look-alikes into D-SNPs and other qualifying MA-PD plans for which the
enrollees are eligible without the transitioned enrollees having to
complete an election form. This transition process is conceptually
similar with the proposed ``crosswalk exception'' procedures at Sec.
422.530(a) and (b) as described in the proposed rule; however, this
final rule allows the transition process to apply across contracts or
legal entities and from non-SNP to SNPs provided that the receiving
plan is otherwise be of the same plan type (for example, HMO or PPO) as
the D-SNP look-alike.
While the contract limitation for existing D-SNP look-alikes begins
in the 2023 plan year, we intend for the transition process to take
effect in time for D-SNP look-alikes operating in 2020 and 2021 to
utilize the transition process for enrollments effective January 1,
2021 or January 1, 2022, respectively. Based on the current landscape
for D-SNP look-alikes, we believe the vast majority of D-SNP look-
alikes are able to move current enrollees into another MA-PD plan using
the transition process we are finalizing in this rule. We expect many
of these plans will choose to transition membership for the 2022 and
2023 plan years. Therefore, we are assuming the burden of the 62 plans
transitioning enrollees will happen for half the plans in 2021 (for a
2022 effective date) and half the plans in 2022 (for a 2023 effective
date).
We estimate each plan will take a one-time amount of 2 hours at
$77.14/hr for a business operations specialist to submit all enrollment
changes to CMS necessary to complete the transition process. D-SNP
look-alikes that transition enrollees into another non-SNP plan will
take less time than D-SNP look-alikes that transition eligible
beneficiaries into a D-SNP because they will not need to verify
enrollees'

[[Page 33879]]

Medicaid eligibility. 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. The burden for
MA organizations to transition enrollees to other MA-PD plans during
the 2021 and 2022 plan years is 124 hours (62 D-SNP look-alikes * 2 hr/
plan) at a cost of $9,565 (124 hr * $77.14/hr). We averaged this burden
for the 62 plans over the 2021 and 2022 plan years, resulting in an
annual burden of 62 hours (124 hr/2 yr) at a cost of $4,783 ($9,565/2
yr).
The vast majority of MA organizations with existing D-SNP look-
alikes also have an MA-PD plan with a premium of $0 or a D-SNP in the
same service area as the D-SNP look-alike. Consequently, we do not
believe many MA organizations will choose to create a new D-SNP as a
result of this final rule. The prevalence of existing MA-PD plans and
D-SNPs also makes it unlikely that an MA organization will need to
expand a service area for an existing MA-PD plan or D-SNP. Therefore,
we do not expect this provision to have further impact beyond the
currently burden approved under control number 0938-0935 (CMS-10237)
for creating a new MA-PD plan or D-SNP and expanding a service area.
As finalized in Sec. 422.514(e)(2)(ii), the MA organization will
be required to describe changes to MA-PD plan benefits and provide
information about the MA-PD plan into which the individual is enrolled
in the Annual Notice of Change (ANOC) that the MA organization must
send, consistent with Sec. 422.111(a), (d), and (e). Consistent with
Sec. 422.111(d)(2), enrollees will receive this 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
(AEP). As each MA plan must send out the ANOC to all enrollees
annually, we do not estimate that MA organizations will incur
additional burden for transitioned enrollees. The current burden for
the ANOC is approved under control number 0938-1051 (CMS-10260).
Additionally, we do not expect any plans will 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 Sec.
422.514(e)(4), as we anticipate all MA organizations with D-SNP look-
alikes will be able to transition their enrollees into another MA-PD
plan (or plans). However, we are finalizing the requirement to ensure
protection of enrollees if the situation does occur.
In subsequent years (2023 and beyond), we estimate that at most
five plans per year will 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 non-
renew and transition their membership into another MA-PD plan or a D-
SNP. Therefore, the annual burden for the 2023 plan year and subsequent
years is estimated at 10 hours (5 plans * 2 hr/plan) at a cost of $771
(10 hr * $77.14/hr) for a business operations specialist to transition
enrollees into a new MA-PD plan.
The average annual burden for MA plans over three years is 45 hours
([62 hr + 62 hr + 10 hr]/3 yr) at a cost of $3,446 ([$4,783 + $4,783
+$771]/3 yr). The impact is summarized in Table 4.
b. MA Plan Enrollee Requirements and Burden
The following changes will be submitted to OMB for approval under
control number 0938-NEW (CMS-10718). The control number for CMS-10718
has yet to be issued. The status of OMB's review/approval can be
monitored at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202003-0938-002.
Section 422.514(e)(2) allows any individual transitioned from a D-
SNP look-alike to another MA-PD plan to stay in the MA-PD 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-PD plan or receiving services through the original Medicare
fee-for-service program option and enrollment in a stand-alone
Prescription Drug Plan (PDP). Because the enrollment transition process
will be effective on January 1 and notices would be provided during the
AEP, affected individuals have opportunities to make different plan
selections through the AEP (prior to January 1) or the Medicare
Advantage Open Enrollment Period (after January 1). Affected
individuals may also qualify for a Special Election Period (SEP), such
as the SEP for plan non-renewals at Sec. 422.62(b)(1) or the SEP for
dually eligible/LIS beneficiaries at Sec. 423.38(c)(4).
Based on our experience 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 one
percent of the 180,758 transitioning D-SNP look-alike enrollees will
select a new plan or the original Medicare fee-for-service program and
PDP option rather than accepting the transition into a different MA-PD
plan or D-SNP under the same MA organization as the D-SNP look-alike in
which they are currently enrolled. We estimate that 1,808 enrollees
(180,758 transitioning D-SNP look-alike enrollees * 0.01), will opt out
of the new plan into which the D-SNP look-alike transitioned them.
Consistent with the burden estimates under the aforementioned control
number, the enrollment process requires 20 minutes (0.3333 hours) and
remains unchanged. For this final rule, the total added burden for
enrollees will be 603 hours (1,808 enrollees * 0.3333 hr/response) at a
cost of $15,509 (603 hr * $25.72/hr). We are averaging this burden over
the 2021 and 2022 plan years, resulting in an annual burden of 302
hours (603 hr/2 yr) at a cost of $7,755 ($15,509/2 yr).
As stated previously, we believe that in subsequent years (2023 and
beyond), at most five plans will be identified as D-SNP look-alikes and
therefore this final regulation would have a much smaller impact on MA
enrollees after the initial period of implementation. Since the current
62 D-SNP look-alike plans have 180,758 enrollees in 62 plans, we
estimate 14,577 enrollees (180,758 enrollees * 5/62 plans) in 5 plans.
Therefore, the maximum number of enrollees affected per year is
estimated to be 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 49 hours (146 enrollees * 0.3333 hr) at a cost
of $1,260 (49 hr * $25.72/hr).
The average annual enrollee burden over three years is therefore
218 hours ([302 hr + 302 hr + 49 hr]/3 yr) at a cost of $5,590 ([$7,755
+ $7,755 + $1,260]/3yr). The estimates are summarized in Table 4.
c. Burden Summary
The burden for the provisions are summarized in Table 4.

[[Page 33880]]

Table 4--Summary of Burden Estimates for Contract Requirements at Sec. 422.514
--------------------------------------------------------------------------------------------------------------------------------------------------------
OMB Control No.
Respondents Subject (CMS ID No.) 2021 2022 2023 3-year average
--------------------------------------------------------------------------------------------------------------------------------------------------------
MA organization................. Transition 0938-0753 (CMS-R- $4,783 (62 hr).... $4,783 (62 hr).... $771 (10 hr)...... $3,446 (45 hr)
enrollees (Sec. 267).
422.514(e)).
Beneficiaries................... Enrollment request 0938-NEW (CMS- $7,755 (302 hr)... $7,755 (302 hr)... $1,260 (49 hr).... $5,590 (218 hr)
(Sec. 10718).
422.514(e)).
-----------------------------------------------------------------------------------------------------------------------
Total....................... .................. .................. $12,538 (364 hr).. $12,538 (364 hr... $2,031 (59 hr).... $9,036 (263 hr)
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. 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 III.A. of this final rule, we are revising
Sec. Sec. 422.50(a)(2), 422.52(c), and 422.110(b) to allow ESRD
beneficiaries, without any limitation not otherwise applicable for
enrollment in the MA program to enroll in an MA plan. In estimating the
impact of this provision, we are required to separately estimate impact
on beneficiaries and plans. Enrollment processing and notification
requirements codified at Sec. 422.60, are not being revised as part of
this rulemaking, and no new or additional information collection
requirements are being imposed.
Additionally, as explained in section VIII.D.1 of this final rule,
OACT has already incorporated an increase in ESRD enrollment in the
Medicare Trust Fund baseline due to the legislation. Therefore, there
is no need to estimate plan burden. However, the burden to enrollees
for completing enrollment forms has not been incorporated into the OACT
baseline and therefore is estimated later in this section.
We did not receive any public comments on our proposed
requirements. In the proposed rule, beneficiary burden was estimated
using the ``long'' enrollment form that is currently approved by OMB
under control number 0938-0753 (CMS-R-267). Based on internal review,
in this final rule, the beneficiaries will instead, be completing a
new, ``shortened'' form (OMB control number 0938-NEW (CMS-10718)) for
enrollment into MA plans beginning with the 2020 AEP, for a January 1,
2021 effective date. The new ``shortened'' enrollment form, which is
three pages in length, (compared to the current model form which is
seven pages), limits the data collection to the minimum that is
lawfully required to process the enrollment and other limited
information that the sponsor is required to, or chooses to, provide to
the beneficiary.
As indicated in the beginning of this section, the shortened form
has been subject to the standard non-rule PRA process (see 84 FR 63655
(November 18, 2019), 84 FR 64319 (November 21, 2019), and 85 FR 13163
(March 6, 2020)) and is currently under OMB review.
In this final rule, we are correcting our proposed beneficiary
burden estimates by considering the completion of the shortened
enrollment form (CMS-10718) in lieu of (CMS-R-267). As indicated in
section VII.A. of this final rule, we have also revised our proposed
cost figures based on more recent BLS wage estimates.
To elect a MA plan, an individual must complete and sign an
election form, complete another CMS-approved election method offered by
the MA plan, or call 1-800-MEDICARE, and provide information required
for enrollment. Regardless of the enrollment mechanism, similar
identifying information is collected by the MA plan to process the
enrollment.
Although not effective until January 1, 2021, section 17006 of the
Cures Act amends the Act by allowing ESRD beneficiaries, without any
limitation not otherwise applicable for enrollment in the MA program,
to enroll in an MA plan. The burden is associated with the effort for
an ESRD beneficiary seeking to enroll in a MA plan 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 number of beneficiaries who are expected to initiate an enrollment
action will increase. However, the erroneous per response time estimate
of 30 minutes (0.5 hr) (CMS-R-267) that was set out in our proposed
rule will decrease to 20 minutes (0.3333 hr) per response based on
beneficiary completion of the new, shortened enrollment form (CMS-
10718)).
As detailed in section VIII.D.1. of this final rule, OACT estimates
an average increase of 59,000 ESRD beneficiaries to enroll in MA plans
per year in 2021 through 2023. Therefore, we expect an average annual
burden of 19,665 hours (59,000 new ESRD enrollees * 0.3333 hr) at a
cost of $505,784 (19,665 hr * $25.72/hr).
4. ICRs Regarding Medical Loss Ratio (MLR) (Sec. 422.2440)
MSA Enrollment
The anticipated 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. We did not receive any comments pertaining to our proposed
requirements or burden estimates. However, based on internal review, we
have updated our proposed time to complete the enrollment form and
adjusted (increased) our enrollment figures to better reflect
implementation in 2022-2024. As indicated above in section VII.A. of
this final rule, we have also revised our proposed cost figures based
on more recent BLS wage estimates.
As discussed in section IV.D.4. of this rule, we are finalizing our
proposal 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 deductible factor would serve as
a multiplier on the credibility factor. The application of the
deductible factor would increase the MLRs of MSA contracts that receive
this adjustment.
We believe that the 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
because we expect more MA organizations to offer MA MSA plans based on
this change in the MLR calculation. Consistent with the proposed rule,
for this impact estimate, we assume the following:
Enrollment in MSAs will double over the first 3 years that
the 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

[[Page 33881]]

proposal. Our estimate is based on the largest potential change in
enrollment that we could reasonably anticipate. We acknowledge that the
change could have no impact on enrollment.
Relative to projections in the baseline, MSA enrollment
will be 33.33 percent higher in contract year 2022 (increasing from
7,812 to 10,416), 66.67 percent higher in 2023 (increasing from 8,179
to 13,632), and 100 percent higher in contract year 2024 (increasing
from 8,531 to 17,062) to contract year 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 whether 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 (or remain in) FFS Medicare if the
proposal were not finalized. The cost burden of the provision is
summarized in Table 5.
a. Beneficiary Requirements and Burden
For beneficiaries, the burden associated with the expected increase
in MSA enrollment as a consequence of the addition of a deductible
factor to the MSA MLR calculation is related to the effort it takes for
a beneficiary to complete an enrollment request. It takes 0.5 hours at
$25.72/hr for a beneficiary to complete an enrollment form. We assume
no burden increase for the estimated 50 percent of additional MSA
enrollees who would otherwise be enrolled in a non-MSA MA plan. For
2022, the burden for all beneficiaries is estimated at 434 hours
(2,604/2 beneficiaries * 0.3333 hr) at a cost of $11,162 (651 hr *
$25.72/hr). For 2023, the burden for all beneficiaries is estimated at
909 hours (5,453/2 beneficiaries * 0.3333 hr) at a cost of $23,379
(1,302 hr * $25.72/hr). For 2024, the burden for all beneficiaries is
estimated at 1,422 hours (8,531/2 beneficiaries * 0.3333 hr) at a cost
of $ $36,574 (1,422 hr * $25.72/hr).
The average burden per year is 922 hours ([434 + 909 + 1422]/3) at
a cost of $23,705 ([11,162 + 23,379 + 36,574]/3).
b. MA Organization Estimate
There are currently four MA organizations offering MSA plans in
2020. We project that this number will double in 2022 as a result of
the change. We therefore estimate that the change would result in
approximately 2,604 total additional enrollments in MSAs in 2022, or
326 additional enrollments per organization (2,604 individuals/8
organizations); in 2023, 5,453 total additional enrollments in MSAs, or
682 additional enrollments per organization (5,453 individuals/8
organizations); and in 2024, and 8,531 total additional enrollments, or
1,066 additional enrollments per organization (8,531 individuals/8
organizations).
An MA organization must give a 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 $77.14/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 2022, 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 22 hours (2,604/2 notices * 1
min/60) at a cost of $1,697 (22 hr * $77.14/hr) or $1.30 per notice
($1,697/1,302 notices) or $212 per organization ($1,697/8 MA
organizations). For 2023, the burden to complete the notices for the
half of new MSA enrollees who would otherwise enroll in FFS Medicare is
approximately 45 hours (5,453/2 notices * 1 min/60) at a cost of $3,471
(45 hr * $77.14/hr) or $1.28 per notice ($3,471/2,727 notices) or $434
per organization ($3,471/8 MA organizations). For 2024, the burden is
approximately 71 hours (8,531/2 notices * 1 min/60) at a cost of $5,477
(71 hr * $77.14/hr) or $1. 1.34 per notice ($5,470/4,090 notices) or
$685 per organization ($5,246/8 MA organizations).
The average burden per year is 46 hours ([22 hr + 45 hr + 71 hr]/3)
at an average cost of $3,548 ([$1,697 + $3,471 + $5,477]/3).
The burden associated with electronic submission of enrollment
information to CMS is estimated at 1 minute at $77.14/hr for a business
operations specialist to submit the enrollment information to CMS
during the open enrollment period. For 2022, 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
22 hours (2,604/2 notices * 1 min/60) at a cost of $1,697 (22 hr *
$77.14/hr) or $1.30 per notice ($1,697/1,302 notices) or $212 per
organization ($1,697/8 MA organizations). For 2023, the burden to
complete the notices for the half of new MSA enrollees who would
otherwise enroll in FFS Medicare is approximately 45 hours (5,453/2
notices * 1 min/60) at a cost of $3,471 (45 hr * $77.14/hr) or $1.28
per notice ($3,471/2,727 notices) or $434 per organization ($3,471/8 MA
organizations). For 2024, the burden is approximately 71 hours (8,531/2
notices * 1 min/60) at a cost of $5,477 (71 hr * $77.14/hr) or $1.33
per notice ($5,477/4,090 notices) or $685 per organization ($5,477/8 MA
organizations).
The average burden per year is 46 hours ([22 hr + 45 hr + 71 hr]/3)
at an average cost of $3,548 ([$1,697 + $3,471 + $5,477]/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 $36.82/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 2022 of 109 hours
(2,604/2 beneficiaries * 5 min/60) at a cost of approximately $4,013
(109 hr * $36.82/hr) or $502 per organization ($4,013/8 MA
organizations). For 2023, we estimate an aggregated annual burden of
227 hours (5,453/2 beneficiaries * 5 min/60) at a cost of approximately
$8,358 (227 hr * $36.82/hr) or $1,634 per organization ($7,821/8 MA
organizations). For 2024, we estimate an aggregated annual burden of
355 hours (8,531/2 beneficiaries * 5 min/60) at a cost of approximately
$13,071 (355 hr * $36.82/hr) or $1,634 per organization ($13,071/8 MA
organizations).
The average burden per year is 230 hours ([109 hr + 227 hr + 355
hr]/3) at an average cost of $8,481 ([$4,013 + $8,358 + $13,071]/3).
MLR Calculation
The changes affecting the MLR calculation will be submitted to OMB
for approval under control number 0938-1232 (CMS-10476). Subject to

[[Page 33882]]

renewal, the control number is currently set to expire on December 31,
2021.
We did not receive any public comments on our proposed requirements
or burden estimates. We are finalizing the requirements as proposed. We
are also finalizing the burden estimates, with the following revisions:
(1) We updated our cost figures using more recent BLS wage estimates;
(2) we reduced the hour burden for an enrollee to fill out an
enrollment form; and (3) we adjusted the 3-year phase-in period for the
anticipated enrollment changes from 2021 to 2023 in the proposed rule
to 2022 to 2024 in this final rule.
MA organizations will need to spend additional time calculating the
MLRs for MSA contracts in order to apply the deductible factor. We
estimate that for each of the 8 MA organizations that we anticipate
will offer MSA contracts in 2022 and in each year through 2030, it will
take an actuary approximately 5 minutes (0.0833 hr) at $116.32/hr to
calculate the deductible factor for the contract. In aggregate, we
estimate an annual burden of 0.6664 hours (0.0833 hr * 8 MA
organizations) at a cost of $78 (0.6664 hr x $116.32/hr) or $10 per
organization ($78/8 organizations).
For 2022, we estimate a total burden for all MA organizations
resulting from this provision to be 154 hours (22 hr + 22 hr + 109 hr +
0.6664 hr) at a cost of $7,485 ($1,697 + $1,697 + $4,013 + $78). Per
organization, we estimate an annual burden of 19.3 hours (154 hr/8 MA
organizations) at a cost of $935.63 ($7,485/8 organizations).
For 2022, we estimate a total burden for all MA organizations
resulting from this provision to be 154 hours (22 hr + 22 hr + 109 hr +
0.6664 hr) at a cost of $7,485 ($1,697 + $1,697 + $4,013 + $78). Per
organization, we estimate an annual burden of 19.3 hours (154 hr/8 MA
organizations) at a cost of $935.63 ($7,485/8 organizations).
For 2023, we estimate a total burden for all MA organizations
resulting from this provision to be 318 hours (45 hr + 45 hr + 227 hr +
0.6664 hr) at a cost of $15,378 ($3,471 + $3,471 + $8,358 + $78). Per
organization, we estimate an annual burden of approximately 40 hours
(318 hr/8 MA organizations) at a cost of $1,922.50 ($15,378/8
organizations).
For 2024, we estimate a total burden for all MA organizations
resulting from this provision to be 498 hours (71 hr + 71 hr + 355 hr +
0.6664 hr) at a cost of $24,103 ($5,477 + $5,477 + $13,071 + $78). Per
organization, we estimate an annual burden of approximately 62 hours
(498 hr/8 MA organizations) at a cost of $3,013 ($24,103/8
organizations).
The burden for beneficiaries is a single burden for each year and
has been estimated above.
d. Summary
The figures in Table 5 associated with beneficiaries' enrollment
requests, MA organizations providing beneficiaries with notice of
acceptance or denial of the enrollment request, MA organizations'
submission of enrollment information to CMS, and MA organizations'
retention of a copy of the notice in beneficiaries' records will be
submitted to OMB for approval under control number 0938-0753 (CMS-R-
267). The figures associated with the calculation of the deductible
factor for MA MSA contracts will be submitted to OMB for approval under
control number 0938-1232 (CMS-10476).

Table 5--Impact of MSA/MLR by Subject
--------------------------------------------------------------------------------------------------------------------------------------------------------
OMB Control No.
Respondents Subject (CMS ID No.) 2022 2023 2024 Average
--------------------------------------------------------------------------------------------------------------------------------------------------------
Beneficiaries................... Enrollment request 0938-0753......... $11,162........... $23,379........... $36,574........... $23,705
(Sec. 422.2440). (CMS-R-267)....... (434 hr).......... (909 hr).......... (1,422 hr)........ (922 hr)
MA organizations................ Notice to 0938-0753......... $1,697............ $3,471............ $5,477............ $3,548
beneficiaries. (CMS-R-267)....... (22 hr)........... (45 hr)........... (71 hr)........... (46 hr)
(Sec. 422.2440).
MA organizations................ Submission to CMS. 0938-0753......... $1,697............ $3,471............ $5,477............ $3,548
(Sec. 422.2440). (CMS-R-267)....... (22 hr)........... (45 hr)........... (71 hours)........ (46 hrs)
MA organizations................ Record retention.. 0938-0753......... $4,013............ $8,358............ $13,071........... $8,481
(Sec. 422.2440). (CMS-R-267)....... (109 hr).......... (227 hr).......... (355 hr).......... (230 hr)
MA organizations................ Calculation of 0938-1232......... $78............... $78............... $78............... $78
deductible factor. (CMS-10476)....... (0.6664 hr)....... (0.6664 hr)....... (0.6664 hr)....... (0.6664 hr)
(Sec. 422.2440).
-----------------------------------------------------------------------------------------------------------------------
Total....................... .................. .................. $7,485............ $15,378........... $24,103........... $15,655
(154 hr).......... (318 hr).......... (498 hr).......... (322 hr)
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. ICRs Regarding Special Election Periods (SEPs) for Exceptional
Conditions (Sec. Sec. 422.62 and 423.38)
The following 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.
As discussed in section V.B. of this final rule, we are finalizing
all SEPs as proposed, with the exception of the SEP for Government
Entity--Declared Disaster or Other Emergency at Sec. Sec.
422.68(b)(18) and 423.38(c)(23), which we are finalizing, with
modification. We are also codifying the SEP for Individuals
Involuntarily Disenrolled from an MA-PD plan due to loss of Part B,
which was inadvertently omitted from the proposed rule.
We did not receive any comments on our proposed requirements and
are finalizing them without change. As indicated in section VII.A. of
this final rule, we have revised our proposed cost figures based on
more recent BLS wage estimates. We are not making any changes to our
proposed time estimates.
We are codifying 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 establishing 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 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 changes would have any impact on the Medicare Trust Fund.
MA organizations and Part D plan sponsors are currently assessing
applicants' eligibility for election

[[Page 33883]]

periods as part of existing enrollment processes; therefore, no
additional burden is anticipated from this change. However, because the
burden 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.
The following changes will be submitted to OMB for approval under
control number 0938-0753 (CMS-R-267). We estimate it would take 5
minutes (0.0833 hr) at $77.14/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
$10,992,219 (142,497 hr * $77.14/hr) or $60,731 per parent organization
($10,992,219/181 MA parent organizations).
The following changes will be submitted to OMB for approval under
control number 0938-0964 (CMS-10141). 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 $12,000,207 (155,564 hr * $77.14/
hr) or $226,419 per Part D parent organization ($12,000,207/53 Part D
parent organizations).
As discussed in section V.B. of this final rule, we are finalizing
all SEPs as proposed, with the exception of the SEP for Government
Entity--Declared Disaster or Other Emergency at Sec. Sec.
422.68(b)(18) and 423.38(c)(23). We are also codifying the SEP for
Individuals Involuntarily Disenrolled from an MA-PD plan due to loss of
Part B, which was inadvertently omitted from the proposed rule.

C. Summary of Information Collection Requirements and Associated Burden
Estimate

Table 6--Annual Information Collection Requirements
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total number Total Time per Total
Provision Regulatory OMB Control No. Respondent type Response summary of number of response Total annual Labor cost annual cost
citation respondents responses (hr) time (hr) ($/hr) ($)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
D-SNP Look-Alikes.............. Sec. 422.514(e). 0938-NEW......... Enrollees........ D-SNP Look- 1,954 1,954 0.3333 218 25.72 5,590
Alikes:
Enrollment.
ESRD........................... Sec. Sec. 0938-NEW......... Enrollees........ ESRD: Enrollment. 59,000 59,000 0.3333 19,665 25.72 505,784
422.50 and 422.52.
MSA MLR........................ Sec. Sec. 0938-0753........ Enrollees........ MSA MLR: Filling 16,588 16,588 0.3333 922 25.72 23,705
422.2420, out enrollment
422.2440, and forms.
422.2430.
Subtotal Enrollees Varies........... Enrollees........ Varies........... 77,542 77,542 Varies 20,805 Varies 535,079
SSCBI.......................... 422.102(f)(3)(i).. 0938-0763........ MA Plans......... SSBCI: Criteria 234 1 12 2,808 103.33 96,717
(initial
software update).
SSCBI.......................... 422.102(f)(3)(i).. 0938-0763........ MA Plans......... SSBCI: Criteria 234 1 36 8,424 193.7 1,631,729
(Annual
physician
review).
SSCBI.......................... 422.102(f)(3)(i).. 0938-0763........ MA Plans......... SSBCI: Criteria 234 1 5 1,170 85.26 99,754
(Software
updates).
SSCBI.......................... 422.102(f)(3)(ii). 0938-0763........ MA Plans......... SSBCI: 234 1 2 468 56.34 26,367
Documentation.
SSCBI.......................... 422.102(f)(3)(iii) 0938-0763........ MA Plans......... SSBCI: Enrollee 234 1 9 702 86.95 61,039
records.
D-SNP Look-Alikes.............. Sec. 422.514 (e) 0938-0753........ MA Plans......... D-SNP Look- 67 67 2 45 77.14 3,446
Alikes:
Transition.
MSA MLR........................ Sec. Sec. 0938-0753........ MA Plans......... MSA MLR: Notify 8 8 0.0167 46 77.14 3,548
422.2420, enrollees.
422.2440, and
422.2430.
MSA MLR........................ Sec. Sec. 0938-0753........ MA Plans......... MSA MLR: Submit 8 8 0.0167 46 77.14 3,548
422.2420, to CMS.
422.2440, and
422.2430.
MSA MLR........................ Sec. Sec. 0938-0753........ MA Plans......... MSA MLR: Archive. 8 8 0.0833 230 36.82 8,481
422.2420,
422.2440, and
422.2430.
MSA MLR........................ Sec. Sec. 0938-1252........ MA Plans......... MSA MLR: 8 8 0.0833 0.6664 116.32 78
422.2420, Calculation of
422.2440, and the deductible
422.2430. factor.
Part C Election Period......... Sec. 422.62..... 0938-0753........ MA Plans......... Part C Election 181 1,710,650 0.0833 142,497 77.14 10,992,219
Period:
Determine
eligibility.

[[Page 33884]]

Part D Election Period......... Sec. 422.38..... 0938-0964........ Part D Plans..... Part D Election 53 1,867,519 0.0833 155,564 77.14 12,000,207
Period:
Determine
eligibility.
Subtotal MA Plans. Varies........... MA Plans......... Varies........... 309 Varies Varies 312,001 Varies 24,927,133
Grand Total All... Varies........... Varies........... Varies........... 77,851 ........... ........... 332,806 ........... 25,462,212
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

VIII. Regulatory Impact Analysis

A. Statement of Need

This final rule implements a subset of the proposals from the
proposed rule. We took a measured approach to review each provision
proposed and focused finalizing in this first final rule those most
helpful for bidding, those that address the COVID-19 pandemic and
public health emergency, as well as those topics on which issuing a
final rule now would advance the MA program.
Summaries of the public comments that are within the scope of the
provisions' proposed regulatory impact analyses implemented in this
final rule are included in this section with our responses under the
appropriate headings. The provisions in this final rule implement
specific provisions of the BBA of 2018 and the 21st Century Cures Act.
The statutory need for these policies is clear. However, this rule also
contains discretionary policies, hence we provide economic
justification 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
changes that may impact a contract's Star Rating: (1) We proposed to
increase measure weights for patient experience/complaints and access
measures from two to four to further emphasize the patient voice, and
(2) we proposed 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
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 after the first year since directly removing
outliers results in a shift downward in ratings. The aggregate savings
to the Medicare Trust Fund over 2024-2030 is $4.1 billion.

B. Overall Impact

We examined the impact of this final rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), 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). This rule, under
Executive Order 12866, is economically significant with over $100
million in costs, benefits, or transfers annually. Pursuant to the
Congressional Review Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs designated this rule as a major rule
as defined by 5 U.S.C. 804(2).
A regulatory impact analysis must be made for major rules with
economically significant effects ($100 million or more in any one
year). We estimate that this final rule is economically significant as
measured by the $100 million threshold and hence, it is also a major
rule under the Congressional Review Act. Accordingly, we have prepared
a regulatory impact analysis that to the best of our ability presents
the costs and benefits of this rulemaking.
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 2020, that threshold is approximately $156
million. This final rule is not 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 final rule that imposes
substantial direct requirement costs on state and local governments,
preempts state law, or otherwise has federalism implications. Since
this final 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 final 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). We expect that each
organization will designate one person to review the rule. A reasonable
maximal number is 2,000 total reviewers. We note that other assumptions
are possible.
Using the BLS wage information for medical and health service
managers (code 11-9111), we estimate that the cost of reviewing this
final rule is $110.74 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 final rule. For each entity that reviews
the rule, the estimated cost is therefore $11,074 (100 hours *
$110.74). Therefore, we estimate that the

[[Page 33885]]

maximum total cost of reviewing this final rule is $22 million ($11,074
* 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 $2.2 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 final rule.
In accordance with the provisions of Executive Order 12866, this
rule was reviewed by OMB.

C. Impact on Small Businesses--Regulatory Flexibility Analysis (RFA)

The RFA, as amended, requires agencies to analyze options for
regulatory relief of small businesses if a rule has a significant
economic 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 final rule has several provisions. Although some provisions
are technical or codify existing guidance, and therefore are not
expected to have economic impact beyond current operating expenses,
there are other provisions with paperwork or other costs. These
provisions are analyzed in both this section and in section VII of this
final rule. A compact summary of burdens by year and provision are
summarized in Tables 6 and 16 of this final rule.
This rule has several affected stakeholders. They include (1)
insurance companies, including the five types of Medicare health plans,
MA organizations, PDPs, cost plans, Medical Savings Account plans
(MSA), PACE organizations, and demonstration projects, (2) providers,
including institutional providers, outpatient providers, clinical
laboratories, and pharmacies, and (3) enrollees.
Some descriptive data on these stakeholders are as follows:
Pharmacies and Drug Stores, NAICS 446110, have a $30
million threshold for ``small size'' with 88 percent of pharmacies,
those with less than 20 employees, considered small.
Direct Health and Medical Insurance Carriers, NAICS
524114, have a $41.5 million threshold for ``small size,'' with 75
percent of insurers having under 500 employees meeting the definition
of small business.
Ambulatory Health Care Services, NAICS 621, including
about 2 dozen sub-specialties, including Physician Offices, Dentists,
Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic
Imaging Centers, have a threshold ranging from $8 to $35 million
(Dialysis Centers, NAICD 621492, have a $41.5 million threshold).
Almost all firms are big, and this also applies to sub-specialties. For
example, for Physician Offices, NAICS 621111, receipts for offices with
under 9 employees exceed $34 million.
Hospitals, NAICS 622, including General Medical and
Surgical Hospitals, Psychiatric and Substance Abuse Hospitals, and
Specialty Hospitals have a $41.5 million threshold for small size, with
half of the hospitals (those with between 20-500 employees) considered
small.
Skilled Nursing Facilities (SNFs), NAICS 623110, have a
$30 million threshold for small size, with half of the SNFs (those with
under 100 employees) considered small.
We are certifying that this final rule does not have a significant
economic impact on a substantial number of small entities. To defend
our position, we first describe at a high level the cash flows related
to the Medicare program. We then provide more specific details.
The high-level underlying idea in creating the MA, Medicare Cost-
plan, and MA-PD Medicare health insurance programs, is to allow private
insurers to coordinate care, resulting in efficiencies of cost. The
high-level underlying idea in creating the non-government-managed
Prescription Drug program (PDPs and drug portion of MA-PDs) is to allow
beneficiaries to obtain prescription drugs in a competitive market to
reduce costs. For MA, MA-PD and Cost plans, enrollees obtain the same
Original Medicare Part A and Part B services they would otherwise
obtain in the original Medicare program, albeit at reduced cost
(however, for the small percentage of plans bidding above the
benchmark, enrollees pay more, but this percentage of plans is not
``significant'' as defined by the RFA and as justified below).
The savings achieved by the MA and the MA-PD plans, the amount of
reduced cost, can then be used by the private insurers in a variety of
ways, including providing benefits supplemental to original Medicare.
Some examples of these supplemental benefits include vision, dental,
and hearing. The cost for furnishing these supplemental benefits comes
from a combination of the Trust Fund and enrollee premiums.
Part D plans submit bids and are paid by the Medicare Trust Fund
for their projected costs in the form of direct premium subsidy and
reinsurance. For any enrolled low-income beneficiaries, they receive
low-income premium subsidy and low-income cost-sharing subsidy in
addition. The national average monthly bid amount, or NAMBA, determines
the base premium. A plan's premium is the sum of the base premium and
the difference between its bid amount and the NAMBA.
Thus the cost of providing services by these insurers is met by a
variety of government funding and in some cases by enrollee premiums.
In order to achieve these goals, the government pays the MA health
plans a portion of the funds that would have been paid had plan
enrollees remained in original Medicare. These funds are then used to
provide additional benefits on behalf of the health plans' enrollees.
Thus, by the initial design of the Medicare health plan programs, the
various insurance programs were not expected to suffer burden or losses
since, in this very unique insurance relationship, the private
companies are being supported by the government who, in turn, is saving
money because health plans, by virtue of coordinating care, are
furnishing the same services, albeit at reduced cost. This lack of
expected burden applies to both large and small health plans.
The unique MA regulations, such as those in this final rule, are
defined so that small entities are not expected to incur additional
burden since the cost of complying with any final rule is passed on to
the government.
We next examine in detail each of the stakeholders and explain how
they can bear cost. (1) For Pharmacies and Drug Stores, NAICS 446110;
(2) for Ambulatory Health Care Services, NAICS 621, including about two
dozen sub-specialties, including Physician Offices, Dentists,
Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic
Imaging Centers, and Dialysis Centers, NAICD 621492; (3) for Hospitals,
NAICS 622, including General Medical and Surgical Hospitals,
Psychiatric and Substance Abuse Hospitals, and Specialty Hospitals; and
(4) for SNFs, NAICS 623110: Each of these are providers (inpatient,
outpatient, or pharmacy) that furnish plan-covered services to plan
enrollees. Whether these providers are contracted or, in the case of
PPOs, PFFS, and MSA, non-contracted with the MA plan, their aggregate
payment for services is the sum of the enrollee cost sharing and

[[Page 33886]]

plan payments. For non-contracted providers, Sec. 422.214 requires
that a non-contracted provider accept payment that is least what they
would have been paid had the services been furnished in a fee-for-
service setting. For contracted providers, Sec. 422.520 requires that
the payment is governed by a contract which the provider and plan
mutually agree to. Consequently, for these providers, there is no
additional cost burden above the already existing burden in original
Medicare.
For Direct Health and Medical Insurance Carriers, NAICS 524114,
plans estimate their costs for the coming year and submit bids and
proposed plan benefit packages. Upon approval, the plan commits to
providing the proposed benefits, and CMS commits to paying the plan
either (1) the full amount of the bid, if the bid is below the
benchmark, which is a ceiling on bid payments annually calculated from
original Medicare data; or (2) the benchmark, if the bid amount is
greater than the benchmark.
Theoretically, there is additional burden if plans bid above the
benchmark. However, consistent with the RFA, the number of these plans
is not substantial. Historically, only two percent of plans bid above
the benchmark, and they contain roughly one percent of all plan
enrollees. Since the CMS criteria for a substantial number of small
entities is 3 to 5 percent, the number of plans bidding above the
benchmark is not substantial.
The preceding analysis shows that meeting the direct cost of this
final rule does not have a significant economic impact on a substantial
number of small entities, as required by the RFA.
There are certain indirect consequences of these provisions which
also create impact. We have already explained that 98 percent of the
plans bid below the benchmark. Thus, their estimated costs for the
coming year are fully paid by the government. However, the government
additionally pays the plan a ``beneficiary rebate'' amount that is an
amount equal to a percentage (between 50 and 70 percent depending on a
plan's quality rating) multiplied by the amount by which the benchmark
exceeds the bid. The rebate is used to provide additional benefits to
enrollees in the form of reduced cost sharing, lower Part B or Part D
premiums, or supplemental benefits. (Supplemental benefits may also
partially be paid by enrollee premiums if the plan choses to use
premiums.) It would follow that if the provisions of this final rule
cause the bid to increase and if the benchmark remains unchanged or
increases by less than the bid does, the result would be a reduced
rebate and possibly fewer supplemental benefits for the health plans'
enrollees.
However, supplemental benefits are only one approach to using the
rebate. The experience of OACT at CMS is that from year to year plans
prefer to reduce their administrative costs, including profit margins,
rather than substantially change their benefit package. This is true
due to marketing forces; a plan lowering supplemental benefits even one
year may lose its enrollees to competing plans that offer these
supplemental benefits. Thus, it is advantageous to the plan to
temporarily reduce administrative costs, including margins, rather than
reduce benefits.
We note that we do not have definitive data on this. That is, we
can at most note the way administrative costs and supplemental benefits
vary from year to year. The thought processes behind the plan are not
reported. More specifically, when supplemental benefits are reduced, we
have no way of knowing the cause for this reduction, whether it be new
provisions, market forces, or other causes.\54\
---------------------------------------------------------------------------

\54\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3893317/.
---------------------------------------------------------------------------

Based on the above, we certify that this final rule does not have a
significant economic impact on a substantial number of small entities.
Finally, we note that this rule has an impact on enrollees. While
enrollees as a group do not constitute a ``small business'' as defined
by the RFA, and hence the impact of this final rule on enrollees is not
discussed in this section, throughout this final rule we have carefully
noted the impact on enrollees. One major impact on enrollees as
presented in section VII of this final rule is the estimated half hour
burden at a cost of $13 per enrollee for filling out enrollment forms.
While the aggregate amount for all enrollees is several million, the
per enrollee burden is not significant.

D. Anticipated Effects

Some provisions of this final rule have negligible 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 VII of this final 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 VII of
this final 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 experienced as a direct result of the statute. For
further discussion of what is estimated in this Regulatory Impact
Analysis, see Table 16 and the discussion afterwards.
1. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease
(ESRD) Beneficiaries (Sec. Sec. 422.50, 422.52, and 422.110)
We are codifying requirements under section 17006 of the Cures Act
that, effective for the plan year beginning January 1, 2021, would
remove the prohibition on beneficiaries with ESRD enrolling in an MA
plan. Since we are codifying existing statute, there is 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 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, with half of the beneficiaries (41,500) enrolling during 2021.
Next, we determine the cost differential of the projected ESRD

[[Page 33887]]

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 7 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 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 contract year 2021 to
$440 million in contract year 2030.

Table 7--Estimated Cost per Year (millions) to the Medicare Trust Fund for Removing the Prohibition for ESRD Beneficiaries To Enroll in MA Plans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contract year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Additional MA ESRD Enrollment:............ 41,500 62,250 73,317 78,850 81,617 83,000 83,000 83,000 83,000 83,000
USPCC Pt A FFS ($):....................... 3,206 3,328 3,447 3,562 3,681 3,801 3,924 4,052 4,184 4,320
USPCC Pt B FFS ($):....................... 4,900 5,109 5,329 5,573 6,383 6,662 6,953 7,257 7,574 7,905
USPCC FFS ($):............................ 8,106 8,437 8,776 9,136 10,063 10,462 10,877 11,309 11,758 12,225
Coding Intensity (Annual) (%):............ 0.65 0.80 0.79 0.63 0.46 0.30 0.14 0.14 0.13 0.13
Coding Intensity (Composite) (%):......... 0.65 1.46 2.26 2.90 3.38 3.69 3.84 3.98 4.12 4.25
Gross Cost ($ millions):.................. 26 92 174 251 333 384 416 448 482 518
Net of Part B Premium (%):................ 85.60 85.60 85.50 85.40 85.30 85.20 85.00 84.90 84.90 84.90
Net Cost ($ millions):.................... 23 79 149 214 284 327 353 381 410 440
--------------------------------------------------------------------------------------------------------------------------------------------------------

Because these increases are already included in the baseline, they
are not included in Table 15, nor do they contribute to the monetized
table calculations (Table 15). However, notes to Table 15 and
observations in the conclusion do mention this impact.
Comment: A commenter thanked CMS for sharing its projection of the
magnitude of ESRD migration from Original Medicare to Medicare
Advantage in 2021 and in future years; however, the commenter expressed
several concerns with the methods and assumptions used. For example,
the commenter requested CMS (i) produce a range of impacts, (ii)
produce an alternative methodology based on adjustment to MOOP limits,
and (iii-iv) reconsider certain assumptions about MLR and migration
patterns. The commenter also asked if CMS, in considering migration
patterns, took note that many ESRD retirees are already in EGWPs or
that migration to MA plans will likely be higher in the under-65 ESRD
population due to the lack of alternatives.
Response: A range of impacts for the estimated costs to the
Medicare Trust Funds for removing the prohibition for ESRD
beneficiaries to enroll in MA plans is described in section VIII.E.1.
of this final rule.
CMS does not have the information readily available to produce an
alternative adjustment to MOOPs; the proposal related to the MOOP
limits for MA plans will be addressed in a future final rule. The cost
to the plan sponsor of having a MOOP is captured as a supplemental
benefit in the bid pricing. The plan sponsor bid pricing models and
methodologies are proprietary health plan information and are not
readily available to CMS. Furthermore, the MOOP for 2021 applies to all
MA enrollees (ESRD and non-ESRD) and we do not believe it is reasonable
to project alternative ESRD enrollment projections based on a MOOP that
applies to all MA enrollees.
We did consider the migration patterns for EGWP ESRD beneficiaries
versus Individual ESRD beneficiaries. We surmised that the costs
differences between EGWP and Individual ESRD coverages are not
significant enough to display the migration patterns separately.
Displaying projections at that coverage level would not provide further
understanding of the financial projections since the cost differences
are not too different.
We did consider the migration patterns for younger versus older
ESRD beneficiaries. In response to the commenter on page G24, we noted
that the higher average age of the MA ESRD enrollee versus the lower
average age of the FFS ESRD enrollee is a main reason that there are
fewer kidney transplants in the MA population. Our expectation is that
younger ESRD beneficiaries will begin to enroll in MA starting in 2021
and that the kidney transplant incidence rate for the two programs will
begin to merge.
After review and consideration of the comments, we are finalizing
this provision without modification.
2. 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, we will codify these
requirements so that, effective for the contract year beginning January
1, 2021, MA

[[Page 33888]]

organizations will no longer be responsible for costs for organ
acquisitions for kidney transplants for 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, Medicare FFS will cover the kidney acquisition costs for MA
beneficiaries, effective 2021.
Since the budget baseline has reflected this change from 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 15 or Table 14,
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.
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.
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 8, the FFS kidney transplant
incidence rate has historically often been more than three times the MA
rate.

Table 8--Medicare FFS and MA Kidney Transplants (2013-2017)
----------------------------------------------------------------------------------------------------------------
2013 2014 2015 2016 2017
----------------------------------------------------------------------------------------------------------------
Number of Kidney Transplants 13,964 13,866 14,400 15,191 15,346
FFS:...........................
ESRD Enrollment FFS (000's):.... 385 390 394 401 402
Transplant Incidence FFS (%):... 3.6 3.6 3.7 3.8 3.8
Number of Kidney Transplants MA: 929 1,015 957 1,137 1,382
ESRD Enrollment MA (000's):..... 69 78 89 96 108
Transplant Incidence MA (%):.... 1.3 1.3 1.1 1.2 1.3
----------------------------------------------------------------------------------------------------------------

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 9. 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.

Table 9--Medicare FFS and MA Kidney Transplants (2018-2030)
----------------------------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024
----------------------------------------------------------------------------------------------------------------
Number of Kidney Transplants MA & 17,230 17,747 18,279 18,828 19,392 19,974 20,573
FFS:..............................
Kidney Transplant Incidence FFS 3.9 4.0 4.0 4.2 4.3 4.4 4.3
(%):..............................
Kidney Transplant Incidence MA (%): 1.4 1.4 1.4 1.6 1.8 2.0 2.2
ESRD Enrollment FFS (000's):....... 401 401 408 373 358 353 352
ESRD Enrollment MA (000's):........ 120 131 137 186 213 231 242
----------------------------------------------------------------------------------------------------------------
2025 2026 2027 2028 2029 2030 .........
----------------------------------------------------------------------------------------------------------------
Number of Kidney Transplants MA & 21,191 21,826 22,481 23,155 23,850 24,566 .........
FFS:..............................
Kidney Transplant Incidence FFS 4.3 4.2 4.2 4.1 4.1 4.0 .........
(%):..............................
Kidney Transplant Incidence MA (%): 2.4 2.6 2.8 3.0 3.2 3.4 .........
ESRD Enrollment FFS (000's):....... 354 358 364 369 374 379 .........
ESRD Enrollment MA (000's):........ 250 256 261 266 270 274 .........
----------------------------------------------------------------------------------------------------------------

[[Page 33889]]

Then we 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 10, 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.

Table 10--Costs to the FFS Program for Covering MA Kidney Acquisition Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021-2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney Transplant Incidence MA 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 .........
(%):..........................
ESRD Enrollment................ 186 213 231 242 250 256 261 266 270 274 .........
MA.............................
(000's):.......................
Avg Kidney Acq Costs........... 99,146 103,804 108,680 113,786 119,131 124,728 130,587 136,722 143,145 149,870 .........
($'s):.........................
Gross Costs.................... 297.9 401.3 503.0 605.7 713.5 828.7 950.2 1,082.5 1,226.1 1,383.7 7,992.6
($Millions):...................
Avg Gov't Share of Gross 83.0 83.0 83.0 83.1 83.2 83.2 83.2 83.4 83.4 83.4 .........
Savings (%):..................
Net of Part B Premium (%):..... 85.6 85.6 85.5 85.4 85.3 85.2 85.0 84.9 84.9 84.9 .........
Net Costs ($Millions):......... 211.7 284.9 357.0 429.5 506.0 587.1 672.3 766.5 869.1 980.8 5,664.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

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:
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.
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 11.
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.

Table 11--Per-Year Calculations, Representing the Pre-Statute Baseline Based on Medicare FFS Coverage of Kidney Acquisition Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013 2014 2015 2016 2017 2018 2019 2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney Acq..................... 1.72 1.82 1.95 2.08 2.20 2.34 2.49 2.65 ......... ......... .........
Costs..........................
(PMPM):........................
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021-2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney Acq Costs (PMPM):....... 2.82 3.00 3.20 3.40 3.62 3.85 4.10 4.36 4.64 4.94 .........
Medicare Advantage Enrollment 24,690 25,624 26,508 27,380 28,237 29,070 29,861 30,607 31,313 32,035 .........
Projection (000's):...........
Gross Savings ($Millions):..... 836.2 923.5 1,016.6 1,117.4 1,226.3 1,343.4 1,468.4 1,601.7 1,743.7 1,898.4 13,175.6

[[Page 33890]]

Average government share of 83.0 83.0 83.0 83.1 83.2 83.2 83.2 83.4 83.4 83.4 .........
Gross Savings (%):............
Net of Part B Premium (%):..... 85.6 85.6 85.5 85.4 85.3 85.2 85.0 84.9 84.9 84.9 .........
Net Savings ($Millions):....... 594.1 655.7 721.5 792.3 869.5 951.7 1,038.9 1,134.1 1,235.9 1,345.6 9,339.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

Comment: A commenter expressed concern about the estimates in the
regulatory impact analysis that concluded the net savings attributable
to the exclusion of kidney acquisition costs from MA benchmarks exceed
the net costs attributable to FFS coverage of kidney acquisition costs.
The commenter also pointed to the Congressional Budget Office's
November 2016 cost estimate of the Cures Act, which reported no change
in federal spending, to underscore the notion that the net savings
estimated in the proposed rule were not intended by the change in law.
Response: We thank the commenter for this feedback. Total MA kidney
acquisition costs have historically been lower than total FFS kidney
acquisition costs for two main reasons: (1) MA transplant incidence has
been lower than FFS transplant incidence; and (2) MA ESRD enrollment
(as a percent of total MA enrollment) has been lower than FFS ESRD
enrollment (as a percent of total FFS enrollment). These factors result
in a lower number of MA kidney transplants per capita versus FFS kidney
transplants per capita. We expect savings from the exclusion of kidney
acquisition costs from the MA benchmarks since MA plans have
historically been reimbursed for these costs based on the higher rate
of transplantation in FFS. We believe our impact analysis sufficiently
outlined why the shift in responsibility from MA to FFS is not budget
neutral.
Comment: Some commenters requested that we explain why the
estimates in the 2021 Advance Notice appear to diverge from the
estimates included in the proposed rule. The commenters indicated that
the FFS cost of kidney acquisition would be an estimated $2.82 PMPM
while the Advance Notice indicated that the carve-out impact estimate
would be $4 PMPM.
Response: The Medicare FFS cost of kidney acquisitions estimate
provided in the proposed rule is a national estimate of the impact on
the Medicare Trust Funds. In contrast, the preliminary estimate
provided in the calendar year 2021 Advance Notice represents a county-
level average impact of excluding kidney acquisition costs from FFS
experience on the MA non-ESRD county rates. Additionally, the estimates
provided in the proposed rule and the Advance Notice were calculated
using different trending assumptions and underlying data. The updated
estimate of the impact figure that was provided in the calendar year
2021 Advance Notice is $3.
Comment: A few commenters questioned the credibility of county
level data in determining the kidney acquisition cost carve-out amounts
and requested that CMS release the supporting data and analyses. A
commenter specifically pointed to Tables 26 and 27 in the proposed
rule, noting that there were approximately 75,000 kidney transplants
paid by FFS during 2014-2018 (the data period used to compute the
kidney acquisition carve-out amounts). The commenter expressed concern
regarding the credibility of using 75,000 events to develop 3,225
county specific carve-out factors, and requested that the kidney
acquisition cost factors be developed across broader geographic areas
than counties in order to mitigate variability and potential
credibility issues that may exist when forecasting county level carve-
out amounts.
Response: CMS provided a step-by-step description of the
methodology for calculating the kidney acquisition costs to be excluded
from the MA benchmarks on pages 25 and 26 of the calendar year 2021
Advance Notice.\55\ Consistent with the statutory requirement to
exclude the cost of kidney acquisitions for organ transplants from the
primary components of the MA capitation rates, CMS finalized the kidney
acquisition carve-out methodology after considering all public comments
received.
---------------------------------------------------------------------------

\55\ The Advance Notice and Rate Announcement for each year are
available online at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.
---------------------------------------------------------------------------

Organ acquisition costs for transplants are paid on a reasonable
cost basis, separately from the MS-DRG (Medicare Severity Diagnosis
Related Group) payment. Hospitals are paid the estimated amount for
these costs through interim biweekly payments throughout the year,
referred to as ``pass-through amounts'' (pass-through amounts include
other costs as well). For MA rate calculations to date, these FFS pass-
through amounts are estimated and specifically added to the inpatient
claim records to account for the eventual payment in the FFS program on
a reasonable cost basis. The kidney acquisition costs included in the
pass-through amounts are added to all discharges from kidney transplant
centers by the county of the beneficiary's residence. Since the number
of these discharges greatly exceeds the number of transplants, there is
sufficient data to calculate credible kidney carve out factors and
there is no need to adjust for credibility. Kidney acquisition costs
are not allocated by the number of transplants. Since the pass-through
KAC amounts are calculated and included at the county level, the carve-
out factors must be developed at the county level to be consistent.
Comment: A commenter expressed concern about potential barriers to
access to transplantation in MA, citing language in the proposed rule
that stated that the transplant incidence rate for ESRD beneficiaries
has historically been higher in FFS than in MA.
Response: Our data indicated that MA ESRD enrollees have been in
dialysis status for a shorter duration and are typically older than FFS
ESRD enrollees. We have observed that in the Medicare program, the
incidence of kidney transplants is typically inversely correlated with
age; the younger the ESRD enrollee, the more likely that a kidney
transplant will occur. Historically, MA enrollees are less likely than
FFS enrollees to receive a kidney transplant since the average age of
MA ESRD enrollees is higher than the average age of FFS ESRD enrollees.
It is our interpretation of this data that on average, older ESRD
enrollees are not as likely to be eligible for a kidney transplant due
to other underlying health conditions that typically occur as these
enrollees age. The 2020 Kidney Disease: Improving Global Outcomes
(KDIGO) Clinical Practice Guideline on the Evaluation and Management of
Candidates for Kidney Transplantation

[[Page 33891]]

outlines a comprehensive, evidence-based set of guidelines and
recommendations designed to assist health care professionals assess
suitability for candidacy for kidney transplantation. While clinicians
are advised against excluding patients because of age alone, the
guidelines recommend that they consider age in the context of other
comorbidities, including frailty, which may affect outcomes. As MA
enrollees have typically become eligible for Medicare due to age and
disability and are, on average, older than FFS enrollees, MA ESRD
enrollees may, on average, be more likely to have comorbidities that
make them less suitable for kidney transplantation. As more ESRD
beneficiaries enroll in MA plans, we anticipate that the profile of
these beneficiaries will change and the difference in the transplant
incidence rate for ESRD beneficiaries enrolled in MA and those in FFS
will decrease.
After careful consideration of all comments received, we are
finalizing the exclusion of kidney acquisition costs from MA benchmarks
and coverage under FFS Medicare as proposed.
3. 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. Therefore, we are unable to
quantitatively estimate the impacts of this provision.
We solicited stakeholder comment on (i) how this provision may be
used, (ii) likely costs and savings, and (iii) other related impacts.
We received no comments on this regulatory impact analysis for this
proposal and therefore are finalizing this provision without
modification.
4. Medicare Advantage (MA) and Part D Prescription Drug Program Quality
Rating System (Sec. Sec. 422.162, 422.166, 423.182, and 423.186)
We proposed measure updates as well as the methodology changes
(concerning outliers and the weight of patient experience/complaints
and access measures). These measure updates are routine and do not have
an impact on the highest ratings of contracts (that is, 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.
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 final rule and without the final rule. There are two ways that
our final rule could cause a contract's Star Rating to change: (1) To
increase measure weights for patient experience/complaints and access
measures from two to four; and (2) 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 after the first year, 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 final rule. There are two ways
that Star Ratings changes will impact the Medicare Trust Fund:
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).
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 final 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 the following:
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 12. The last column of Table 12
presents net savings to the Medicare Trust Fund once both provisions
are in place; in 2024 the costs are $345.1 million; the net savings
will grow over time reaching $999.4 million by 2030. The first year
only includes the implementation of the weight change, while future
years include both the weight change and Tukey outlier deletion
resulting in a change from the first year as a cost to the Medicare
Trust Fund to a net savings in future years. The aggregate savings over
2024 to 2030 are $4.1 billion. Ordinary inflation is carved out of
these estimates. The source for ordinary inflation is Table II.D.1. 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 increase in the weight of measures classified as

[[Page 33892]]

patient experience/complaints and access measures in 2029. This is due
to several contracts that are projected to achieve a 4.0 Star Rating in
2029 and are eligible for the QBP at that time, even after this final
rule is applied. This narrows the difference in costs between the final
rule and the original baseline.
The impact on costs is not seen until 2024 for the increase in
weights and 2025 for the Tukey outlier deletion since these policies
are being implemented for the 2021 and 2022 measurement years (meaning
performance periods), respectively. A change for the 2021 measurement
year impacts the 2023 Star Ratings which determines the MA QBPs for the
2024 contract year. Similarly, a change for the 2022 measurement year
impacts the 2024 Star Ratings which determines the MA QBPs for the 2025
contract year.

Table 12--Calculations of Net Savings per Year to the Medicare Trust Fund for Star Ratings Updates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased cost
(weight) in Savings from
Increased cost patient access Tukey outlier Net savings
(weight) in and experience/ Savings from deletion ($ with ordinary
Calendar year Ordinary patient access complaints ($ Tukey outlier millions) with inflation
inflation (%) and experience/ millions) with deletion ($ ordinary carved out ($
complaints ($ ordinary millions) inflation millions)
millions) inflation carved out
carved out
--------------------------------------------------------------------------------------------------------------------------------------------------------
2024.................................................... 3.20 391.4 345.1 0 0.0 -345.1
2025.................................................... 3.20 305.4 260.9 935 798.8 537.9
2026.................................................... 3.20 296.1 245.1 1,029.00 851.8 606.7
2027.................................................... 3.20 343.4 275.4 1,110.50 890.8 615.3
2028.................................................... 3.20 301.1 234.0 1,296.50 1007.7 773.7
2029.................................................... 2.60 93.9 71.1 1,356.90 1027.9 956.8
2030.................................................... 2.60 95.7 70.7 1,449.20 1070.0 999.4
Totals with inflation carved out.................... .............. .............. 1502.3 .............. 5647.0 4144.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: In all but the last column both costs and savings are expressed as positive numbers. Positive numbers in the last column indicate savings while
negative numbers indicate net cost.

We received the following comments on our estimates of cost
impacts, and our responses follow.
Comment: A couple of commenters wanted more information on the
modeling related to the financial impacts.
Response: The modeling is based on taking the difference of the MA
baseline with the Star Ratings changes (Tukey outlier deletion and the
weight increase for patient experience/complaints and access measures)
and the original MA baseline which is described in the Medicare
Trustees Report available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2019.pdf. CMS assumptions related to enrollment and revenue
growth are available in the Medicare Trustees Report. Some commenters
referenced analyses that Wakely \56\ conducted that suggested a higher
impact for deletion of outliers. As we are implementing these changes
on top of guardrails, which will already limit significant movements of
cut points from year-to-year, we do not believe that the estimates
should be higher than what was included in the notice of proposed
rulemaking.
---------------------------------------------------------------------------

\56\ Wakely Consulting Group. Star Rating Variability of Patient
Experience and Access Measures: Analyzing the Impact of Variable
Star Rating Cut Points and Measure Level Results. March 2020.
---------------------------------------------------------------------------

As many commenters noted, the COVID-19 public health emergency does
create more uncertainly in terms of how performance and quality metrics
will change following the pandemic. At this time there is too much
uncertainty to revise these estimates to reflect the impact of the
pandemic on quality measure scores. CMS will continue to monitor the
impact for additional changes.
Comment: A few commenters mentioned the analysis by Wakely
referenced in the prior comment which suggests that CMS may have
overestimated the weight impact on Star Ratings for plans. The report
also found there is significant year-over-year volatility in average
Star Ratings for patient experience/complaints and access measures,
despite consistent trends in plan performance over time and that
increasing the weight of these measures could impact the stability of
the Star Ratings program.
Response: The Wakely report claims that the volatility in cut
points over time is primarily driven by the clustering methodology. CMS
disagrees with this conclusion. The majority of measures included in
the patient experience/complaints and access categories do not use the
clustering methodology. CAHPS measure Star Ratings are calculated using
relative distribution and significance testing, per Sec. Sec.
422.166(a)(3) and 423.186(a)(3). CMS has seen over time that changes in
measure cut points are primarily driven by differences in the
distribution of scores over time and changes in industry performance.
It is also not clear whether Wakely took into consideration other
changes to the Star Ratings methodology over time, including the
retirement of the Part D appeals and BMI measures.
In the proposed rule, CMS proposed outlier deletion using the Tukey
outer fence outlier removal. The main objective of removing outliers is
to stabilize cut points and prevent large year-to-year fluctuations in
cut points. Even for skewed distributions, Tukey outlier removal works
to stabilize cut points to avoid substantial year-to-year fluctuations
in cut points that can be caused by extreme outliers.
Comment: A couple of commenters questioned the budget estimates for
the new policies. They mentioned the Wakely report noting that the
report estimated that increasing the weights of patient experience/
complaints and access measures in the 2023 Star Ratings would only
increase MA plan payments by $83 million--nearly 5 times less than what
CMS estimated. A commenter stated that when combined with the proposal
to exclude outliers, more MA enrollees would be in plans negatively
impacted than those who would see positive results. The commenter
requested CMS to first provide more details on its methodology to allow
plans to run similar simulations to better understand the impact of the

[[Page 33893]]

proposed change to the weighting for these measures and plan ratings
Response: It is unclear to CMS how Wakely did their simulations.
For example, it appears that Wakely did not understand that the CAHPS
measures are not calculated using the clustering methodology, and
consequently, Tukey outlier deletion would not be applied to that group
of measures. CMS simulations were conducted assuming the implementation
of guardrails which limits the fluctuation in cut points and assuming
the retirement of the Part D appeals and BMI measures. Wakely stated
they applied mean resampling and guardrails to the Star Rating cut
points prior to applying Tukey outlier deletion; therefore, the
estimated impact of Tukey outlier deletion does not include the impact
of mean resampling and guardrails. We specifically proposed that prior
to applying mean resampling with hierarchal clustering, Tukey outer
fence outliers are removed and this is how CMS conducted the
simulations. This may be causing some of the discrepancies. As
described above, CMS estimated the change in the ratings of MA
contracts and then modeled the cost impact using that information and
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 the USPCC growth rates, adjustment to
MA risk scores, quality bonuses (county-specific), and phase-out of
indirect medical education (county-specific).
After careful consideration of all comments received, and for the
reasons set forth in our responses to the related comments summarized
earlier, we are finalizing our impact analysis for the Star Ratings
updates to include delayed implementation of Tukey outlier deletion by
one year.
5. Medical Loss Ratio (MLR) (Sec. Sec. 422.2420, 422.2440, and
423.2440)
Regulatory Changes to Incurred Claims (Sec. [thinsp]422.2420)
As discussed in section IV.D.2 of this final rule, we are
finalizing our proposal 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. Prior to this regulatory
change, Sec. 422.2420(b)(2)(i) specified that incurred claims include
direct claims that an MA organization pays to providers as defined in
Sec. 422.2 (including under capitation contracts with physicians) for
covered services provided to all enrollees under the contract.
We proposed this amendment so that incurred claims in the MLR
numerator will include expenditures for certain supplemental benefits
that MA organizations are newly authorized to offer to MA enrollees as
a result of recent policy and legislative changes. As explained in
greater detail in section II.A. of this final rule and sections II.A.
and VI.F. of the proposed rule, recent subregulatory guidance and
statutory changes have expanded the types of supplemental benefits that
MA organizations may offer to enrollees. 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' interpretation of ``primarily health related benefits,''
which is used as a criterion 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 amendments to Sec.
422.2420(b)(2)(i) would not impact MA enrollee benefits. In other
words, the analysis assumes the 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.
The requirements pertaining to the calculation and reporting of MA
contracts' MLRs are presented in 42 CFR part 422, subpart X. MA
organizations that do not meet the 85 percent minimum MLR requirement
for a contract year are required to remit funds to us (Sec.
422.2410(b)). We collect remittances by deducting the amounts owed from
MA organizations' monthly payments (Sec. 422.2470(c)). In the absence
of statutory language directing us to return remitted funds to the
Medicare Trust Fund, we transfer 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 meet 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 the amendments to Sec. 422.2420(b)(2)(i), which
we are finalizing in this final rule, 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 amendments to
Sec. 422.2420(b)(2)(i) that we are finalizing, incurred claims would
include amounts 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 would not have satisfied the 85 percent
minimum MLR requirement 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, we anticipate
that the amendments to Sec. 422.2420(b)(2)(i) that we are finalizing
will effectively result in a transfer of funds from the Treasury

[[Page 33894]]

to the MA organizations through the Medicare Trust Fund. Amounts that
MA organizations would remit and which the Treasury would receive under
the regulations prior to their amendment by this final rule will
instead remain with the MA organizations, implying that MA
organizations will enjoy cost savings while the Treasury has a cost
impact. The net impact on the Medicare Trust Fund is expected to be
zero, since there will be no additional transfers from or to the
Medicare Trust Fund; the only issue will be 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 amendments to Sec.
422.2420(b)(2)(i) that we are finalizing, 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
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 our 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 Sec. 422.2420(b)(2)(i), as
defined prior to the amendment that we are finalizing in this final
rule, 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 13, which shows that for the
first year of the finalized provision, 2021, there will effectively be
a transfer from the Treasury through the Medicare Trust Fund of $35.3
million to MA organizations. (For computational transparency, the table
also shows the amounts that would have been transferred to MA
organizations for 2017--2020 if the change we are finalizing in this
final rule had been in place in those years.) This transfer is in 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 under the finalized provision) 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.

Table 13--Transfer of Remittances From the Treasury to MA Organizations
----------------------------------------------------------------------------------------------------------------
Medicare Average
Advantage annual per Ordinary Net costs ($
Year enrollment capita inflation millions)
increase increase %
----------------------------------------------------------------------------------------------------------------
2017............................................ .............. .............. .............. 25.8
2018............................................ 7.7 5.5 3.2 28.4
2019............................................ 6.7 5.5 3.2 31.0
2020............................................ 5.0 5.5 3.2 33.3
2021............................................ 3.6 5.5 3.2 35.3
2022............................................ 3.8 5.5 3.2 37.5
2023............................................ 3.5 5.5 3.2 39.7
2024............................................ 3.3 5.5 3.2 41.9
2025............................................ 3.1 5.5 3.2 44.2
2026............................................ 3.0 5.5 3.2 46.5
2027............................................ 2.7 5.5 3.2 48.8
2028............................................ 2.5 5.5 3.2 51.1
2029............................................ 2.3 5.5 2.6 53.8
2030............................................ 2.0 5.5 2.6 56.4
---------------------------------------------------------------
Total 2021-2030............................. .............. .............. .............. 455.2
----------------------------------------------------------------------------------------------------------------

[[Page 33895]]

We received no comments on our impact analysis and are finalizing
the proposal without modification.
Deductible Factor for MA Medical Savings Account (MSA) Contracts (Sec.
422.2440)
As discussed in section IV.D.4. of this final rule, we are
finalizing our proposal 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 deductible factor
will serve as a multiplier on the credibility factor. We are also
finalizing our proposal 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 will 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.
In section IV.D.4. of this final rule, we explain that we proposed
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 deductible factors would 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
uncertain 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 change to the MLR calculation for
MA MSAs will be as low as $0 or as high as $40 million over 10 years
(2021-2030).
We do not anticipate that applying a deductible factor to the MLR
calculation for MA MSA contracts will have an impact on remittances to
the federal government. For contract years 2014-2018 (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 deductible factor had applied to the MLR calculation for MA MSAs
for contract years 2014-2018, 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 after the
deductible factor is applied to the MLR calculation, starting in
contract year 2021. We anticipate that new MA MSA contracts that MA
organizations may choose to offer as a result of this regulatory 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 deductible factor.
We believe that the cost impact of this regulatory 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 change to the MLR calculation. To
develop the upper limit of the cost estimate for this impact analysis
($40 million over 10 years), we assumed that the change to the MLR
calculation for MSAs would cause MA MSA enrollment to double over the
first 3 years that the change is in effect. We estimated that, relative
to previous enrollment projections that did not account for the
amendments that we are finalizing in this final rule, this regulatory
change MSA enrollment will be 33.33 percent higher in 2022, 66.67
percent higher in 2023, and 100 percent higher in 2024 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 did consider the migration patterns for EGWP ESRD beneficiaries
versus Individual ESRD beneficiaries. We surmised that the costs
differences between EGWP and Individual ESRD coverages are not
significant enough to display the migration patterns separately.
Displaying projections at that coverage level would not provide further
understanding of the financial projections since the cost differences
are not too different. Furthermore, EGWP plans have not submitted bids
since 2017 and their payments are based on aggregated Individual bids
so the cost differences would not be expected to be too different.
We then determined the difference between the amount we pay for
each MA MSA plan enrollee and the amount we pay for each enrollee in a
non-MSA MA plan or FFS Medicare. We generally incur 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 non-MSA MA plans
that bid under the benchmark, we retain between 30 percent and 50
percent of the amount by which the benchmark exceeds the bid. FFS
spending per enrollee is approximately 100 percent of the amount we pay
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 14. 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 14--Estimated Cost per Year to the Medicare Trust Fund for Changes to MLR Calculation for MA MSA Contracts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contract year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021-2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual cost (millions)......... $0.0 $1.2 $2.4 $4.0 $4.4 $4.8 $5.2 $5.6 $6.0 $6.4 $40.0
Proposed Annual Increase in MA 0 2,604 5,453 8,531 8,876 9,213 9,531 9,833 10,118 10,354 .........
MSA Enrollment................
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 33896]]

We received no comments on our impact analysis and are finalizing
the proposal without modification.
6. Medicare Advantage (MA) and Cost Plan Network Adequacy (Sec. Sec.
417.416 and 422.116)
Our final rule codifies the standards and methodology used
currently, with some modifications, to evaluate network adequacy for MA
plans and section 1876 cost plans; the final rule 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 final rule 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 final rule 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 are finalizing three modifications to current network
adequacy policy that may have qualitative impacts on MA organizations.
In Micro, Rural, and CEAC county designation types, we are reducing the
percentage of beneficiaries residing within maximum time and distance
standards from 90 percent to 85 percent. We will allow for a 10-
percentage point credit towards the percentage of beneficiaries
residing within maximum time and distance when MA organizations
contract with one or more telehealth providers in the specialties of
Dermatology, Psychiatry, Neurology, Otolaryngology, Cardiology,
Ophthalmology, Allergy and Immunology, Nephrology, Primary Care,
Gynecology/OB/GYN, Endocrinology, and Infectious Diseases. Similarly,
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, if the
laws 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. We received no comments on the regulatory
impact of this proposal, and therefore, we are finalizing this
provision without modification.

E. Alternatives Considered

We intend to address the proposals that had Alternatives Considered
sections from the February 2020 proposed rule in subsequent rulemaking.
CMS did not develop Alternatives Considered sections for most of the
provisions in this final rule as they generally are direct
implementations of federal laws or codifications of existing policy for
the Part C and D programs. In this section, CMS includes discussions of
Alternatives Considered for the provisions to which they are
applicable.
1. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease
(ESRD) Beneficiaries (Sec. Sec. 422.50, 422.52, and 422.110)
We have considered alternatives to estimated costs to the Medicare
Trust Funds for removing the prohibition for ESRD beneficiaries to
enroll in MA plans. Table 7 above displays the baseline scenario that
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, with half of the beneficiaries (41,500) enrolling during 2021.
Table 7 shows the net cost to range from $23 million in CY 2021 to $440
million in CY 2030 which sums to $2.66 billion cost for those 10 years.
The upper scenario uses the assumption that the entire ESRD
enrollment increase in MA plans of 83,000 will occur in 2021. All other
assumptions are expected to remain the same as those in the baseline.
Under this upper scenario, net costs are expected to range from $45
million in CY 2021 to $440 million in CY2030

[[Page 33897]]

which sums to $2.73 billion cost for the 10 year projection period.
The lower scenario uses a slower ESRD enrollment increase
assumption. Under this scenario, the ESRD enrollment will linearly
increase from 8,300 in 2021 to 83,000 in 2030. All other assumptions
are expected to remain the same as those in the baseline. Under this
lower scenario, net costs are expected to range from $5 million in CY
2021 to $440 million in CY2030 which sums to $1.87 billion cost for the
10 year projection period.
2. 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 have considered alternative methodologies for deleting outliers
prior to clustering for determining cut points for non-CAHPS measures
for the Star Ratings program.
For example, we have considered trimming, which removes scores
below and above a certain percentile. As stated in the NPRM, this
methodology would remove scores regardless of whether they are true
outliers; thus, this methodology would not meet the policy goal of
removing outliers as well as the approach we proposed and might not
have a negligible impact on the cost estimates.
For the Tukey outlier deletion provision as described in section
VIII.D.5. of this final rule, we considered which year it should begin.
In the NPRM we proposed for it to begin for the 2021 measurement year,
which impacts the 2023 Star Ratings and 2024 Quality Bonus Payment
ratings. To provide more time for the healthcare delivery system to
adapt to changes from the COVID-19 pandemic, we are finalizing a delay
until the 2022 measurement year, which impacts the 2024 Star Ratings
and the 2025 Quality Bonus Payment ratings. The cost impact of this
change is $713 million (that is, this amount will not be saved from the
Medicare Trust Fund in 2024).
We have also considered alternatives to the doubling of the weight
from 2 to 4 for patient experience/complaints measures and access
measures for the Star Ratings program as described in section VIII.D.5.
of this final rule. For example, we considered a weight increase to 3
or 5 for these measures. With a weight increase to 3, there are very
small changes in the number of contracts that would increase their
highest Star Rating, resulting in negligible impacts on Quality Bonus
Payments and costs to the Medicare Trust Fund relative to a weight of
4. Similarly, if we were to increase the weight even further to 5, we
anticipate even greater impacts on the Quality Bonus Payments and,
consequently, costs to the Medicare Trust Fund.
Finally, we considered delaying any weight increase given the
uncertainty about how COVID-19 will impact the healthcare system;
however, we decided to proceed to further emphasize the importance of
patient experience/complaints measures and access measures.
3. Medical Loss Ratio (MLR) (Sec. Sec. 422.2420, 422.2440, and
423.2440)
We considered finalizing the proposal to add a deductible factor to
the MLR calculation for MA MSA contracts (section VIII.D.6. of this
final rule) with an applicability date of January 1, 2022, rather than
January 1, 2021, since this rule is not being finalized until after the
deadline for MA organizations to apply to offer MSA plans in 2021.
However, as discussed in greater detail in section IV.D.4. of this
final rule, we believe that the credibility factors used to adjust the
MLRs of low enrollment contracts do not adequately account for the
impact of claims variability on the MLRs of high deductible MSA
contracts. We therefore believe it is appropriate that we finalize the
provision to add a deductible factor to the MLR calculation for MA MSA
contracts with an applicability date of January 1, 2021, as this will
allow the deductible factor to be applied when calculating the contract
year 2021 MLRs for current MA MSA contracts. However, as no current MA
MSA contract has failed to meet the minimum MLR requirement for a
previous contract year, we do not anticipate that applying a deductible
factor to those contracts' contract year 2021 MLRs will have an impact
on remittances.

F. 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 15, we
have prepared an accounting statement showing the savings, costs, and
transfers associated with the provisions of this final rule for
calendar years 2021 through 2030. Table 15 is based on Tables 16A, 16B,
and 16C which lists savings, costs, and transfers by provision. Table
15 is expressed in millions of dollars with both costs and savings
listed as positive numbers; aggregate impact is expressed as a negative
number (cost versus savings). The sign of the transfers follow the
convention of Table 16 with positive 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 impact of this rule is a
cost of about $1.9 million per year. The raw aggregate cost over 10
years is $18.5 million. Due to transfers, there is net annualized
reduced spending by government agencies (the Medicare Trust Fund and
Treasury) of $290-$335 million. A breakdown of these savings from
various perspectives may be found in Table 16.

Table 15--Accounting Table
(millions $) *
----------------------------------------------------------------------------------------------------------------
Item Annualized at 7% Annualized at 3% Period Who is impacted
----------------------------------------------------------------------------------------------------------------
Net Annualized Monetized Savings (1.9)............. (1.9)............. Contract Years Federal
2021-2030. government, MA
organizations and
Part D Sponsors.
Annualized Monetized Savings.... .................. .................. Contract Years ..................
2021-2030.
Annualized Monetized Cost....... 1.9............... 1.9............... Contract Years Federal
2021-2030. government, MA
organizations and
Part D Sponsors.

[[Page 33898]]

Transfers....................... (293.7)........... (334.5)........... Contract Years Transfers between
2021-2030. the 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 $421.99 and $447.65 savings at
7 percent and 3 percent respectively. Note: Negative numbers indicate a net reduction in dollar spending by
the government.

The following Table 16 summarizes savings, costs, and transfers by
provision and forms a basis for the accounting table. For reasons of
space, Table 16 is broken into Table 16A (2021 through 2024), Table 16B
(2025 through 2028), and Table 16C (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 16A, B, and C form the basis for Table
15.

[[Page 33899]]

[GRAPHIC] [TIFF OMITTED] TR02JN20.001

[[Page 33900]]

Table 16C--Aggregate Savings, Cost, and Transfers in Millions by Provision and Year From 2029 Through 2030 and Raw Totals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Raw 10 year Raw 10 year Raw 10 year
2029 2029 Cost 2029 2030 2030 Costs 2030 totals totals totals
Savings Transfers Savings Transfers (savings) (costs) (transfers)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Savings...................... ........... ........... ........... ........... ........... ........... ........... ........... ...........
Total Costs........................ ........... 1.8 ........... ........... 1.8 ........... ........... 18.5 ...........
Aggregate Total.................... (1.8) ........... ........... (1.8) ........... ........... (18.5) ........... ...........
Total Transfers.................... ........... ........... (900.0) ........... ........... (939.8) ........... ........... (3,669.4)
Health Plan Quality Rating system.. ........... ........... (956.8) ........... ........... (999.4) ........... ........... (4,144.6)
Medical Loss Ratio Regulation...... ........... ........... 53.8 ........... ........... 56.4 ........... ........... 455.2
MSA MLR............................ ........... ........... 3.0 ........... ........... 3.2 ........... ........... 20.0
SSBCI.............................. ........... 1.8 ........... ........... 1.8 ........... ........... 18.5 ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------

The following information supplements Table 16 and also identifies
how impacts calculated in section VII of this final rule affect the
calculations of this section and the tables.
Table 16 includes a row for the paperwork burden of the
SSBCI provision, whose impact is about $1 million a year.
For the transfer rows, positive numbers indicate transfers
that result in increased dollar spending by the government, while
negative numbers indicate transfers that result in reduced dollar
spending by the government. Costs are expressed as positive numbers;
however, net savings are expressed as negative numbers to reflect that
the net impact is a cost, not a savings.
For two provisions, Parts C and D SEPs, and ESRD
enrollment, calculations of impact, either paperwork impact or Medicare
Trust Fund impact, 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 16. Similarly, as explained the section VII, since
the SSBCI paperwork burden is already being spent (similar to SEP), the
burden is not included in the summary table.
Besides the enrollment burden for the SEP provision, there
is an additional cost of $0.5 million arising from burden to
beneficiaries for filling out enrollment forms in several provisions.
These costs have been duly noted in section VII of this final rule but
were not included in Table 16 since Table 16 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 VII of this final rule is $0.0 million and
hence these amounts are not included in Table 16. They are however
included in Table 6 of section VII of this final rule.
We received comments on impacts in certain individual provisions.
These comments as well as our responses have been addressed in the
appropriate provision sections above. However, none of these comments
led to changes in impacts. Additionally, we did not receive any
comments on the summary or monetized table and are therefore finalizing
these numbers as is with appropriate adjustments for provisions not
included in this first final rule.

G. Conclusion

As indicated in Table 16, while the SSBCI provision has a paperwork
burden of about $1 million per year, the other provisions of this final
rule are all classified as transfers because consumption of goods or
usage of services is neither increased nor decreased. However, we note
that the provisions of this part 1 of this final rule will reduce
dollar spending of the government by about $300 million a year. The
primary driver of this is the Tukey outlier provision.
As indicated in Table 16, the government agencies have a net
reduction in spending of $3.65 billion over 10 years. The driver of
reduction is the use of the Tukey outlier deletion for Star Ratings
after the first year of implementation. Other provisions also affect
government spending: (1) The MLR provisions will reduce civil penalties
to the Treasury by about 0.46 billion; (2) the MLA MSR provisions will
cost the government an extra $40 million due to increased spending on
benefits arising from expected increased MSA enrollment; (3) the
increased weight in patient experience/complaints and access measures
and Tukey outlier deletion in the health plan quality rating system
(Star Ratings) will reduce Medicare Trust Fund spending by about $1.5
billion.

H. Reducing Regulation and Controlling Regulatory Costs

Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017, and requires that the
costs associated with significant new regulations ``shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least two prior regulations.'' This rule has an
aggregate cost of $1 million a year arising from paperwork burden
associated with the SSBCI provision, and consequently, this rule is
classified as a regulatory action for the purposes of Executive Order
13771. At a 7 percent rate, this rule is estimated to cost $1.2 million
a year in 2016 dollars over an infinite horizon.

List of Subjects

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.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:

[[Page 33901]]

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

0
1. The authority citation for part 417 continues 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
2. 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.

PART 422--MEDICARE ADVANTAGE PROGRAM

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

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

0
4. 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 in either of the following ways--
(1) The MA organization must retain risk for at least the first
$10,000 in costs per individual enrollee for providing basic benefits
during a contract year; or
(2) If the MA organization uses insurance or makes other
arrangements for sharing such costs proportionately on a per member per
year first dollar basis, the MA organization must retain risk based on
the following:
(i) The actuarially equivalent value of the retained risk is
greater than or equal to the value of risk retained in paragraph (a)(1)
of this section.
(ii) The MA organization makes a determination of actuarial
equivalence based on reasonable actuarial methods. For example, a
reasonable method for determining actuarial equivalence would be to
equate the percentage of net claim costs that the MA organization would
retain under paragraphs (a)(1) and (a)(2)(i) of this section.
(b) In evaluating compliance with section 1855(b) of the Act and
with paragraph (a) of this section, CMS will consider a parent
organization and any of its subsidiaries to be part of the MA
organization.
(c) The type of payment arrangement used between an MA organization
and contracting physicians, other health professionals or institutions
for the financial risk specified in section 1855(b)(4) of the Act (that
is, the financial risk on a prospective basis for the provision of
basic benefit by those physicians or other health professionals or
through those institutions) is not limited by paragraph (a) of this
section.

Sec. 422.50 [Amended]

0
5. 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
6. 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
7. 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 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

[[Page 33902]]

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 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 an emergency or major disaster
declared by a Federal, state or local government entity are eligible
for a SEP to make a MA enrollment or disenrollment election. The SEP
starts as of the date the declaration is made, the incident start date
or, if different, the start date identified in the declaration,
whichever is earlier, and ends 2 full calendar months following the end
date identified in the declaration or, if different, the date the end
of the incident is announced, whichever is later. The individual is
eligible for this SEP provided the individual--
(i)(A) Resides, or resided at the start of the SEP eligibility
period described in this paragraph (b)(18), in an area for which a
federal, state or local government entity has declared an emergency or
major disaster; or
(B) Does not reside in an affected area but relies on help making
healthcare decisions from one or more individuals who reside in an
affected area; and
(ii) Was eligible for another election period at the time of the
SEP eligibility period described in this paragraph (b)(18); and
(iii) Did not make an election during that other election period
due to the 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.

[[Page 33903]]

(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
8. 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
10. Section 422.102 is amended by adding paragraph (f) to read as
follows:

Sec. 422.102 Supplemental benefits.

* * * * *
(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 the standard in this paragraph (f)(1)(ii)
may also include a benefit that is not primarily health related.
(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 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 these criteria.
(iv) Document each determination that an enrollee is eligible to
receive an SSBCI and make this information available to CMS upon
request.

[[Page 33904]]

Sec. 422.110 [Amended]

0
11. 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
12. Section 422.116 is added to read as follows:

Sec. 422.116 Network adequacy.

(a) General rules--(1) Access. (i) 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.
(ii) CMS does not require information, other than an attestation,
regarding compliance with Sec. 422.116 as part of an application for a
new or expanding service area and will not deny application on the
basis of an evaluation of the applicant's network for the new or
expanding service area.
(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 the MA Medicare Sample Census)
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) [Reserved]
(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) Surgical Services (Outpatient or ASC).
(vi) Skilled Nursing Facilities.
(vii) Diagnostic Radiology.
(viii) Mammography.
(ix) Physical Therapy.
(x) Occupational Therapy.
(xi) Speech Therapy.
(xii) Inpatient Psychiatric Facility Services.
(xiii) 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 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

[[Page 33905]]

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 30 15 60 40 100 75 110 90 145 130
Oncology.......................
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 30 15 45 30 80 60 90 75 125 110
Medicine.......................
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-- 20 10 45 30 160 120 145 120 155 140
Intensive Care Units (ICU).....
Surgical Services (Outpatient or 20 10 45 30 80 60 75 60 110 100
ASC)...........................
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 30 15 70 45 100 75 90 75 155 140
Services.......................
Outpatient Infusion/Chemotherapy 20 10 45 30 80 60 75 60 110 100
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 33906]]

(3) By customization. When necessary due to utilization or supply
patterns, 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.
(vi) Ophthalmology.
(vii) Allergy and Immunology.
(viii) Nephrology.
(ix) Primary Care.
(x) Gynecology/OB/GYN.
(xi) Endocrinology.
(xii) Infectious Diseases.
(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 will 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, when necessary due to utilization or
supply patterns, customize the base time and distance standards.
(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:

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

[[Page 33907]]

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 number of 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 private-fee-for-service (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 regional preferred provider organization (RPPO),
local preferred provider organization (LPPO), HMO, HMO/provider
sponsored organization (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
13. Section 422.162 is amended in paragraph (a) by adding a definition
for ``Tukey outer fence outliers'' in alphabetical order to 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)).
* * * * *

0
14. Section 422.166 is amended--
0
a. By revising paragraph (a)(2)(i); and
0
b. In paragraphs (e)(1)(iii) and (iv) by removing the phrase ``weight
of 2'' and adding in its place ``weight of 4''.

The revision reads 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. Effective
for the Star Ratings issued in October 2022 and subsequent years, CMS
will add 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. Effective for the Star Ratings
issued in October 2023 and subsequent years, 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.
* * * * *

Sec. 422.258 [Amended]

0
15. 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 ``Sec. 422.306(c)'' and adding in
its place the reference '' Sec. 422.306(c) and (d)''.
165. 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

[[Page 33908]]

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
17. 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
18. 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
19. Section 422.514 is amended by--
0
a. Revising the section heading and the heading for paragraph (a).
0
b. Adding paragraphs (d), (e), and (f).

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:
(1) Enter into a contract under this subpart, for plan year 2022
and subsequent years, for a new MA plan that--
(i) Is not a specialized MA plan for special needs individuals as
defined in Sec. 422.2; and
(ii) 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 medical assistance under a state plan under title
XIX.
(2) Renew a contract under this subpart, for plan year 2023 and
subsequent years, for an MA plan that--
(i) Is not a specialized MA plan for special needs individuals as
defined in Sec. 422.2; and
(ii) 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)(ii) 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;
(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; and
(iv) Is of the same plan type (for example, HMO or PPO) as the plan
specified in paragraph (d)(2) of this section.
(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-PD plan into which individuals are transitioned
describes changes to MA-PD benefits and provides information about the
MA-PD plan in the Annual Notice of Change, which must be sent
consistent with Sec. 422.111(a), (d), and (e).
(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 a written notice to enrollees who are not transitioned,
consistent with Sec. 422.506(a)(2).
(f) Special considerations. Actions taken pursuant to paragraph (d)
of this section warrant special consideration to exempt affected MA
organizations from the denial of an application for a new contract or
service area expansion in accordance with Sec. Sec. 422.502(b)(3) and
(4), 422.503(b)(6) and (7), 422.506(a)(3) and (4), 422.508(c) and (d),
and 422.512(e)(1) and (2).

0
20. 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
21. 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

[[Page 33909]]

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
------------------------------------------------------------------------
Deductible
Weighted average 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
22. The authority citation for part 423 continues to read as follows:

Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152,
and 1395hh.

0
23. Section 423.38 is amended by revising paragraph (c)(8) and adding
paragraphs (c)(11) through (34) 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 any
of 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.
(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 2 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 3 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 33910]]

(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 an emergency or major disaster
declared by a federal, state or local government entity are eligible
for a SEP to make a Part D enrollment or disenrollment election. The
SEP starts as of the date the declaration is made, the incident start
date or, if different, the start date identified in the declaration,
whichever is earlier, and ends 2 full calendar months following the end
date identified in the declaration or, if different, the date the end
of the incident is announced, whichever is later. The individual is
eligible for this SEP provided the individual--
(i)(A) Resides, or resided at the start of the SEP eligibility
period described in this paragraph (c)(23), in an area for which a
Federal, state or local government entity has declared an emergency or
major disaster; or
(B) Does not reside in an affected area but relies on help making
healthcare decisions from one or more individuals who reside in an
affected area;
(ii) Was eligible for another election period at the time of SEP
eligibility period described in this paragraph (c)(23); and
(iii) Did not make an election during that other election period
due to the 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

[[Page 33911]]

the individual is enrolled in the low performing Part D plan.
(33) The individual was involuntarily disenrolled from an MA-PD
plan due to loss of Part B but continues to be entitled to Part A. This
SEP begins when the individual is advised of the loss of Part B and
continues for 2 additional months.
(34) The individual meets other exceptional circumstances as CMS
may provide.
* * * * *

0
24. 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
25. Section 423.182 is amended in paragraph (a) by adding a definition
for ``Tukey outer fence outliers'' in alphabetical order to read as
follows:

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

0
26. Section 423.186 is amended--
0
a. By revising paragraph (a)(2)(i); and
0
b. In paragraphs (e)(1)(iii) and (iv) by removing the phrase ``weight
of 2'' and adding in its place ``weight of 4''.
The revision reads 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. Effective
for the Star Ratings issued in October 2022 and subsequent years, CMS
will add 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 one year to the next. Effective for the Star Ratings
issued in October 2023 and subsequent years, 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.
* * * * *

0
27. 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
28. 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).
------------------------------------------------------------------------

Dated: May 7, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: May 20, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-11342 Filed 5-22-20; 8:45 am]
BILLING CODE 4120-01-P

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