Medicare Program; Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications, 78476-78630 [2023-24118]
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78476
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 401, 405, 417, 422, 423,
455, and 460
Office of the Secretary
45 CFR Part 170
[CMS–4205–P]
RIN 0938–AV24
Medicare Program; Contract Year 2025
Policy and Technical Changes to the
Medicare Advantage Program,
Medicare Prescription Drug Benefit
Program, Medicare Cost Plan Program,
and Programs of All-Inclusive Care for
the Elderly; Health Information
Technology Standards and
Implementation Specifications
Centers for Medicare &
Medicaid Services (CMS), Office of the
National Coordinator for Health
Information Technology (ONC),
Department of Health and Human
Services (HHS).
ACTION: Proposed rule.
AGENCY:
This proposed rule would
revise the Medicare Advantage (Part C),
Medicare Prescription Drug Benefit (Part
D), Medicare cost plan, and Programs of
All-Inclusive Care for the Elderly
(PACE) regulations to implement
changes related to Star Ratings,
marketing and communications, agent/
broker compensation, health equity,
dual eligible special needs plans (D–
SNPs), utilization management, network
adequacy, and other programmatic
areas. This proposed rule also includes
proposals to codify existing subregulatory guidance in the Part C and
Part D programs.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on January 5, 2024.
ADDRESSES: In commenting, please refer
to file code CMS–4205–P. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission. Comments, including
mass comment submissions, must be
submitted in one of the following three
ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
to https://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.
2. By regular mail. You may mail
written comments to the following
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SUMMARY:
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address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–4205–P, P.O. Box 8013, Baltimore,
MD 21244.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–4205–P, Mail
Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Carly Medosch, (410) 786–8633—
General Questions.
Naseem Tarmohamed, (410) 786–
0814—Part C and Cost Plan Issues.
Lucia Patrone, (410) 786–8621—Part
D Issues.
Kristy Nishimoto, (206) 615–2367—
Beneficiary Enrollment and Appeal
Issues.
Kelley Ordonio, (410) 786–3453—
Parts C and D Payment Issues.
Hunter Coohill, (720) 853–2804—
Enforcement Issues.
Lauren Brandow, (410) 786–9765—
PACE Issues.
Sara Klotz, (410) 786–1984—D–SNP
Issues.
Joe Strazzire, (410) 786–2775—RADV
Audit Appeals Issues.
Alexander Baker, (202) 260–2048—
Health IT Standards.
PartCandDStarRatings@
cms.hhs.gov—Parts C and D Star Ratings
Issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following
website as soon as possible after they
have been received: https://
www.regulations.gov. Follow the search
instructions on that website to view
public comments. CMS will not post on
Regulations.gov public comments that
make threats to individuals or
institutions or suggest that the
commenter will take actions to harm an
individual. CMS continues to encourage
individuals not to submit duplicative
comments. We will post acceptable
comments from multiple unique
commenters even if the content is
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identical or nearly identical to other
comments.
Plain Language Summary: In
accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this
proposed rule may be found at https://
www.regulations.gov/.
I. Executive Summary
A. Purpose
The primary purpose of this proposed
rule is to amend the regulations for the
Medicare Advantage (Part C) program,
Medicare Prescription Drug Benefit (Part
D) program, Medicare cost plan
program, and Programs of All-Inclusive
Care for the Elderly (PACE). This
proposed rule includes a number of new
policies that would improve these
programs beginning with contract year
2025 and proposes to codify existing
Part C and Part D sub-regulatory
guidance. Please note that the new
marketing and communications policies
in this rule are proposed to be
applicable for all contract year 2025
marketing and communications,
beginning September 30, 2024. This
proposed rule also includes revisions to
existing regulations in the Risk
Adjustment Data Validation (RADV)
audit appeals process and the appeals
process for quality bonus payment
determination that would take effect
and apply 60 days after publication of
a final rule. Revisions to existing
regulations for the use and release of
risk adjustment data would also take
effect and apply 60 days after
publication of a final rule. A limited
number of the provisions in this rule are
proposed to be applicable beginning
with coverage on and after January 1,
2026.
Additionally, this proposed rule
would implement certain sections of the
following Federal laws related to the
Parts C and D programs:
• The Bipartisan Budget Act (BBA) of
2018.
• The Consolidated Appropriations
Act (CAA), 2023.
B. Summary of the Major Provisions
1. Improving Access to Behavioral
Health Care Providers
We propose regulatory changes that
would improve access to behavioral
health care by adding certain behavioral
health provider specialties to our MA
network adequacy standards.
Specifically, we propose to add a new
facility-specialty type to the existing list
of facility-specialty types evaluated as
part of our network adequacy reviews.
The new facility-specialty type,
‘‘Outpatient Behavioral Health,’’ would
be included in network adequacy
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evaluations and can include: Marriage
and Family Therapists (MFTs), Mental
Health Counselors (MHCs), Opioid
Treatment Program (OTP) providers,
Community Mental Health Centers or
other behavioral health and addiction
medicine specialists and facilities.
MFTs and MHCs will be eligible to
enroll in Medicare and start billing for
services beginning January 1, 2024, due
to the new statutory benefit category
established by the Consolidated
Appropriations Act (CAA) 2023. We aim
to strengthen network adequacy
requirements and improve beneficiary
access to behavioral health services and
providers by expanding our network
adequacy requirements for MA
organizations.
2. Special Supplemental Benefits for the
Chronically Ill (SSBCI)
We are proposing regulatory changes
that would help ensure that SSBCI items
and services offered are appropriate and
improve or maintain the health or
overall function of chronically ill
enrollees. First, we are proposing to
require that an MA organization must be
able to demonstrate through relevant
acceptable evidence that an item or
service offered as SSBCI has a
reasonable expectation of improving or
maintain the health or overall function
of a chronically ill enrollee, and must,
by the date on which it submits its bid
to CMS, establish a bibliography of this
evidence. Second, we are proposing to
clarify that an MA plan must follow its
written policies based on objective
criteria for determining an enrollee’s
eligibility for an SSBCI when making
such eligibility determinations. Third,
we are proposing to require that the MA
plan document its denials of SSBCI
eligibility rather than its approvals.
Additionally, we are proposing to codify
CMS’s authority to review and deny
approval of an MA organization’s bid if
the MA organization has not
demonstrated, through relevant
acceptable evidence, that its proposed
SSBCI has a reasonable expectation of
improving or maintaining the health or
overall function of the chronically ill
enrollee. Finally, we propose to codify
CMS’s authority to review SSBCI
offerings annually for compliance,
considering the evidence available at
the time. These proposals, if
implemented, would better ensure that
the benefits offered as SSBCI are
reasonably expected to improve health
or overall function of the chronically ill
enrollee while also guarding against the
use of MA rebate dollars for SSBCI that
are not supported by evidence.
In addition, we are proposing new
policies to protect beneficiaries and
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improve transparency regarding SSBCI
so that beneficiaries are aware that
SSBCI are only available to enrollees
who meet specific eligibility criteria. We
propose to modify and strengthen the
current requirements for the SSBCI
disclaimer that MA organizations
offering SSBCI must use whenever
SSBCI are mentioned. Specifically, we
propose that the SSBCI disclaimer list
the relevant chronic condition(s) the
enrollee must have to be eligible for the
SSBCI offered by the MA organization.
We propose that the MA organization
must convey in its SSBCI disclaimer
that even if the enrollee has a listed
chronic condition, the enrollee may not
receive the benefit because other
coverage criteria also apply. We also
propose to establish specific font and
reading pace parameters for the SSBCI
disclaimer in print, television, online,
social media, radio, other voice-based
ads, and outdoor advertising (including
billboards). Finally, we propose to
clarify that MA organizations must
include the SSBCI disclaimer in all
marketing and communications
materials that mention SSBCI. We
believe that imposing these new SSBCI
disclaimer requirements will help to
ensure that the marketing of and
communication about these benefits is
not misleading or potentially confusing
to enrollees who rely on these materials
to make enrollment decisions.
3. Mid-Year Enrollee Notification of
Available Supplemental Benefits
In addition, over the past several
years, the number of MA plans offering
supplemental benefits has increased.
The benefits offered are broader in
scope and variety and we are seeing an
increasing amount of MA rebate dollars
directed towards these benefits. At the
same time, plans have reported that
enrollee utilization of many of these
benefits is low. It is not clear whether
MA plans are actively encouraging
utilization of these benefits by their
enrollees. We propose requiring MA
plans to notify enrollees mid-year of the
unused supplemental benefits available
to them. The notice would list any
supplemental benefits not utilized by
the beneficiary during the first 6 months
of the year (1/1 to 6/30). Currently, MA
plans are not required to send any
communication specific to an enrollee’s
usage of supplemental benefits which
could be an important part of a plan’s
overall care coordination efforts. This
policy aims to educate enrollees on their
access to supplemental benefits to
encourage greater utilization of these
benefits and ensure MA plans are better
stewards of the rebate dollars directed
towards these benefits.
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4. Enhance Guardrails for Agent and
Broker Compensation
Section 1851(j) of the Act requires
that CMS develop guidelines to ensure
that compensation to agents and brokers
creates incentives to enroll individuals
in MA plans that are intended to best
meet their health care needs. To that
end, for many years CMS has set upper
limits on the amount of compensation
agents and brokers can receive for
enrolling Medicare beneficiaries into
MA and PDP plans. We have learned,
however, that many MA and PDP plans,
as well as third-party entities with
which they contract (such as Field
Marketing Organizations (FMOs)) have
structured payments to agents and
brokers that have the effect of
circumventing compensation caps. We
also note that that these additional
payments appear to be increasing. In
this rule, we are proposing to generally
prohibit contract terms between MA
organizations and agents, brokers or
other third party marketing
organizations (TPMOs) that may
interfere with the agent’s or broker’s
ability to objectively assess and
recommend the plan that best fits a
beneficiary’s health care needs; set a
single compensation rate for all plans;
revise the scope of items and services
included within agent and broker
compensation; and eliminate the
regulatory framework which currently
allows for separate payment to agents
and brokers for administrative services.
We are also proposing to make
conforming edits to the Part D agent
broker compensation rules at
§ 423.2274. Collectively, we believe the
impact of these proposed changes will
better align with statutory requirements
and intent: to ensure that the use of
compensation creates incentives for
agents and brokers to enroll individuals
in the plan that best fits a beneficiary’s
health care needs. Further, such changes
align with the Biden-Harris
Administration’s commitment to
promoting fair, open, and competitive
markets and ensuring beneficiaries can
make fully informed choices among a
robust set of health insurance options.
5. Annual Health Equity Analysis of
Utilization Management Policies and
Procedures
We are proposing regulatory changes
to the composition and responsibilities
of the Utilization Management (UM)
committee. We propose to require that
a member of the UM committee have
expertise in health equity. We also
propose that the UM committee conduct
an annual health equity analysis of the
use of prior authorization. The proposed
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
analysis would examine the impact of
prior authorization on enrollees with
one or more of the following social risk
factors (SRFs): (i) receipt of the lowincome subsidy or being dually eligible
for Medicare and Medicaid (LIS/DE); or
(ii) having a disability. To enable a more
comprehensive understanding of the
impact of prior authorization practices
on enrollees with the specified SRFs,
the proposed analysis must compare
metrics related to the use of prior
authorization for enrollees with the
specified SRFs to enrollees without the
specified SRFs. Finally, we propose to
require MA organizations to make the
results of the analysis publicly available
on their website in a manner that is
easily accessible and without barriers.
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6. Amendments to Part C and Part D
Reporting Requirements
We are proposing to affirm our
authority to collect detailed information
from MA organizations and Part D plan
sponsors under current regulations, in
keeping with the Biden-Harris
administration’s focus on improving
transparency and data in Medicare
Advantage and Part D. This proposal
would lay the groundwork for new data
collection to be established through the
Paperwork Reduction Act (PRA)
process, which would provide advance
notice to interested parties and be
subject to public comment. An example
of increased data collection could be
service level data for all initial coverage
decisions and plan level appeals, such
as decision rationales for items,
services, or diagnosis codes to have
better line of sight on utilization
management and prior authorization
practices, among many other issues.
7. Enhance Enrollees’ Right To Appeal
an MA Plan’s Decision To Terminate
Coverage for Non-Hospital Provider
Services
Beneficiaries enrolled in Traditional
Medicare and MA plans have the right
to a fast-track appeal by an Independent
Review Entity (IRE) when their covered
skilled nursing facility (SNF), home
health, or comprehensive outpatient
rehabilitation facility (CORF) services
are being terminated. Currently, Quality
Improvement Organizations (QIO) act as
the IRE and conduct these reviews.
Under current regulations, MA enrollees
do not have the same access to QIO
review of a fast-track appeal as
Traditional Medicare beneficiaries. We
are proposing to (1) require the QIO,
instead of the MA plan, to review
untimely fast-track appeals of an MA
plan’s decision to terminate services in
an HHA, CORF, or SNF; and (2) fully
eliminate provision requiring the
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forfeiture of an enrollee’s right to appeal
a termination of services decision when
they leave the facility. These proposals
would bring MA regulations in line with
the parallel reviews available to
beneficiaries in Traditional Medicare
and expand the rights of MA
beneficiaries to access the fast-track
appeals process.
8. Additional Changes to an Approved
Formulary—Substituting Biosimilar
Biological Products
Under current policy, Part D sponsors
must obtain explicit approval from CMS
prior to making a midyear formulary
change that removes a reference product
and replaces it with a biosimilar
biological product other than an
interchangeable biological product. If
such a change is approved, the Part D
sponsor may apply the change only to
enrollees who begin therapy after the
effective date of the change. In other
words, enrollees currently taking the
reference product can remain on the
reference product until the end of the
plan year without having to obtain an
exception. To increase access to
biosimilar biological products,
including interchangeable biological
products, in the Part D program,
consistent with the Biden-Harris
Administration’s commitment to
competition as outlined in Executive
Order (E.O.) 14036: ‘‘Promoting
Competition in the American
Economy,’’ we previously proposed to
permit Part D sponsors either to
immediately substitute interchangeable
biological products for their reference
products and/or to treat such
substitutions as changes applicable to
all enrollees following 30 days’ notice.1
As we continue to consider comments
received on that proposal, we are now
also proposing to add substitutions of
biosimilar biological products other
than interchangeable biological
products to the type of formulary
changes that apply to all enrollees
(including those already taking the
reference product prior to the effective
date of the change) following a 30-day
notice. This proposed policy regarding
formulary substitution of biosimilar
biological products would parallel our
1 See section III.Q., Changes to an Approved
Formulary, of the proposed rule titled ‘‘Medicare
Program; Contract Year 2024 Policy and Technical
Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program,
Medicare Cost Plan Program, Medicare Parts A, B,
C, and D Overpayment Provisions of the Affordable
Care Act and Programs of All-Inclusive Care for the
Elderly; Health Information Technology Standards
and Implementation Specifications,’’ which
appeared in the December 27, 2022 Federal
Register (87 FR 79452) (hereinafter referred to as
the December 2022 proposed rule).
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current notice policy for formulary
changes that cannot take place
immediately. Under current
§ 423.120(b)(5)(i), Part D sponsors must
give 30 days’ advance notice to affected
enrollees before removing or changing
the tiered cost-sharing status of a Part D
drug, unless, for instance, the formulary
change qualifies for an immediate
substitution. This proposal would not
permit immediate formulary
substitution of biosimilar biological
products other than interchangeable
biological products.
9. Increasing the Percentage of Dually
Eligible Managed Care Enrollees Who
Receive Medicare and Medicaid
Services From the Same Organization
We are proposing interconnected
proposals to (a) replace the current
quarterly special enrollment period
(SEP) with a one-time-per month SEP
for dually eligible individuals and
others enrolled in the Part D lowincome subsidy program to elect a
standalone PDP, (b) create a new
integrated care SEP to allow dually
eligible individuals to elect an
integrated D–SNP on a monthly basis,
(c) limit enrollment in certain D–SNPs
to those individuals who are also
enrolled in an affiliated Medicaid
managed care organization (MCO), and
(d) limit the number of D–SNP plan
benefit packages an MA organization, its
parent organization, or entity that shares
a parent organization with the MA
organization, can offer in the same
service area as an affiliated Medicaid
MCO. This proposed rule would
increase the percentage of dually
eligible MA enrollees who are in plans
that are also contracted to cover
Medicaid benefits, thereby expanding
access to integrated materials, unified
appeal processes across Medicare and
Medicaid, and continued Medicare
services during an appeal. It would also
reduce the number of plans overall that
can enroll dually eligible individuals
outside the annual coordinated election
period, thereby reducing the number of
plans deploying aggressive marketing
tactics toward dually eligible
individuals throughout the year.
10. For D–SNP PPOs, Limit Out-ofNetwork Cost Sharing
We are proposing to limit out-ofnetwork cost sharing for D–SNP
preferred provider organizations (PPOs)
for specific services. The proposed rule
would reduce cost shifting to Medicaid,
increase payments to safety net
providers, expand dually eligible
enrollees’ access to providers, and
protect dually eligible enrollees from
unaffordable costs.
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11. Contracting Standards for Dual
Eligible Special Needs Plan Look-Alikes
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Under existing regulations, CMS does
not contract with and will not renew the
contract of a D–SNP look-alike—that is,
an MA plan that is not a SNP but in
which dually eligible enrollees account
for 80 percent or more of total
enrollment. We are proposing to lower
the D–SNP look-alike threshold from 80
percent to 70 percent for plan year 2025
and 60 percent for plan year 2026. This
proposal would help address the
continued proliferation of MA plans
that are serving high percentages of
dually eligible individuals without
meeting the requirements to be a D–
SNP.
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12. Standardize the Medicare Advantage
(MA) Risk Adjustment Data Validation
Appeals Process
We propose regulatory language to
address gaps and operational constraints
included in existing RADV appeal
regulations. Currently, if MA
organizations appeal both medical
record review determinations and
payment error calculations resulting
from RADV audits, both issues must be
appealed and move through the appeals
process concurrently, which we foresee
could result in inconsistent appeal
adjudications at different levels of
appeal that impact recalculations of the
payment error. This has the potential to
cause burden, confuse MA
organizations, and negatively impact the
operations and efficiency of CMS’s
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78479
appeals processes. This proposal would
standardize and simplify the RADV
appeals process for CMS and MA
organizations, as well as address
operational concerns at all three levels
of appeal. We are proposing that MA
organizations must exhaust all three
levels of appeal for medical record
review determinations before beginning
the payment error calculation appeals
process. This will ensure adjudication
of medical record review determinations
are final before a recalculation of the
payment error is completed and subject
to appeal. We also propose several other
revisions to our regulatory appeals
process to conform with these proposed
changes to our procedures.
C. Summary of Costs and Benefits
BILLING CODE 4120–01–P
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TABLE Al
2. Special Supplemental Benefits for
the Chronically Ill (SSBCI)
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3. Mid-Year Enrollee Notification of
Available Supplemental Benefits
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Description
We propose to add a new facility-specialty type
called "Outpatient Behavioral Health" to the
network adequacy standards under
§ 422.116(b )(2). For pmposes of the network
adequacy requirements, the new facilityspecialty type would be evaluated using time and
distance and minimum number standards
proposed here. The new facility type would
include MFTs, MHCs, OTP or other behavioral
health and addiction medicine specialists and
facilities.
We propose to require MA organizations to
establish bibliographies for each SSBCI they
include in their bid to demonstrate that an SSBCI
has a reasonable expectation of improving or
maintaining the health or overall function of a
chronically ill enrollee. This would shift the
burden from CMS to the MA organizations to
demonstrate compliance with this standard and
help ensure that SSBCI items and services are
offered based on current, reliable evidence.
In addition, we are proposing new policies to
protect beneficiaries and improve transparency
regarding SSBCI so that beneficiaries are aware
that SSBCI are only available to enrollees who
meet specific eligibility criteria. We propose to
modify and strengthen the current requirements
for the SSBCI disclaimer that MA organizations
offering SSBCI must use whenever SSBCI are
mentioned.
We propose to require MA plans to issue notices
to enrollees who, by June 30th of a given year,
have not utilized supplemental benefits, to ensure
enrollees are aware of the availability of such
benefits and ensure appropriate utilization.
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Financial Impact
The new provision adds
requirements for a new facility
specialty type, which include
providers some of which we have
data for and some which are new
and for which we lack data.
Therefore, we cannot quantify the
effects of this provision though
we expect it may increase access
which may qualitatively increase
utilization.
The proposed requirements for
SSBCI are not expected to have
any economic impact on the
Medicare Trust Fund.
Although the intent is to increase
utilization and ultimately create a
savings to the Medicare Trust
Fund, we cannot currently
quantify this provision_because it
is new, and we lack data. Sec the
Regulatory Impact Analysis for
further discussion.
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Provision
1. Improving Access to Behavioral
Health Care Providers
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
Provision
4. Enhance Guardrails for
Agent/Broker Compensation
Description
We propose modifications to agent/broker
compensation requirements to further ensure
payment arrangements and structure are aligned
with CMS' s statutory obligation to set limits on
compensation to ensure that the use of
compensation creates incentives for agents and
brokers to enroll prospective enrollees in plans
that best fit their needs.
Financial Impact
There is a paperwork burden of
about $31 million annually. Other
effects cannot be analyzed at this
time because of uncertainty;
however, we expect any impact
would be minimal. See the
Regulatory Impact Analysis for
further discussion.
5. Annual Health Equity Analysis of
Utilization Management Policies and
Procedures
We propose changes to the composition and
responsibilities for the Utilization Management
committee, to require: a member of the UM
committee have expertise in health equity; the
UM committee conduct an annual health equity
analysis of prior authorization used by the MA
organization using specified metrics; and require
MA organizations to make the results of the
analysis publicly available on its website.
We propose to affirm our authority to collect
detailed data from MA organizations and Part D
plan sponsors under the Part C and D reporting
reQuirements.
We propose to (1) require QIOs to review
untimely fast-track appeals of an MA plan's
decision to terminate services in an HHA,
CORF, or SNF and (2) eliminate the provision
requiring the forfeiture of an enrollee's right to
appeal to the QIO a termination of services
decision when they leave the facilitv.
We propose to permit biosimilar biological
products other than interchangeable biological
products2 to be substituted for their reference
products without requiring that enrollees
currently taking the reference product be exempt
from the change for the remainder of the contract
year.
We propose to (a) replace the current dual/LIS
quarterly SEP, (b) create a new integrated care
SEP, (c) limit enrollment in certain D-SNPs to
those individuals who are also enrolled in an
affiliated Medicaid MCO, and (d) limit the
number of D-SNPs an MA organization, its
parent organization, or an entity that shares a
parent organization with the MA organization,
can offer in the same service area as an affiliated
Medicaid MCO.
We propose to limit D-SNP PPOs' out-ofnetwork cost sharing for certain Part A and Part
B benefits, on an individual service level.
We do not expect any cost impact
to the Medicare Trust Fund.
7. Enhance Enrollees' Right to Appeal
an MA Plan's Decision to Terminate
Coverage for Non-Hospital Provider
Services
8. Additional Changes to an Approved
Formulary-Substituting Biosimilar
Biological Products
9. Increasing the Percentage of Dually
Eligible Managed Care Enrollees Who
Receive Medicare and Medicaid
Services from the Same Organization
10. For D-SNP PPOs, Limit Out-ofNetwork Cost Sharing
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We do not expect any cost impact
to the Medicare Trust Fund.
We do not expect any cost impact
to the Medicare Trust Fund.
We do not expect any cost impact
to the Medicare Trust Fund.
Over a 10-year horizon, we
estimate a $1.3 billion savings to
the Trust Fund for Part D plans
and an additional $1 billion
savings to the Trust Fund for Part
C plans.
We do not expect any cost impact
to the Medicare Trust Fund.
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Reporting Requirements
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Provision
11. Contracting Standards for Dual
Eligible Special Needs Plan LookAlikes
Description
We propose to lower the D-SNP look-alike
threshold from 80 percent to 70 percent for plan
year 2025 and 60 percent for plan year 2026.
12. Standardiz.e the Medicare
Advantage (MA) Risk Adjustment
Data Validation (RADV) Appeals
Process
Revising when a medical record review
determination and a payment error calculation
appeal can be requested and adjudicated is
necessary because RADY payment error
calculations are based upon the outcomes of
medical record review determinations. We are
also proposing other revisions to our regulatory
appeals process to conform with these proposed
changes. The proposed changes could reduce
burden on some MA organizations that, absent
these revisions, would have otherwise potentially
submitted payment error calculation appeals that
could have been rendered moot by certain types
of medical record appeals decisions. The
potential reduction in burden to MA
organizations cannot be quantified prior to the
implementation and execution of the appeals
process pursuant to these changes. While the MA
RADY appeals regulations have been in place
for a period of years, CMS did not issue RADY
overpayment findings to MA organizations as we
worked to finalize a regulation on our long-term
RADY methodology. Therefore, any impact of
these proposed policies on MA organi:zation
behavior is further unquantifiable. The proposed
changes do not impose any new information
collection requirements.
BILLING CODE 4120–01–C
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II. Strengthening Current Medicare
Advantage and Medicare Prescription
Drug Benefit Program Policies: Past
Performance
We established at §§ 422.502(b) and
423.503(b) that we may deny an
2 We previously proposed that would provide
Part D sponsors (choosing not to or unable to
qualify to make immediate substitutions as
proposed) the option to treat substitutions of
interchangeable biological products for their
reference products as changes applicable to all
enrollees requiring 30 days’ notice for those
currently taking a related reference product. See
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application submitted by MA
organizations and Part D sponsors that
failed to comply with the requirements
of a previous MA or Part D contract,
which we refer to as ‘‘past
performance.’’ We are proposing several
technical changes to the regulation text
related to past performance. These
changes are intended to clarify the basis
for application denials due to past
performance and to ensure that the
section III.Q. of the December 2022 proposed rule.
These and other proposals discussed in section
III.Q. of the December 2022 proposed rule have not
been finalized and remain under consideration.
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Financial Impact
We estimate this provision would
have an average annual impact of
less than $ IM for plan years
2025-2027 due to non-SNP MA
plans meeting the lower D-SNP
look-alike threshold transitioning
enrollees into other plans. We
also estimate this provision would
have an average annual impact of
less than $ IM on MA plan
enrollees for plan years
2025-2027 due to enrollees
choosing a different plan. We
expect cumulative annual costs to
non-SNP MA plans and MA plan
enrollees beyond plan year 2027
to also be less than $ IM oer vear.
The potential reduction in burden
to MA organi:zations cannot be
quantified prior to the
implementation and execution of
the appeals process pursuant to
these changes.
factors adequately account for financial
difficulties that should prevent an
organization from receiving a new or
expanded MA or Part D contract.
One factor we consider regarding the
past performance of MA organizations
and Part D sponsors is their record of
imposition of intermediate sanctions,
because intermediate sanctions
represent significant non-compliance
with MA or Part D contract
requirements. To clarify the basis for
application denials due to intermediate
sanctions, at §§ 422.502(b)(1)(i)(A) and
423.503(b)(1)(i)(A) we propose to
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change ‘‘Was subject to the imposition
of an intermediate sanction’’ to ‘‘Was
under an intermediate sanction.’’ We are
proposing this revision because MA
organizations and Part D sponsors may
have a sanction imposed in one 12month past performance review period
and effective for all or part of the
subsequent 12-month review period. For
instance, CMS could impose a sanction
in December 2022 that remains in effect
until September 2023. The sanction
would be in effect for the past
performance review period that runs
from March 2022 through February 2023
(for Contract Year 2024 MA and Part D
applications filed in February 2023) and
for the past performance review period
that runs from March 2023 through
February 2024 (for Contract Year MA
and Part D applications filled in
February 2024). Our proposal reflects
our stated intent to deny applications
from MA organizations and Part D
sponsors when an active sanction
existed during the relevant 12-month
review period when we previously
codified that intermediate sanctions are
a basis for denial of an application from
an MA organization or Part D sponsor in
‘‘Medicare and Medicaid Programs;
Contract Year 2022 Policy and
Technical Changes to the Medicare
Advantage Program, Medicare
Prescription Drug Benefit Program,
Medicaid Program, Medicare Cost Plan
Program, and Programs of All-Inclusive
Care for the Elderly,’’ final rule which
appeared in the Federal Register on
January 19, 2021 (86 FR 5864)
hereinafter referred to as the ‘‘January
2021 final rule.’’ When we codified this
requirement, a commenter requested
that sanctions lifted during the 12
months prior to the application denial
be excluded from past performance. We
responded that ‘‘The applying
organization will receive credit for
resolving the non-compliance that
warranted the sanction during the next
past performance review period, when,
presumably, the organization will not
have an active sanction in place at any
time during the applicable 12-month
review period’’ (86 FR 6000 through
6001). Since an intermediate sanction
may be active during multiple
consecutive review periods, our
proposed language clarifies that an
organization’s application may be
denied as long as the organization is
under sanction, not just during the 12month review period when the sanction
was imposed.
An additional factor we consider
regarding the past performance of MA
organizations and Part D sponsors is
involvement in bankruptcy proceedings.
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At §§ 422.502(b)(1)(i)(C) and
423.503(b)(1)(i)(C) we propose to
incorporate Federal bankruptcy as a
basis for application denials due to past
performance and to conform the two
paragraphs by changing the text to
‘‘Filed for or is currently in Federal or
State bankruptcy proceedings’’ from
‘‘Filed for or is currently in State
bankruptcy proceedings,’’ at
§ 422.502(b)(1)(i)(C) and ‘‘Filed for or is
currently under State bankruptcy
proceedings’’ at § 423.503(b)(1)(i)(C). We
codified State bankruptcy as a basis for
an application denial for the past
performance of an MA or Part D
Sponsor in ‘‘Medicare Program; Contract
Year 2023 Policy and Technical
Changes to the Medicare Advantage and
Medicare Prescription Drug Benefit
Programs; Policy and Regulatory
Revisions in Response to the COVID–19
Public Health Emergency; Additional
Policy and Regulatory Revisions in
Response to the COVID–19 Public
Health Emergency’’ which appeared in
the Federal Register on May 9, 2022 (87
FR 27704). We codified that
requirement because bankruptcy may
result in the closure of an organization’s
operations and entering into a new or
expanded contract with such an
organization is not in the best interest of
the MA or Prescription Drug program or
the beneficiaries they serve. This
concern is equally applicable to both
Federal and State bankruptcy, so we
propose to revise the regulation so that
applications from MA organizations or
Part D sponsors that have filed for or are
in State or Federal bankruptcy
proceedings may be denied on the basis
of past performance.
In addition, we are also proposing to
correct two technical issues identified
since the final rule was published in
May 2022. At § 422.502(b)(1)(i)(B), we
propose to change the reference to the
requirement to maintain fiscally sound
operations from § 422.504(b)(14) to the
correct reference at § 422.504(a)(14). We
also propose to remove the duplication
of § 422.502(b)(1)(i)(A) and (B).
III. Enhancements to the Medicare
Advantage and Medicare Prescription
Drug Benefit Programs
A. Expanding Network Adequacy
Requirements for Behavioral Health
Section 1852(d)(1) of the Act allows
an MA organization to select the
providers from which an enrollee may
receive covered benefits, provided that
the MA organization, in addition to
meeting other requirements, makes such
benefits available and accessible in the
service area with promptness and
assures continuity in the provision of
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benefits. Further, our regulation at
§ 422.112(a), requires that a coordinated
care plan maintain a network of
appropriate providers that is sufficient
to provide adequate access to covered
services to meet the needs of the
population served. To establish
standards for these requirements, CMS
codified network adequacy criteria and
access standards in the ‘‘Medicare
Program; Contract Year 2021 Policy and
Technical Changes to the Medicare
Advantage Program, Medicare
Prescription Drug Benefit Program, and
Medicare Cost Plan Program’’ final rule,
which appeared in the Federal Register
on June 2, 2020 (85 FR 33796),
hereinafter referred to as the ‘‘June 2020
final rule.’’ In that final rule, we
codified, at § 422.116(b), the list of 27
provider specialty types and 13 facility
specialty types subject to CMS network
adequacy standards. Further, as part of
the ‘‘Medicare Program; Contract Year
2023 Policy and Technical Changes to
the Medicare Advantage and Medicare
Prescription Drug Benefit Programs’’
published in the Federal Register
January 12, 2022 (87 FR 1842) proposed
rule, hereinafter referred to as the
‘‘January 2022 proposed rule,’’ we
solicited comments through a Request
for Information (RFI), regarding
challenges in building MA behavioral
health networks and opportunities for
improving access to services. In
response to the RFI, stakeholders
commented on the importance of
ensuring adequate access to behavioral
health services for enrollees and
suggested expanding network adequacy
requirements to include additional
behavioral health specialty types. As a
result, in the ‘‘Medicare Program;
Contract Year 2024 Policy and
Technical Changes to the Medicare
Advantage Program, Medicare
Prescription Drug Benefit Program,
Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the
Elderly’’ final rule, which appeared in
the Federal Register on April 12, 2023
(88 FR 22120) hereinafter referred to as
the ‘‘April 2023 final rule,’’ CMS
finalized the addition of two new
specialty types to the provider-specialty
types list at § 422.116(b)(1), Clinical
Psychology and Clinical Social Work, to
be subject to the specific time and
distance and minimum provider
number requirements used in CMS’s
network adequacy evaluation.
While our regulation at
§ 422.116(b)(3) authorizes the removal
of a specialty or facility type from the
network evaluation criteria for a specific
year without rulemaking, CMS did not
implement a process in § 422.116 to add
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new provider types without rulemaking.
In a continued effort to address access
to behavioral health services within MA
networks, we are proposing to add to
the list of provider specialties at
§ 422.116(b) and add corresponding
time and distance standards at
§ 422.116(d)(2).
In addition to meeting the network
adequacy evaluation requirements, MA
organizations are required at
§ 422.112(a) to maintain and
consistently monitor their provider
networks to ensure they are sufficient to
provide adequate access to covered
services that meet the needs of
enrollees. This also helps MA
organizations maintain a complete and
accurate health plan provider directory
as required under §§ 422.111(b)(3) and
422.120(b). The Health Plan
Management System (HPMS) provides
MA organizations with access to the
‘‘Evaluate my Network’’ functionality,
which allows MA organizations the
opportunity to test their provider
networks against the evaluation
standards in § 422.116 outside of a
formal network review. The ‘‘Evaluate
my Network’’ functionality provides
MA organizations the ability to test their
networks using the standards in
§ 422.116(a)(2) in different scenarios,
including at the Plan Benefit Package
(PBP) level, to consistently monitor
whether their provider networks are
meeting the current network adequacy
standards. We encourage MA
organizations to utilize the HPMS
‘‘Evaluate my Network’’ tool to monitor
their PBP-level active provider networks
and keep abreast of any network issues
that could hinder access to care for
enrollees. We also remind MA
organizations to report any compliance
issues or significant changes in their
provider network to their CMS Account
Manager.
With the revisions applicable
beginning January 1, 2024, MA
organizations are required to
demonstrate that they meet network
adequacy for four behavioral health
specialty types: psychiatry, clinical
psychology, clinical social work, and
inpatient psychiatric facility services.
The Consolidated Appropriations Act
(CAA), 2023 (Pub. L. 117–328) amended
the Act to authorize payment under
Medicare Part B for services furnished
by a Marriage and Family Therapist
(MFT) and by a Mental Health
Counselor (MHC), effective January 1,
2024. Specifically, section 4121 of the
CAA amends section 1861(s)(2) of the
Act by adding a new subparagraph (II)
that establishes a new benefit category
under Part B for MFT services (as
defined in section 1861(lll) of the Act)
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and MHC services (as defined in section
1861(lll) of the Act). MA organizations
are required to cover virtually all Part B
covered services. As such, these new
services must be covered as defined and
furnished, respectively, by MFTs, as
defined in section 1861(lll)(2) of the
Act, and MHCs, as defined in section
1861(lll)(4) of the Act. As a practical
matter, MA organizations need to ensure
access to these new Medicare-covered
services that can only be provided by
these types of individual providers and
therefore must contract with these types
of providers in order to furnish basic
benefits as required by section 1852 of
the Act (when furnished by different
providers, the services would be
supplemental benefits covered by the
MA plan.)
In addition, we discussed in the April
2023 final rule, that the responses CMS
received to the January 2022 proposed
rule RFI emphasized the importance of
expanding network adequacy standards
to include other outpatient behavioral
health physicians and health
professionals that treat substance use
disorders (SUDs) to better meet
behavioral health care needs of
enrollees. Medicare fee-for-service
claims data for 2020 shows that Opioid
Treatment Program (OTP) providers had
the largest number of claims for SUD
services during that timeframe. At the
time of publishing our April 2023 final
rule, we indicated that while we were
not able to finalize adding a combined
specialty type called ‘‘Prescribers of
Medication for Opioid Use Disorder,’’
which included OTPs and Medication
for Opioid Use Disorder (MOUD)
waivered providers to the facilityspecialty type list in § 422.116(b)(2) as
proposed, we would consider the
appropriateness of setting network
adequacy standards for OTPs in future
rulemaking.
Considering the statutory changes to
section 1861 of the Act as mentioned,
and our interest in establishing network
adequacy standards for SUD providers,
CMS is proposing to amend the MA
network adequacy requirements to
address the new provider types and
SUD provider types through a combined
behavioral health specialty type to
include MFTs, MHCs, OTPs,
Community Mental Health Centers and
other behavioral health and addiction
medicine specialty providers that will
help us enhance behavioral health
access for enrollees. This is consistent
with the explanation in our April 2023
final rule that setting a meaningful
access standard for the OTP specialty
type would be possible under a
combined behavioral health specialty
type.
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CMS is committed to improving
access to behavioral health care services
for enrollees in the MA program. The
CMS Behavioral Health Strategy,3 aims
to improve access and quality of mental
health care and services, including,
access to substance use disorder
prevention and treatment services. We
propose to extend network adequacy
requirements to additional behavioral
health and substance use disorder
providers and facilities by adding time
and distance and minimum provider
number requirements for a combined
provider category. Specifically, we are
proposing to add Outpatient Behavioral
Health as a new type of facility-specialty
in § 422.116(b)(2) and to add Outpatient
Behavioral Health to the time and
distance requirements in
§ 422.116(d)(2). For purposes of network
adequacy evaluations under § 422.116,
Outpatient Behavioral Health can
include, MFTs (as defined in section
1861(lll) of the Act), MHCs (as defined
in section 1861(lll) of the Act), OTPs (as
defined in section 1861(jjj) of the Act),
Community Mental Health Centers (as
defined in section 1861(ff)(3)(B) of the
Act), or those of the following who
regularly furnish or will regularly
furnish behavioral health counseling or
therapy services, including, but not
limited to, psychotherapy or
prescription of medication for substance
use disorders: physician assistants,
nurse practitioners, and clinical nurse
specialists (as defined in section
1861(aa)(5) of the Act); addiction
medicine physicians; or outpatient
mental health and substance use
treatment facilities. Per § 422.2, the term
‘‘provider’’ means (1) any individual
who 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; and (2) any entity
that is engaged in the delivery of health
care services in a State and is licensed
or certified to deliver those services if
such licensing or certification is
required by State law or regulation.
Although we are not using the term
‘‘provider’’ specifically here in listing
the type of healthcare professionals that
we expect to be available to furnish
services in order to count for purposes
of the proposed new network evaluation
standard, all applicable laws about the
practice of medicine and delivery of
health care services must be met and
specific healthcare professionals must
be appropriately licensed or certified to
furnish the applicable services.
We are proposing to add this
combined facility-specialty type instead
3 https://www.cms.gov/cms-behavioral-healthstrategy.
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of adding individual provider-specialty
types for a few reasons. First, data from
the U.S. Department of Labor, Bureau of
Labor Statistics show that currently
MFTs and MHCs are generally
providing services in outpatient
behavioral health settings, such as
community mental health centers,
substance abuse treatment centers,
hospitals, and some private practices.4 5
These types of clinical settings offer a
fuller range of services and usually
provide access to additional providers,
such as advanced practice nurses and
physician assistants who provide
counseling and other therapeutic
services to individuals with behavioral
health conditions; our review of the
Place of Service codes recorded on
professional claims for behavioral
health services in the Medicare FFS
program illustrates this. In addition,
currently, there are a limited number (if
any) claims in the Medicare FFS
program from MFTs and MHCs;
combining the MFT and MHC provider
types into the ‘‘Outpatient Behavioral
Health’’ facility type provides time for
CMS to develop additional data as FFS
claims are submitted by MFTs and
MHCs to show patterns of access to
these provider types across the country.
CMS needs such claims and utilization
data to support the development of time
and distance standards for these
particular provider-specialty types.
Finally, categorizing these provider
specialties as a facility type is consistent
with our practice, under § 422.116,
wherein physical therapy (PT),
occupational therapy (OT), and speech
therapy (ST) providers have
traditionally been categorized as facility
types, even though care is typically
furnished by individual health care
providers. These provider types (that is,
PT, OT, ST) are reported for network
adequacy purposes under facility
specialty types on Health Service
Delivery (HSD) tables.
As mentioned previously, the
statutory change under the CAA will
allow MFTs and MHCs to bill Medicare
directly for services provided beginning
January 1, 2024. We acknowledge that
these provider types may not always be
located in facilities and provide facilitybased services. As such, we will
continue to monitor the appropriateness
of maintaining this proposed new
behavioral health specialty type as a
facility-specialty type (that is, under
§ 422.116(b)(2)) for network adequacy
review purposes. Similarly, as the list 6
of OTPs enrolled in Medicare continues
to expand, we will continue to monitor
whether network adequacy for OTPs is
best measured under a combined facility
type for the purpose of network
adequacy reviews. Thus, we may engage
in future rulemaking to revise this
requirement if the landscape of
78485
providers changes such that access
would be best evaluated separately for
MFTs, MHCs, or OTPs instead of under
the one facility-specialty type we are
proposing in this rule. Any related
changes would be proposed in future
rulemaking. At this time, we are
proposing that MA organizations are
allowed to include on their facility HSD
tables the following: contracted
individual practitioners, group
practices, or facilities that are applicable
under this specialty type. Under this
proposal, MA organizations may not
submit a single provider, for purposes of
meeting more than one of our provider
network requirements, for example, they
cannot submit a single provider as a
psychiatry, clinical social work, or
clinical psychologist provider specialty
and also as an Outpatient Behavioral
Health facility.
Our current regulations, at
§ 422.116(a)(2), specify 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. Therefore, as part
of the proposed changes to our list of
facility specialty types under
§ 422.116(b)(2), we are proposing base
time and distance standards in each
county type for the new specialty type
as follows:
TABLE CA-1: MAXIMUM TIME AND DISTANCE STANDARDS:
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Provider/
Facility type
Outpatient Behavioral
Health
Metro
Micro
Rural
Max
Time
Max
Distance
Max
Time
Max
Distance
Max
Time
Max
Distance
Max
Time
Max
Distance
20
10
40
25
55
40
60
50
Counties with
Extreme Access
Considerations
(CEAC)
Max
Max
Time
Distance
110
100
In 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 appeared in the Federal
Register on February 18, 2020 (85 FR
9002) (hereinafter referred to as the
‘‘February 2020 proposed rule’’), we
explained how CMS developed the base
time and distance standards and the
minimum provider requirements used
in § 422.116 (85 FR 9094 through 9103).
Further, we explained in the February
2020 proposed rule how CMS
determines the minimum number
requirement for all provider and facility
specialty types, which is now codified
in § 422.116(e). We codified at
§ 422.116(e)(2)(iii) that all facilities,
except for acute inpatient hospitals
facilities, have a minimum number
requirement of one. Because we had
previously established paragraph
(e)(2)(iii) to refer to all facility types
listed in paragraphs (b)(2)(ii) through
(xiv) and are proposing to add
Outpatient Behavioral Health as a
facility type at paragraph (b)(2)(xiv), we
are not proposing any revisions to
paragraph (e)(2)(iii). We followed the
analysis and methodology described in
the February 2020 proposed rule to
4 Bureau of Labor Statistics, U.S. Department of
Labor, Occupational Outlook Handbook, Marriage
and Family Therapists, at https://www.bls.gov/ooh/
community-and-social-service/marriage-andfamily-therapists.htm (visited July 03, 2023).
5 Bureau of Labor Statistics, U.S. Department of
Labor, Occupational Outlook Handbook, Substance
Abuse, Behavioral Disorder, and Mental Health
Counselors, at https://www.bls.gov/ooh/communityand-social-service/substance-abuse-behavioral-
disorder-and-mental-health-counselors.htm (visited
July 06, 2023).
6 https://data.cms.gov/provider-characteristics/
medicare-provider-supplier-enrollment/opioidtreatment-program-providers.
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develop the time and distance standards
that we propose to apply to the new
behavioral health facility-specialty type
described here. However, we utilized
updated data, including outpatient
facility and professional Part B claims
data from August 1, 2021, through July
31, 2022, to inform our proposed
standard.
Finally, as we indicated in the April
2023 final rule, Medicare FFS claims
data shows that telehealth was the
second most common place of service
for claims with a primary behavioral
health diagnosis in 2020 (88 FR 22170).
Per § 422.116(d)(5), MA plans may
receive a 10-percentage point credit
towards the percentage of beneficiaries
that reside within published time and
distance standards for certain providers
when the plan includes one or more
telehealth providers of that specialty
type that provide additional telehealth
benefits, as defined in § 422.135, in its
contracted network. Currently,
§ 422.116(d)(5) specifies 14 specialty
types for which the 10-percentage point
credit is available. Because we
understand from stakeholders who
commented on our April 2023 final rule
that they were supportive of usage of the
10-percentage point credit for
behavioral health specialty types, we
also propose to add the new Outpatient
Behavioral Health facility-specialty type
to the list at § 422.116(d)(5) of the
specialty types that that will receive the
credit if the MA organization’s
contracted network of providers
includes one or more telehealth
providers of that specialty type that
provide additional telehealth benefits,
as defined in § 422.135, for covered
services.
We welcome comment on this
proposal.
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B. Standards for Electronic Prescribing
(§ 423.160)
1. Legislative Background
Section 1860D–4(e) of the Act
requires the adoption of Part D eprescribing standards. Part D sponsors
are required to establish electronic
prescription drug programs that comply
with the e-prescribing standards that are
adopted under this authority. For a
further discussion of the statutory
requirements at section 1860D–4(e) of
the Act, refer to the proposed rule titled
‘‘Medicare Program; E-Prescribing and
the Prescription Drug Program,’’ which
appeared in the February 4, 2005
Federal Register (70 FR 6255). Section
6062 of the Substance Use-Disorder
Prevention that Promotes Opioid
Recovery and Treatment for Patients
and Communities Act (Pub. L. 115–271),
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hereinafter referred to as the SUPPORT
Act, amended section 1860D–4(e)(2) of
the Act to require the electronic
transmission of ePA requests and
responses for the Part D e-prescribing
program to ensure secure ePA request
and response transactions between
prescribers and Part D sponsors for
covered Part D drugs prescribed to Part
D-eligible individuals. Such electronic
transmissions must comply with
technical standards adopted by the
Secretary. There is generally no
requirement that Part D prescribers or
dispensers implement e-prescribing,
with the exception of required
electronic prescribing of Schedule II, III,
IV, and V controlled substances that are
Part D drugs, consistent with section
2003 of the SUPPORT Act and as
specified at § 423.160(a)(5). However,
prescribers and dispensers who
electronically transmit and receive
prescription and certain other
information regarding covered Part D
drugs prescribed for Medicare Part D
eligible beneficiaries, directly or
through an intermediary, are required to
comply with any applicable standards
that are in effect.
2. Regulatory History
As specified at § 423.160(a)(1), Part D
sponsors are required to support the
Part D e-prescribing program transaction
standards as part of their electronic
prescription drug programs. Likewise,
as specified at § 423.160(a)(2),
prescribers and dispensers that conduct
electronic transactions for covered Part
D drugs for Part D eligible individuals
for which a program standard has been
adopted must do so using the adopted
standard. Transaction standards are
periodically updated to take new
knowledge, technology, and other
considerations into account. As CMS
adopted specific versions of the
standards when it initially adopted the
foundation and final e-prescribing
standards, there was a need to establish
a process by which the standards could
be updated or replaced over time to
ensure that the standards did not hold
back progress in the healthcare industry.
CMS discussed these processes in the
final rule titled ‘‘Medicare Program; EPrescribing and the Prescription Drug
Program,’’ (hereinafter referred to as
‘‘the November 2005 final rule’’) which
appeared in the November 7, 2005
Federal Register (70 FR 67579). An
account of successive adoption of new
and retirement of previous versions of
various e-prescribing standards is
described in the final rule titled
‘‘Medicare Program; Revisions to
Payment Policies Under the Physician
Fee Schedule, Clinical Laboratory Fee
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Schedule & Other Revisions to Part B for
CY 2014,’’ which appeared in the
December 10, 2013 Federal Register (78
FR 74229); the proposed rule titled
‘‘Medicare Program; Contract Year 2019
Policy and Technical Changes to the
Medicare Advantage, Medicare Cost
Plan, Medicare Fee-for-Service, the
Medicare Prescription Drug Benefit
Programs, and the PACE Program,’’
which appeared in the November 28,
2017 Federal Register (82 FR 56336);
and the corresponding final rule (83 FR
16440), which appeared in the April 16,
2018 Federal Register. The final rule
titled ‘‘Medicare Program; Secure
Electronic Prior Authorization For
Medicare Part D,’’ which appeared in
the December 31, 2020 Federal Register
(85 FR 86824), codified the requirement
that Part D sponsors support the use of
NCPDP SCRIPT standard version
2017071 for certain ePA transactions (85
FR 86832).
The final rule titled ‘‘Modernizing
Part D and Medicare Advantage To
Lower Drug Prices and Reduce Out-ofPocket Expenses,’’ which appeared in
the May 23, 2019 Federal Register (84
FR 23832), codified at § 423.160(b)(7)
the requirement that Part D sponsors
adopt an electronic RTBT capable of
integrating with at least one prescriber’s
electronic prescribing or electronic
health record (EHR) system, but did not
name a standard since no standard had
been identified as the industry standard
at the time (84 FR 23851). The
electronic standards for eligibility
transactions were codified in the final
rule titled ‘‘Medicare and Medicaid
Program; Regulatory Provisions to
Promote Program Efficiency,
Transparency, and Burden Reduction,’’
which appeared in the May 16, 2012
Federal Register (77 FR 29001), to align
with the applicable Health Insurance
Portability and Accountability Act of
1996 (HIPAA) standards.
The Part D program has historically
adopted electronic prescribing
standards independently of other HHS
components that may adopt electronic
prescribing standards under separate
authorities; however, past experience
has demonstrated that duplicative
adoption of health IT standards by other
agencies within HHS under separate
authorities can create significant burden
on the healthcare industry as well as
HHS when those standards impact the
same technology systems. Notably,
independent adoption of the NCPDP
SCRIPT standard version 2017071 by
CMS in various subsections of § 423.160
(83 FR 16638) in 2018, which required
use of the standard beginning in 2020,
led to a period where ONC had to
exercise special enforcement discretion
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3. Withdrawal of Previous Proposals
and Summary of New Proposals
CMS published a proposed rule,
‘‘Medicare Program; Contract Year 2024
Policy and Technical Changes to the
Medicare Advantage Program, Medicare
Prescription Drug Benefit Program,
Medicare Cost Plan Program, Medicare
Parts A, B, C, and D Overpayment
Provisions of the Affordable Care Act
and Programs of All-Inclusive Care for
the Elderly; Health Information
Technology Standards and
Implementation Specifications’’
(hereinafter referred to as ‘‘the
December 2022 proposed rule’’), which
appeared in the Federal Register
December 27, 2022 (87 FR 79452), in
which we proposed updates to the
standards to be used by Medicare Part
D prescription drug plans for electronic
prescribing (e-prescribing). The
proposals in the December 2022
proposed rule included a novel
approach to updating e-prescribing
standards by proposing to crossreference Part D requirements with
standards adopted by the Office of the
National Coordinator for Health
Information Technology (ONC) and the
standards adopted by HHS for electronic
transactions under HIPAA 7 rather than
the historical approach of adopting eprescribing standards in the Part D
regulations independently or making
conforming amendments to the Part D
regulations in response to updated
HIPAA standards for eligibility
transactions. We proposed this
approach in concert with ONC in order
to mitigate potential compliance
challenges for the healthcare industry
and enforcement challenges for HHS
that could result from independent
adoption of such standards.8
In summary, the proposals in the
December 2022 proposed rule included
the following:
• Requiring the National Council for
Prescription Drug Plans (NCPDP)
SCRIPT standard version 2022011,
proposed for adoption at 45 CFR
170.205(b), and retiring the current
NCPDP SCRIPT standard version
2017071, as the e-prescribing standard
for transmitting prescriptions and
prescription-related information,
medication history, and electronic prior
authorization (ePA) transactions using
electronic media for covered Part D
drugs for Part D eligible individuals.
This proposal included a transition
period from July 1, 2023 up to January
1, 2025, when either version of the
NCPDP SCRIPT standard could be used.
The cross citation to 45 CFR 170.205(b)
included an expiration date of January
1, 2025 for NCPDP SCRIPT standard
version 2017071 meaning that this
version would expire for the purposes of
HHS use and entities named at
§ 423.160(a)(1) and (2) could use only
NCPDP SCRIPT standard version
2022011 as of that date;
• Requiring the NCPDP Real-Time
Prescription Benefit (RTPB) standard
version 12, proposed for adoption at 45
CFR 170.205(c), as the standard for
prescriber real-time benefit tools
(RTBTs) supported by Part D sponsors
beginning January 1, 2025; and
• Revising regulatory text referring to
standards for eligibility transactions (87
FR 79548) to cross reference standards
adopted for electronic eligibility
transactions in the HIPAA regulations at
45 CFR 162.1202.
We received 24 comments related to
these proposals by the close of the
comment period on February 13, 2023.
Commenters largely supported the
proposals; however, several
commenters, including NCPDP,
recommended that CMS require use of
7 HIPAA mandated the adoption of standards for
electronically conducting certain health care
administrative transactions between certain entities.
HIPAA administrative requirements are codified at
45 CFR part 162. See also: https://www.cms.gov/
about-cms/what-we-do/administrativesimplification.
8 Due to discrepancies between prior regulatory
timelines, adoption of the NCPDP SCRIPT standard
version 2017071 in different rules led to a period
where ONC had to exercise special enforcement
discretion in the ONC Health IT Certification
Program. See section III.C.5. for additional
discussion.
ddrumheller on DSK120RN23PROD with PROPOSALS2
in its Health Information Technology
(IT) Certification Program until the same
version was incorporated into regulation
at 45 CFR 170.205(b)(1) through the
final rule titled ‘‘21st Century Cures Act:
Interoperability, Information Blocking,
and the ONC Health IT Certification
Program,’’ which appeared in the May 1,
2020 Federal Register (85 FR 25679).
This resulted in significant impact on
both ONC and CMS program resources.
See section III.C. of this proposed rule
for additional discussion of ONC’s
proposal and authority. Similarly, the
final rule titled ‘‘Medicare and Medicaid
Program; Regulatory Provisions to
Promote Program Efficiency,
Transparency, and Burden Reduction,’’
which appeared in the May 16, 2012
Federal Register (77 FR 29002), noted
that, in instances in which an eprescribing standard has also been
adopted as a HIPAA transaction
standard in 45 CFR part 162, the process
for updating the e-prescribing standard
would have to be coordinated with the
maintenance and modification of the
applicable HIPAA transaction standard
(77 FR 29018).
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NCPDP SCRIPT standard version
2023011, rather than NCPDP SCRIPT
standard version 2022011. Similarly,
NCPDP and other commenters
recommended that CMS require NCPDP
RTPB standard version 13, rather than
NCPDP RTPB standard version 12.
Several commenters expressed
concerns about being able to
successfully transition to NCPDP
SCRIPT standard version 2022011 by
January 1, 2025, and requested at least
2 years from publication of a final rule
to sunset NCPDP SCRIPT standard
version 2017071. Several commenters
noted that if the implementation of
NCPDP SCRIPT standard version
2022011 (or NCPDP SCRIPT standard
version 2023011, as recommended by
some commenters) is delayed, the
January 1, 2025 compliance deadline for
electronic prescribing of controlled
substances (EPCS) in long-term care
(LTC) facilities, as codified at
§ 423.160(a)(5), should also be delayed
accordingly, since the new versions of
the NCPDP SCRIPT standard permit 3way communication between the
prescriber, LTC pharmacy, and LTC
facility, enabling EPCS to occur reliably
in the LTC setting.
A commenter expressed concern that
requiring use of the NCPDP SCRIPT
standard imposes a financial barrier for
independent pharmacies since NCPDP
membership is required to access
standards. CMS’s requirements at
§ 423.160(a)(2) do not require that all
pharmacies transmit, directly or through
an intermediary, prescriptions and
prescription-related information using
electronic media for Part D drugs for
Part D-eligible individuals, but (subject
to exemptions in § 423.160(a)(3))
§ 423.160(a)(2) does require that when
pharmacies do so, they must comply
with the Part D electronic prescribing
standards. CMS’s understanding is that
a pharmacy management system vendor
or software developer is the entity that
incurs the direct costs associated with
accessing the code and implementation
guide associated with updating
standards, not the pharmacy itself. We
acknowledge that these costs may be
passed on through license fees that the
vendor charges to the pharmacy as
normal costs of doing business. We are
not aware of any open-source standards
that could replace the NCPDP standards
in the Part D program, but we invite
comments on this topic. We also note in
section III.C.10. of this proposed rule
that interested parties may view
materials proposed for incorporation by
reference for free by following the
instructions provided.
CMS has considered these comments,
reviewed NCPDP SCRIPT standard
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version 2023011 and NCPDP RTPB
standard version 13, and identified
areas where we can reorganize the
regulatory text in § 423.160.
Consequently, CMS is withdrawing all
proposals contained in section III.S.
Standards for Electronic Prescribing (87
FR 79548) of the December 2022
proposed rule. This approach will allow
CMS to incorporate the feedback we
received on prior proposals, seek
comment on concerns raised in
response to prior proposals, add new
proposals, reorganize and make
technical changes to the electronic
prescribing regulations at § 423.160, and
allow the public to comment on all
Medicare Part D electronic prescribingrelated proposals simultaneously.
In sections III.B.4. through III.B.9. of
this proposed rule, the new proposals
related to standards for electronic
prescribing that we are putting forth
encompass the following:
• Requiring use of NCPDP SCRIPT
standard version 2023011, proposed for
adoption at 45 CFR 170.205(b)(2), and
retiring use of NCPDP SCRIPT standard
version 2017071 for communication of a
prescription or prescription-related
information supported by Part D
sponsors. This proposal includes a
transition period beginning on the
effective date of the final rule during
which either version of the NCPDP
SCRIPT standard may be used. The
transition period would end on January
1, 2027, which is the date that ONC has
proposed that NCPDP SCRIPT standard
version 2017071 would expire for the
purposes of HHS use, as described in
section III.C.8.a. of this proposed rule. If
finalized as proposed, starting January
1, 2027, NCPDP SCRIPT standard
version 2023011 would be the only
version of the NCPDP SCRIPT standard
available for HHS use and for purposes
of the Medicare Part D electronic
prescribing program;
• Requiring use of NCPDP RTPB
standard version 13 for prescriber
RTBTs implemented by Part D sponsors
beginning January 1, 2027;
• Requiring use of NCPDP Formulary
and Benefit (F&B) standard version 60,
proposed for adoption at 45 CFR
170.205(u), and retiring use of NCPDP
F&B version 3.0 for transmitting
formulary and benefit information
between prescribers and Part D
sponsors. This proposal includes a
transition period beginning on the
effective date of the final rule and
ending January 1, 2027, during which
entities would be permitted to use either
NCPDP F&B version 3.0 (currently
named in regulation at
§ 423.160(b)(5)(iii) and proposed to be
named at § 423.160(b)(3) consistent with
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the proposed technical changes in this
rule) or NCPDP F&B standard version
60, proposed for adoption at 45 CFR
170.205(u). If finalized as proposed,
starting January 1, 2027, only a version
of the standard adopted for HHS use at
45 CFR 170.205(u) would be permitted
for use in Part D electronic prescription
drug program, which would be NCPDP
F&B standard version 60 if the proposal
in section III.C.8.c. of this rule is
finalized as proposed;
• Cross-referencing standards
adopted for eligibility transactions in
HIPAA regulations at 45 CFR 162.1202
for requirements related to eligibility
inquiries; and
• Making multiple technical changes
to the regulation text throughout
§ 423.160 by removing requirements and
incorporations by reference that are no
longer applicable, re-organizing existing
requirements, and correcting a technical
error.
In these proposals, we propose a
novel approach to updating eprescribing standards by crossreferencing Part D e-prescribing
requirements with standards, including
any expiration dates, adopted by ONC,
as discussed in section III.C.5. of this
proposed rule, and the standards
adopted by HHS for electronic
transactions under HIPAA. This
approach differs from our historical
approach of adopting e-prescribing
standards in the Part D regulations
independently or undertaking
rulemaking to make conforming
amendments to the Part D regulations in
response to updated HIPAA standards
for eligibility transactions.9 As ONC
notes in section III.C.5., independent
adoption of the NCPDP SCRIPT
standard version 2017071 in different
rules 10 led to a period where ONC had
to exercise special enforcement
discretion in the ONC Health IT
9 HIPAA eligibility transaction standards were
updated in final rule titled ‘‘Health Insurance
Reform; Modifications to the Health Insurance
Portability and Accountability Act (HIPAA)
Electronic Transaction Standards,’’ which appeared
in the January 16, 2009 Federal Register (74 FR
3296). Conforming amendments to the Part D
regulation were made in the final rule titled
‘‘Medicare and Medicaid Program; Regulatory
Provisions to Promote Program Efficiency,
Transparency, and Burden Reduction,’’ which
appeared in the May 16, 2012 Federal Register (77
FR 29002).
10 21st Century Cures Act: Interoperability,
Information Blocking, and the ONC Health IT
Certification Program final rule, which appeared in
the May 1, 2020 Federal Register (85 FR 25642),
and 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, which
appeared in the April 16, 2018 Federal Register (83
FR 16440).
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Certification Program. We believe the
proposed approach would mitigate
potential compliance challenges for the
healthcare industry and enforcement
challenges for HHS that could result
from independent adoption of such
standards or asynchronous rulemaking
cycles across programs. CMS invites
comment on all aspects of these
proposals. We also solicit comment on
our proposals to cross-reference ONC
regulations adopting NCPDP SCRIPT
standard version 2023011, NCPDP RTPB
standard version 13, and NCPDP F&B
standard version 60. We solicit
comment on the effect of the proposals
that, taken together, would require use
of these standards by January 1, 2027, as
a result of ONC’s proposals to adopt
these standards and retire previous
versions, as well as our proposal to
require use NCPDP F&B standard
version 60 by that date.
The NCPDP SCRIPT standards are
used to exchange information among
prescribers, dispensers, intermediaries,
and Medicare prescription drug plans
(PDPs). NCPDP has requested that CMS
adopt NCPDP SCRIPT standard version
2023011 because this version provides a
number of enhancements to support
electronic prescribing and transmission
of prescription-related information.11
Accordingly, we propose to update
§ 423.160 to specify where transactions
for electronic prescribing, medication
history, and ePA are required to utilize
the NCPDP SCRIPT standard. The
proposal, in conjunction with ONC’s
proposal as described in section
III.C.8.a. of this proposed rule, will
allow for a transition period where
either NCPDP SCRIPT standard version
2017071 or 2023011 can be used, with
exclusive use of NCPDP SCRIPT
standard version 2023011 required by
January 1, 2027. As described in section
III.B.7., we solicit comment on the date
by which use of the updated version of
this and other standards proposed in
this proposed rule would be required, if
finalized as proposed.
The NCPDP RTPB standard enables
the real-time exchange of patientspecific eligibility, product coverage
(including any restrictions and
alternatives), and estimated cost sharing
so prescribers have access to this
information through a RTBT application
11 National Council for Prescription Drug
Programs (NCPDP) SCRIPT Standard,
Implementation Guide, Version 2023011, April
2023. NCPDP SCRIPT standard implementation
guides are available to NCPDP members for free and
to non-members for a fee at ncpdp.org. The NCPDP
SCRIPT standard version 2023011 implementation
guide proposed for incorporation by reference in
section III.C.10. of this proposed rule can be viewed
by interested parties for free by following the
instructions provided in that section.
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at the point-of-prescribing.12 13 As
discussed in section III.B.5. of this
proposed rule, as currently codified at
§ 423.160(b)(7), CMS requires that Part
D sponsors implement one or more
electronic RTBTs that are capable of
integrating with at least one prescriber’s
electronic prescribing system or
electronic health record, as of January 1,
2021; however, at the time CMS
established this requirement, no single
industry RTPB standard was available.
NCPDP has since developed an RTPB
standard. We propose to require the
most current version, NCPDP RTPB
standard version 13, as the standard for
prescriber RTBTs at § 423.160(b)(5)
starting January 1, 2027.
The NCPDP F&B standard is a batch
standard that provides formulary and
benefit information at the plan level
rather than at the patient level. The
NCPDP F&B standard complements
other standards utilized for electronic
prescribing, electronic prior
authorization, and real-time
prescription benefit applications.14 15
We propose to require use of NCPDP
F&B standard version 60, and retire
NCPDP F&B standard version 3.0,
beginning January 1, 2027, and after a
transition period during which either
version may be used.
Eligibility inquiries utilize the NCPDP
Telecommunication standard or
Accredited Standards Committee X12N
270/271 inquiry and response
transaction for pharmacy or other health
benefits, respectively. The Part D
program has adopted standards based
on the HIPAA electronic transaction
standards, which have not been updated
for more than a decade. HHS has
proposed updates to the HIPAA
electronic transaction standards for
retail pharmacies (87 FR 67638) in the
proposed rule titled ‘‘Administrative
Simplification: Modifications of Health
Insurance Portability and
Accountability Act of 1996 (HIPAA)
National Council for Prescription Drug
Programs (NCPDP) Retail Pharmacy
Standards; and Adoption of Pharmacy
Subrogation Standard,’’ (hereinafter
referred to as ‘‘the November 2022
Administrative Simplification proposed
rule’’), which appeared in the Federal
Register November 9, 2022 (87 FR
67634). We propose to update the Part
D regulation at § 423.160(b)(3) to require
that eligibility transactions utilize the
applicable standard named as the
HIPAA standard for electronic eligibility
transactions at 45 CFR 162.1202. Since
45 CFR 162.1202 currently identifies the
same standards that are named at
§ 423.160(b)(3)(i) and (ii), we anticipate
no immediate impact from this
proposed change in regulatory language.
Our proposal, however, would ensure
that Part D electronic prescribing
requirements for eligibility transactions
align with the HIPAA standard for
electronic eligibility transactions should
a newer version of the NCPDP
Telecommunication (or other) standards
be adopted as the HIPAA standard for
these types of electronic transactions, if
HHS’ proposals in the November 2022
Administrative Simplification proposed
rule are finalized or as a result of any
future HHS rules.
12 National Council for Prescription Drug
Programs (NCPDP) Real-Time Prescription Benefit
Standard, Implementation Guide, Version 13, July
2023. NCPDP RTPB standard implementation
guides are available to NCPDP members for free and
to non-members for a fee at ncpdp.org. The NCPDP
RTPB standard version 13 implementation guide
proposed for incorporation by reference in section
III.C.10. of this proposed rule can be viewed by
interested parties for free by following the
instructions provided in that section.
13 Bhardwaj S, Miller SD, Bertram A, Smith K,
Merrey J, Davison A. Implementation and cost
validation of a real-time benefit tool. Am J Manag
Care. 2022 Oct 1;28(10):e363–e369. doi: 10.37765/
ajmc.2022.89254.
14 National Council for Prescription Drug
Programs (NCPDP) Formulary and Benefit Standard,
Implementation Guide, Version 60, April 2023.
NCPDP F&B standard implementation guides are
available to NCPDP members for free and to nonmembers for a fee at ncpdp.org. The NCPDP F&B
standard version 60 implementation guide
proposed for incorporation by reference in section
III.C.10. of this proposed rule can be viewed by
interested parties for free by following the
instructions provided in that section.
15 Babbrah P, Solomon MR, Stember L, Hill JW,
Weiker M. Formulary & Benefit and Real-Time
Pharmacy Benefit: Electronic standards delivering
value to prescribers and pharmacists. J Am Pharm
Assoc. 2023 May–June;63(3):725–730. https://
doi.org/10.1016/j.japh.2023.01.016.
4. Requiring NCPDP SCRIPT Standard
Version 2023011 as the Part D
Electronic Prescribing Standard,
Retirement of NCPDP SCRIPT Standard
Version 2017071, and Related
Conforming Changes in § 423.160
The NCPDP SCRIPT standard has
been the adopted electronic prescribing
standard for transmitting prescriptions
and prescription-related information
using electronic media for covered Part
D drugs for Part D eligible individuals
since foundation standards were named
in the final rule titled ‘‘Medicare
Program; E-Prescribing and the
Prescription Drug Program,’’ which
appeared in the November 7, 2005
Federal Register (70 FR 67568), at the
start of the Part D program. The NCPDP
SCRIPT standard is used to exchange
information among prescribers,
dispensers, intermediaries, and
Medicare prescription drug plans. In
addition to electronic prescribing, the
NCPDP SCRIPT standard is used in
electronic prior authorization (ePA) and
medication history transactions.
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Although electronic prescribing is
optional for physicians, except as to
Schedule II, III, IV, and V controlled
substances that are Part D drugs
prescribed under Part D, and
pharmacies, the Medicare Part D statute
and regulations require drug plans
participating in the prescription benefit
to support electronic prescribing, and
physicians and pharmacies who elect to
transmit prescriptions and related
communications electronically must
utilize the adopted standards except in
limited circumstances, as codified at
§ 423.160(a)(3).
NCPDP’s standards development
process involves a consensus-based
approach to solve emerging needs of the
pharmacy industry or to adapt NCPDP
standards to changes made by other
standards development organizations.16
Emerging needs of the pharmacy
industry may be the result of legislative
or regulatory changes, health IT
innovations, patient safety issues,
claims processing issues, or electronic
prescribing-related process
automation.17 Changes to standards are
consensus-based and driven by the
NCPDP membership, which includes
broad representation from pharmacies,
insurers, pharmacy benefit managers,
Federal and State government agencies,
and vendors serving all the
stakeholders.18 19
In a letter to CMS dated January 14,
2022, NCPDP requested that CMS adopt
NCPDP SCRIPT standard version
2022011, given the number of updates
and enhancements that had been added
to the standard since NCPDP SCRIPT
standard version 2017071 was
adopted.20 NCPDP summarized the
major enhancements in NCPDP SCRIPT
standard version 2022011 relative to the
currently required NCPDP SCRIPT
standard version 2017071. Those
summarized enhancements include—
• General extensibility; 21
• Redesign of the Product/Drug
groupings requiring National Drug Code
16 https://standards.ncpdp.org/Our-Process.aspx.
17 NCPDP University. How Industry Needs Drive
Changes in Standards. Accessed August 15, 2023,
from https://member.ncpdp.org (member-only
content).
18 NCPDP University. Voting: The Life Cycle of
Standards Approval. Accessed August 15, 2023,
from https://member.ncpdp.org (member-only
content).
19 https://www.ncpdp.org/Membershipdiversity.aspx.
20 https://standards.ncpdp.org/Standards/media/
pdf/Correspondence/2022/202201NCPDPSCRIPTNextVersionLetter.pdf.
21 Extensibility is a term in software engineering
that is defined as the quality of being designed to
allow the addition of new capabilities or
functionality. See: Ashaolu B. What is
Extensibility? Converged. February 17, 2021.
Available from: https://converged
.propelsoftware.com/blogs/what-is-extensibility.
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(NDC) for DrugCoded element, but not
for NonDrugCoded element;
• Addition of Observation elements
to Risk Evaluation and Mitigation
Strategies (REMS) transactions;
• Addition of
ProhibitRenewalRequest to
RxChangeResponse and
RxRenewalResponse;
• Modification of Structured and
Codified Sig Structure format; and
• Additional support related to dental
procedure codes, RxBarCode,
PatientConditions, patient gender and
pronouns,
TherapeuticSubstitutionIndicator,
multi-party communications, and
withdrawal/retracting of a previous sent
message using the
MessageIndicatorFlag.
Subsequently, in the December 2022
proposed rule, CMS proposed to require
NCPDP SCRIPT standard version
2022011 and retire NCPDP SCRIPT
standard version 2017071, after a
transition period, by cross referencing
the standards as proposed for adoption
by ONC. In response to this proposal,
NCPDP and many other commenters
recommended that CMS instead adopt
the more current NCPDP SCRIPT
standard version 2023011. NCPDP
SCRIPT standard version 2023011, like
NCPDP SCRIPT standard version
2022011, includes the functionality that
supports a 3-way transaction (that is,
multi-party communication) among
prescriber, facility, and pharmacy,
which will enable EPCS in the LTC
setting.22 In its comments on the
December 2022 proposed rule,23 NCPDP
highlighted specific enhancements
within NCPDP SCRIPT standard version
2023011 that are not present in NCPDP
SCRIPT standard version 2022011,
which include:
• Addition of an optional element in
the header for OtherReferenceNumber
for multi-party communication
transactions, such as those in LTC;
• Addition of a response type of
Pending for RxChangeResponse and
RxRenewalResponse for communicating
when to expect an approval or denial of
the request or delays in approval or
denial of requests;
22 National Council for Prescription Drug
Programs (NCPDP) SCRIPT Standard,
Implementation Guide, Version 2023011, April
2023. NCPDP SCRIPT standard implementation
guides are available to NCPDP members for free and
to non-members for a fee at ncpdp.org. The NCPDP
SCRIPT standard version 2023011 implementation
guide proposed for incorporation by reference in
section III.C.10. of this proposed rule can be viewed
by interested parties for free by following the
instructions provided in that section.
23 https://standards.ncpdp.org/Standards/media/
pdf/Correspondence/2023/20230213_To_CMS_
CMS_4201_P_NPRM.pdf.
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• Addition of a new
RequestExpirationDate element to
NewRxRequest, RxChangeRequest, and
RxRenewalRequest to notify the
prescriber to not send a response after
this date;
• Addition of a new a new element
NoneChoiceID to PASelectType so that
a ‘‘none of the above’’ answer can be
selected by the provider and allow
branching to the next question in a
series;
• Addition of a new element for
REMSReproductivePotential replacing
REMSPatientRiskCategory in the
prescribed medication element group in
the NewRx and RxChangeRequest
message and in the replace medication
element group for the
RxRenewalResponse;
• Addition of a new element group of
ReviewingProvider to the Resupply and
Recertification messages to allow for the
reporting of the provider who reviewed
the chart and certified continued need
of a specific medication; and
• Revised guidance in the SCRIPT
Implementation Guide.
NCPDP SCRIPT standard version
2023011 is fully backwards compatible
with NCPDP SCRIPT standard version
2017071. This allows for a less
burdensome implementation process
and flexible adoption timeline for
pharmacies, payers, prescribers, health
IT vendors, and intermediaries involved
in electronic prescribing, since
backwards compatibility permits a
transition period where both versions of
the NCPDP SCRIPT standards may be
used simultaneously without the need
for entities involved to utilize a
translator program.
Even though we are withdrawing the
proposals contained in section III.S.
Standards for Electronic Prescribing in
the December 2022 proposed rule (87
FR 79548), we have considered
comments we received on the December
2022 proposed rule when crafting our
proposals for this proposed rule. For
instance, several commenters asked that
CMS clearly indicate that the proposed
version of the NCPDP SCRIPT standard
will apply to medication history
functions. Several commenters noted
that the regulation text at
§ 423.160(b)(4)(ii) does not list the
NCPDP SCRIPT standard-specific
medication history transactions.
Commenters asked that CMS list the
corresponding medication history
transactions (RxHistoryRequest and
RxHistoryResponse) in the regulation
text so as to minimize ambiguity. After
considering these comments, we
propose to list the RxHistoryRequest
and RxHistoryResponse transactions at
§ 423.160(b)(1)(i)(U) subsequent to our
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technical reorganization of the section
proposed in section III.B.9. of this rule,
rather than list the transactions under
§ 423.160(b)(4).
With respect to ePA transactions in
the NCPDP SCRIPT standard currently
listed at § 423.160(b)(8)(i)(A) through
(D) (PAInitiationRequest,
PAInitiationResponse, PARequest,
PAResponse, PAAppealRequest,
PAAppealResponse, PACancelRequest,
PACancelResponse) and a new ePA
transaction (PANotification) available in
NCPDP SCRIPT standard version
2023011, we propose to list all
transactions at § 423.160(b)(1)(i)(V)
through (Z). We are proposing new
language at § 423.160(b)(1) to indicate
that the transactions listed must comply
with a standard in proposed 45 CFR
170.205(b) ‘‘as applicable to the version
of the standard in use’’ since an older
version of a standard may not support
the same transactions as the newer
version of the standard. For example,
during the proposed transition period
where either NCPDP SCRIPT version
2017071 or NCPDP SCRIPT standard
version 2023011 may be used, entities
that are still using NCPDP SCRIPT
standard version 2017071 would not be
expected to use the PANotification
transaction because the PANotification
transaction is only supported in the
NCPDP SCRIPT standard version
2023011.
Since the NCPDP SCRIPT standard
version 2023011 is fully backwards
compatible with NCPDP SCRIPT
standard version 2017071, the
pharmacies, payers, prescribers, health
IT vendors, and intermediaries involved
in electronic prescribing can
accommodate a transition period when
either version may be used. That is,
during a transition period, transactions
taking place between entities using
different versions of the same standard
maintain interoperability without the
need for entities to utilize (that is,
purchase) a translator software program.
The cross reference to proposed 45 CFR
170.205(b) permits a transition period
starting as of the effective date of a final
rule during which either NCPDP
SCRIPT standard version 2017071 or
NCPDP SCRIPT standard version
2023011 may be used. If finalized as
proposed, the transition period will end
and exclusive use of NCPDP SCRIPT
standard version 2023011 will be
required starting January 1, 2027, when
NCPDP SCRIPT standard version
2017071 will expire for the purposes of
HHS use.
Instead of independently naming the
NCPDP SCRIPT standard version
2023011 and incorporating the
corresponding implementation guide by
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reference at § 423.160(c), we propose at
§ 423.160(b)(1) to cross reference a
standard in 45 CFR 170.205(b). ONC
proposes to adopt NCPDP SCRIPT
standard version 2023011 in 45 CFR
170.205(b)(2) as described in section
III.C.8.a. of this proposed rule. The
proposed approach would enable CMS
and ONC to avoid misalignment from
independent adoption of NCPDP
SCRIPT standard version 2023011 for
their respective programs. Updates to
the standard would impact
requirements for both programs at the
same time, ensure consistency, and
promote alignment for providers,
payers, and health IT developers
participating in and supporting the
same prescription transactions. See
section III.C.5. of this proposed rule for
additional discussion of this
coordination effort.
In its letter to CMS requesting CMS to
adopt NCPDP SCRIPT standard version
2022011, NCPDP requested that CMS
identify certain transactions for
prescriptions for which use of the
standard is mandatory.24 As previously
mentioned in this preamble, in response
78491
to the December 2022 proposed rule,
NCPDP and other commenters requested
additional transactions be named in
regulation. As part of our proposed
reorganization of § 423.160, we propose
to list all transactions associated with
the NCPDP SCRIPT standard
requirements in one place in the
regulation. We propose the transactions
for prescriptions, ePA, and medication
history for which use of the standard is
mandatory at § 423.160(b)(1)(i)(A)
through (Z), as described in Table C–C1.
BILLING CODE 4120–01–P
TABLE C-Cl: PROPOSED TRANSACTIONS FOR COMMUNICATION OF
PRESCRIPTION AND PRESCRIPTION RELATED INFORMATION USING THE
NCPDPSCRIPTSTANDARD
Function Supported by Transaction25
Requests from a mailbox, a renewal prescription request,
prescription change request, new prescription request,
prescription fill status notification, verification, transfer
request, transfer response, transfer confirmation or an error or
other transactions that have been sent by a pharmacy or
prescriber system.
Relays acceptance of a transaction back to the sender.
Indicates an error has occurred indicating the request was
terminated.
Request from a pharmacy to a prescriber asking for a change in
a new or "fillable" prescription; additional usage includes
verification of prescriber credentials and request on a prior
authorization from the payer. Response is sent from a prescriber
to the requesting pharmacy to either approve, approve with
change, validate, or deny the request.
Request from the pharmacy to the prescriber requesting
additional refills. Response is sent from the prescriber to the
requesting pharmacy to allow pharmacist to provide a patient
with additional refills, a new prescription, or decline to do
either.
Status
Error
RxChangeRequest and
RxChangeResponse
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RxRenewalRequest and
RxRenewalResponse
24 https://standards.ncpdp.org/Standards/media/
pdf/Correspondence/2022/202201NCPDPSCRIPTNextVersionLetter.pdf.
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Transaction
GetMessage
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Verify
CancelRx and
CancelRxResponse
RxFill
DrugAdministration
NewRxRequest
NewRx
NewRxResponseDenied
RxTransferlnitiationRequest
(previously named
RxTransferRequest in
NCPDP SCRIPT standard
version 2017071)
RxTransfer (previously
named RxTransferResponse
NCPDP SCRIPT standard
version 2017071)
RxTransferConfirm
RxFilllndicatorChange
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Recertification
REMSiinitiationRequest and
REMSiinitiationResponse
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Function Suooorted bv Transaction25
Request from a Long Term or Post-Acute Care (LTPAC)
organization to a pharmacy to send an additional supply of
medication for an existing order.
Response to a pharmacy or prescriber indicating that a
transaction requesting a return receipt has been received.
Request from the prescriber to the pharmacy to inactivate a
previously sent prescription. Response is sent from the
pharmacy to the prescriber to acknowledge a cancel request.
Indicates the dispensing or activity status. It is the notification
from one entity to another conveying the status of dispensing
activities or other clinical activities.
Communicates drug administration events from a
prescriber/care facility to the pharmacy or other entity. It is a
notification from a prescriber/care facility to a pharmacy or
other entity that a drug administration event has occurred.
Request from a pharmacy to a prescriber for a new prescription
for a patient. If approved, a NewRx transaction would be sent.
New prescription is sent from the prescriber to the pharmacy
electronically so it can be dispensed to a patient.
Denied response to a previously sent NewRxRequest.
Used when the destination pharmacy is asking for a transfer of
one or more prescriptions for a specific patient from the source
pharmacy.
In the solicited model, it is the response to the
RxTransferlnitiationRequest which includes the prescription(s)
being transferred from the source pharmacy to the destination
pharmacy or a rejection of the transfer request. In the
unsolicited model, it is a push of the prescription(s) being
transferred from the source pharmacy to the destination
pharmacy.
Used by the destination pharmacy to confirm the transfer
prescription has been received and the transfer is complete.
Sent to the receiver to indicate the sender is changing the types
ofRxFill responses that were previously requested. The sender
may modify the fill status notification of transactions previously
selected or cancel future RxFill transactions.
Notification on behalf of a reviewing provider to a pharmacy
recertifying the continued administration of a medication order.
Used in LTPAC only.
Request to the REMS Administrator for the information
required to submit a REMS request (REMSRequest) for a
specified patient and drug. Response is from the REMS
Administrator with the information required to submit a REMS
request (REMSRequest) for a specified patient and drug.
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Transaction
Resupply
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Function Supported by Transaction25
Request to the REMS Administrator with information (answers
to question set; clinical documents) to make a REMS
determination (approved, denied, pended, etc.). Response is the
determination from the REMS administrator whether dispensing
authorization can be granted.
Request from one entity to another for a list of medications that
have been prescribed, dispensed, claimed or indicated by the
patient. Response includes the medications that were dispensed
or obtained within a certain timeframe, optionally including the
prescriber that prescribed them.
Request from the submitter to a payer for the information
required to submit a prior authorization request (PARequest) for
a specified patient and product. Response is from a payer to the
submitter with the information required to submit a prior
authorization request (PARequest) for a specified patient and
product.
Request from the submitter to the payer with information
(answers to question set; clinical documents) for the payer to
make a PA determination (approved, denied, pended, etc.).
Response from the payer to the submitter indicates the status of
a PARequest. Response could be a PA determination, notice
that the request is in process, or specify that more information is
required.
Request from the submitter to the payer to appeal a PA
determination. Response from the payer to the submitter
indicates what information is needed for an appeal or the status
or outcome of a PAAppealRequest.
Request from the submitter to the payer to notify the payer that
the PA request is no longer needed. Response from the payer to
the submitter indicates the if the PA request was cancelled or
not.
Alerts the pharmacist or prescriber when a PA has been
requested, or when a PA determination has been received.
RxHistoryRequest and
RxHistoryResponse
PAinitiationRequest and
PAinitiationResponse
PARequest and
PAResponse
PAAppealRequest and
PAAppealResponse;
PACancelRequest and
PACancelResponse
PANotification
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BILLING CODE 4120–01–C
The transactions specific to electronic
prescribing remain the same as those
required for NCPDP SCRIPT standard
version 2017071 (currently codified at
§ 423.160(b)(2)(iv)(A) through (Z)),
except where renamed as noted in Table
C–C1. The transactions specific to ePA
are also the same as those required with
NCPDP SCRIPT standard version
2017071, with one additional
transaction (PA Notification), which
was incorporated into the standard after
NCPDP SCRIPT standard version
2017071. As discussed in section
III.C.8.a. of this proposed rule, NCPDP
SCRIPT standard version 2023011 is
proposed for adoption at 45 CFR
170.205(b)(2), and NCPDP SCRIPT
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standard version 2017071 is proposed to
expire January 1, 2027, at 45 CFR
170.205(b)(1). Consequently, should we
finalize our proposal, use of NCPDP
SCRIPT standard version 2023011 for
the transactions related to electronic
prescribing, medication history, and
ePA (proposed at § 423.160(b)(1)(i)(A)
through (Z)) will be mandatory starting
January 1, 2027, if ONC’s proposed
adoption of NCPDP SCRIPT version
2023011 and proposed expiration date
for NCPDP SCRIPT version 2017071 are
adopted as proposed.
25 Section 4. Business Functions, and Section 5.
Transactions. National Council for Prescription
Drug Programs (NCPDP) SCRIPT Standard,
Implementation Guide, Version 2023011, April
2023. NCPDP SCRIPT standard implementation
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As stated previously, in response to
the December 2022 proposed rule,
several commenters pointed out that if
mandatory use of an updated version of
the NCPDP SCRIPT standard is delayed,
then the EPCS requirement in LTC
facilities should also be delayed
accordingly, since NCPDP SCRIPT
standard version 2017071 lacks
appropriate guidance for LTC facilities.
CMS was aware of this limitation in the
NCPDP SCRIPT standard version
guides are available to NCPDP members for free and
to non-members for a fee at ncpdp.org. The NCPDP
SCRIPT standard version 2023011 implementation
guide proposed for incorporation by reference in
section III.C.10. of this proposed rule can be viewed
by interested parties for free by following the
instructions provided in that section.
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Transaction
REMSRequest and
REMSResponse
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2017071, and acknowledged the
challenges to EPCS faced by LTC
facilities in the proposed rule ‘‘Medicare
Program; CY 2022 Payment Policies
Under the Physician Fee Schedule and
Other Changes to Part B Payment
Policies; Medicare Shared Savings
Program Requirements; Provider
Enrollment Regulation Updates;
Provider and Supplier Prepayment and
Post-Payment Medical Review
Requirements’’ (hereinafter referred to
as ‘‘the July 2022 proposed rule’’),
which appeared in the Federal Register
July 23, 2021 (86 FR 39104). However,
in the July 2022 proposed rule, CMS
also stated that we understood that
NCPDP was in the process of creating
specific guidance for LTC facilities
within the NCPDP SCRIPT standard
version 2017071, which would allow
willing partners to enable 3-way
communication between the prescriber,
LTC facility, and pharmacy to bridge
any outstanding gaps that impede
adoption of the NCPDP SCRIPT
standard version 2017071 in the LTC
setting (86 FR 39329).
Similarly, in the ‘‘Medicare Program;
CY 2022 Payment Policies Under the
Physician Fee Schedule and Other
Changes to Part B Payment Policies;
Medicare Shared Savings Program
Requirements; Provider Enrollment
Regulation Updates; and Provider and
Supplier Prepayment and Post-Payment
Medical Review Requirements’’ final
rule (hereinafter referred to as ‘‘the
November 2021 final rule’’), which
appeared in the Federal Register
November 19, 2021 (86 FR 64996), CMS
acknowledged that although 3-way
communication is not as seamless in
NCPDP SCRIPT standard version
2017071 as it was expected to be in later
versions, EPCS was still possible with
some modifications (86 FR 65364). CMS
delayed EPCS compliance for
prescribers’ prescriptions written for
beneficiaries in a LTC facility from
January 1, 2022, to no earlier than
January 1, 2025, in order to give
prescribers additional time to make the
necessary changes to conduct electronic
prescribing of covered Part D controlled
substance prescriptions for Part D
beneficiaries in LTC facilities using
NCPDP SCRIPT standard version
2017071 (86 FR 65365). We are not
proposing a change in the EPCS
compliance date for covered Part D
controlled substance prescriptions for
Part D beneficiaries in LTC on the basis
of the proposed adoption of NCPDP
SCRIPT standard version 2023011;
however, we invite comment on the
status of EPCS in LTC and the degree to
which LTC facilities have been able to
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implement guidance from NCPDP to
meet the EPCS requirement.
As proposed, § 423.160(b)(1) would
require use of the version or versions of
the NCPDP SCRIPT standard adopted in
45 CFR 170.205(b) to carry out the
transactions listed in
§ 423.160(b)(1)(i)(A) through (Z).
However, it would not require that all
transactions be utilized if they are not
needed or are not relevant to the entity.
We refer readers to ONC’s
Interoperability Standards Advisory
(ISA) website for descriptions and
adoption level of transactions in the
NCPDP SCRIPT standard.26 For
example, we have been informed that
the ‘‘GetMessage’’ transaction described
in Table C–C1 is not widely used among
prescribers. For this reason, we are
reiterating guidance 27 that the NCPDP
SCRIPT standard transactions named
are not themselves mandatory, but
rather they are to be used as applicable
to the entities specified at
§ 423.160(a)(1) and (2) when they are
completing or supporting the
transmission of information related to
electronic prescriptions, electronic prior
authorization, or medication history. We
believe the pharmacies, payers,
prescribers, health IT vendors, and
intermediaries involved in electronic
prescribing have been utilizing the
standards in this manner, based on
discussions with NCPDP.
In summary, with respect to changes
related to adopting, via cross-reference
to ONC proposals in section III.C.8.a.,
NCPDP SCRIPT standard version
2023011 and retiring NCPDP SCRIPT
standard version 2017071, we propose a
revised paragraph § 423.160(b)(1) to:
• Consolidate all transactions for
electronic prescribing, ePA, and
medication history for which use of the
NCPDP SCRIPT standard is mandatory
at § 423.160(b)(1)(i)(A) through (Z); and
• Indicate that communication of
prescriptions and prescription-related
transactions listed must comply with a
standard in 45 CFR 170.205(b). In
conjunction with ONC proposals in
section III.C.8.a., this cross-reference
would permit a transition period when
either NCPDP SCRIPT standard versions
2017071 or 2023011 may be used
beginning as of the effective date of a
final rule and ending January 1, 2027,
because, as ONC has proposed at 45
CFR 170.205(b)(1), the NCPDP SCRIPT
standard version 2017071 would expire
January 1, 2027, after which only
26 https://www.healthit.gov/isa/section/
pharmacyinteroperability.
27 Supporting Electronic Prescribing Under
Medicare Part D. September 19, 2008. https://
www.hhs.gov/guidance/document/supportingelectronic-prescribing-under-medicare-part-d.
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NCPDP SCRIPT standard version
2023011 would be available for HHS
use.
We solicit comment on these
proposals.
5. Requiring NCPDP Real-Time
Prescription Benefit (RTPB) Standard
Version 13
In the May 2019 final rule (84 FR
23832), which implemented the
statutory provision at section 1860D–
4(e)(2)(D) of the Act, CMS required at
§ 423.160(b)(7) that Part D plan sponsors
implement, by January 1, 2021, one or
more electronic real-time benefit tools
(RTBT) capable of integrating with at
least one prescriber’s e-prescribing
system or electronic health record (EHR)
to provide prescribers with complete,
accurate, timely, clinically appropriate,
patient-specific formulary and benefit
information. CMS indicated that the
formulary and benefit information
provided by the tool should include
cost, clinically appropriate formulary
alternatives, and utilization
management requirements because, at
that time, an industry standard for
RTBTs had not been identified (84 FR
23833). NCPDP has since developed and
tested an RTPB standard for use with
RTBT applications. The NCPDP RTPB
standard enables the real-time exchange
of information about patient eligibility
and patient-specific formulary and
benefit information. For a submitted
drug product, the RTPB standard will
indicate coverage status, coverage
restrictions, and estimated patient
financial responsibility. ‘‘Estimated’’
financial responsibility accounts for the
fact that the RTPB transaction transmits
the patient’s cost sharing at that
particular moment in time, which could
later change if the claim is processed at
a later date or in a different sequence
relative to other claims (for example, an
RTPB transaction could show a cost
sharing that reflects a deductible or
particular stage in the Part D benefit
which could be different from when the
prescription claim is actually processed
by the pharmacy if other claims were
processed in the interim). The RTPB
standard also supports providing
information on alternative pharmacies
and products. In an August 20, 2021
letter to CMS, NCPDP described these
features and recommended adoption of
RTPB standard version 12.28
Subsequently, in the December 2022
proposed rule, CMS proposed that Part
D sponsors’ RTBTs comply with NCPDP
RTPB standard version 12. In response
28 https://standards.ncpdp.org/Standards/media/
pdf/Correspondence/2021/20210820_To_CMS_
RTPBandFandBStandardsAdoptionRequest.pdf.
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to that proposal, NCPDP and many other
interested parties provided comments to
CMS recommending that CMS instead
require NCPDP RTPB standard version
13. In their comments on the December
2022 proposed rule,29 NCPDP listed
enhancements in NCPDP RTPB standard
version 13 that improve the information
communicated between the payer and
the prescriber. These enhancements
include:
• Addition of a Coverage Status
Message to enable the payer to
communicate at the product level
additional clarifying coverage
information which is not codified;
• Addition of values to the Coverage
Restriction Code and data elements to
codify information communicated in the
Message to reduce the number of free
text messages on the response;
• Addition of a next available fill date
to communicate when the patient is
eligible to receive a prescription refill in
a discrete field instead of via a free text
message;
• Addition of fields to communicate
formulary status and preference level of
both submitted and alternative products
in order to clarify pricing; and
• Addition of data elements on the
request transaction to convey the
patient’s address, State/province, zip/
postal code and country to aid in
coverage determinations.
Even though we are withdrawing the
proposals contained in section III.S.
Standards for Electronic Prescribing in
the December 2022 proposed rule (87
FR 79548), we have considered
comments we received on the December
2022 proposed rule when crafting our
proposals related to RTBTs for this
proposed rule. A commenter on the
December 2022 proposed rule requested
that CMS specify that adoption of the
NCPDP RTPB standard should not
impede what the commenter refers to as
the industry standard of sending 4 drugs
or 4 pharmacies for pricing in a single
transaction. We understand that each
transaction between a prescriber EHR
and the payer or processor is associated
with a degree of latency (that is, the
amount of time it takes for the RTBT
request to travel from the electronic
prescribing system to the payer or
processor and return a response with
the patient’s cost sharing and formulary
status information for the submitted
drug). In order to populate information
on alterative formulary drugs or
alternative pharmacies, if one
alternative is submitted per transaction,
then the latency associated with each
29 https://standards.ncpdp.org/Standards/media/
pdf/Correspondence/2023/20230213_To_CMS_
CMS_4201_P_NPRM.pdf.
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transaction becomes additive. If the total
latency is too long, then either the RTBT
request may ‘‘time out’’ and a response
may never be presented to the
prescriber, or the prescriber may simply
not wait long enough for the RTBT
response before moving on through the
electronic prescribing process. To
illustrate the concept at the center of
this issue, if each RTBT transaction is
associated with 1 second of latency,
then 1 transaction containing the
submitted drug, plus 3 alternatives
should return the patient-specific cost
and formulary status information for all
4 drugs within 1 second. However, if the
submitted drug and each alternative are
sent as separate transactions, then the
total time to return the RTBT response
becomes 4 seconds (1 second × 4
transactions). This longer response time
increases the likelihood that the
prescriber will not wait for the
information to populate or that that EHR
system will cause the transaction to
time out, meaning the patient-specific
cost and formulary status information
are not presented to the prescriber. CMS
takes interest in how adoption of the
proposed NCPDP RTPB standard
version 13 could alter functionality of
RTBTs already in use. CMS created
requirements for RTBTs in the absence
of an industry-wide standard because of
their potential to increase drug price
transparency and lower out-of-pocket
costs for Medicare Part D enrollees. The
impact of RTBTs is contingent on
prescribers actually receiving the
patient-specific information in the
response from the payer. CMS
appreciates that this is relatively new
technology and that there are multiple
factors that contribute to the overall
impact of RTBTs in real-world
settings.30 31 32 Nevertheless, we seek
comment on the issue raised by the
commenter. We ask interested parties
for their perspective on whether
requiring the NCPDP RTPB standard
version 13 would limit the ability to
send more than one drug or pharmacy
per RTBT transaction, and if so, whether
the benefit of adopting a standard for
30 Everson J, Dusetzina SB. Real-time Prescription
Benefit Tools—The Promise and Peril. JAMA Intern
Med. 2022;182(11):1137–1138. Doi:10.1001/
jamainternmed.2022.3962.
31 Real-Time Benefit Check: Key Insights and
Challenges. May 2021. Accessed January 1, 2023.
Available at: https://
www.hmpgloballearningnetwork.com/site/frmc/
cover-story/real-time-benefit-check-key-insightsand-challenges.
32 American Medical Association. Council on
Medical Service. Access to Health Plan Information
regarding Lower-Cost Prescription Options
(Resolution 213–NOV–20). Available from https://
councilreports.ama-assn.org/councilreports/
downloadreport?uri=/councilreports/n21_cms_
report_2.pdf.
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prescriber RTBTs in order to enable
widespread integration across EHRs and
payers outweighs such limitation.
The NCPDP RTPB standard version 13
standard is designed for prescriber, not
beneficiary (that is, consumer), RTBTs.
CMS emphasizes that we are not
proposing a required standard for
beneficiary RTBTs. Beneficiary RTBTs
are made available directly to Part D
plan enrollees by the Part D sponsor;
therefore, beneficiary RTBT applications
do not necessarily interface with an
electronic prescribing system or EHR, as
prescriber RTBTs must. Consequently,
CMS believes that Part D sponsors can
retain the flexibility to use beneficiary
RTBTs that are based on an available
standard or a custom application, as
long as the information presented to
enrollees meets CMS’s requirements
codified at § 423.128(d)(4). The
requirements for the beneficiary RTBT
are discussed in the final rule titled
‘‘Medicare and Medicaid Programs;
Contract Year 2022 Policy and
Technical Changes to the Medicare
Advantage Program, Medicare
Prescription Drug Benefit Program,
Medicaid Program, Medicare Cost Plan
Program, and Programs of All-Inclusive
Care for the Elderly,’’ which appeared in
the January 19, 2021 Federal Register
(86 FR 5864). We decline to propose a
standard for beneficiary RTBTs at this
time, however we welcome comments
on this topic which we may consider for
future rulemaking.
As discussed in section III.C.8.b. of
this proposed rule, ONC proposes to
adopt the NCPDP RTPB standard
version 13 at 45 CFR 170.205(c)(1). We
therefore propose at § 423.160(b)(5) to
require that beginning January 1, 2027,
Part D sponsors’ prescriber RTBT must
comply with a standard in 45 CFR
170.205(c).
We solicit comment on these
proposals and the related issues raised.
6. Requiring NCPDP Formulary and
Benefit Standard Version 60 and
Retirement of NCPDP Formulary and
Benefit Standard Version 3.0
The NCPDP Formulary and Benefit
(F&B) standard provides a uniform
means for prescription drug plan
sponsors to communicate plan-level
formulary and benefit information to
prescribers through electronic
prescribing/EHR systems. The NCPDP
F&B standard transmits, on a batch
basis, data on the formulary status of
drugs, preferred alternatives, coverage
restrictions (that is, utilization
management requirements), and cost
sharing consistent with the benefit
design (for example, cost sharing for
drugs on a particular tier). The NCPDP
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F&B standard serves as a foundation for
other electronic prescribing functions
including ePA, real-time benefit check,
and specialty medication eligibility
when used in conjunction with other
standards.33 NCPDP F&B standard
version 3.0 is required for transmitting
formulary and benefits information
between prescribers and Medicare Part
D sponsors, consistent with the existing
text of § 423.160(b)(1)(v) and (b)(5)(iii).
In an April 4, 2023 letter to CMS,
NCPDP requested that CMS adopt
NCPDP F&B standard version 60 to
replace NCPDP F&B standard version
3.0.34 A detailed change log was
attached to the letter and is available at
the link in the footnote. As described in
the letter, compared with NCPDP F&B
standard version 3.0, NCPDP F&B
standard version 60 includes all of the
following major enhancements:
• Normalization of all files (lists),
which allows for smaller files and
reusability.
• All files have expiration dates.
• Redesigned alternative and step
medication files to reduce file sizes and
to include support for reason for use
(that is, diagnosis).
• Step medication files support a
more complex step medication program.
• Updated coverage files to include
support for electronic prior
authorization and specialty drugs.
• Updated copay files to allow a
minimum and maximum copay range
without a percent copay and to support
deductibles and pharmacy networks.
In its letter to CMS, NCPDP requested
mandatory use of NCPDP F&B version
60 24 months after the effective date of
a final rule adopting the standard.
NCPDP F&B standard version 60 is
backwards compatible with NCPDP F&B
standard version 3.0, permitting a
transition period where both versions of
the NCPDP F&B standard may be used
simultaneously without the need for
entities involved to utilize a translator
program.
Following an approach similar to
those proposed in sections III.B.4. and
III.B.5. of this proposed rule, CMS
proposes at § 423.160(b)(3) that
transmitting formulary and benefit
information between prescribers and
Medicare Part D sponsors must either
utilize NCPDP F&B standard version 3.0
or comply with a standard in 45 CFR
33 Babbrah P, Solomon MR, Stember LA, Hill JW,
Weiker M. Formulary & benefit and real-time
pharmacy Benefit: Electronic standards delivering
value to prescribers and pharmacists. J Am Pharm
Assoc (2003). 2023 May–Jun;63(3):725–730. doi:
10.1016/j.japh.2023.01.016.
34 https://standards.ncpdp.org/Standards/media/
pdf/Correspondence/2023/20230404-to-CMSFormulary-and-Benefit-V60-Request.pdf.
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170.205(u), where ONC proposes to
adopt, at 45 CFR 170.205(u)(1), NCPDP
F&B standard version 60 as described in
section III.C.8.c. of this proposed rule.
After January 1, 2027, entities
transmitting formulary and benefit
information would be required to
comply with a standard in 45 CFR
170.205(u) exclusively, if finalized as
proposed. Since ONC did not previously
adopt NCPDP F&B standard version 3.0,
we are maintaining the incorporation by
reference of that version in the Part D
regulation at § 423.160(c)(1)(i) to permit
a transition period where either NCPDP
F&B standard version 3.0 or NCPDP F&B
version 60 could be used until January
1, 2027.
We solicit comment on these
proposals.
7. Date for Required Use of NCPDP
SCRIPT Standard Version 2023011,
NCPDP RTPB Standard Version 13, and
NCPDP F&B Standard Version 60
CMS has received feedback on a
number of practical considerations for
determining a realistic timeframe to
implement new or update existing
electronic prescribing standards. We
have been informed that organizations
generally do not budget for new
requirements until a final rule has been
published establishing a particular new
requirement and, therefore, the timing
of when a final rule is finalized relative
to budget approval cycles can determine
if a requirement can be accounted for in
the organization’s next annual budget.
The health IT industry has indicated to
CMS that it requires at least 2 years to
design, develop, test, and certify
software with trading partners; perform
DEA audits for EPCS compliance; and
roll out updated software to provider
organizations and partners who then
must train end users before a transition
to a new or updated version of a
standard is complete. This account is
consistent with NCPDP’s requests for up
to 24-month implementation timeframes
for new standards.35 36 A commenter on
the December 2022 proposed rule
requested that CMS either permit 3
years from a final rule before requiring
use of a new or updated version of a
standard, or use enforcement discretion
if requiring use of a new or updated
version of a standard less than 3 years
from a final rule. CMS will generally
aim to provide entities with at least 2
years from when a final rule is finalized;
however, we qualify that in some cases
35 https://standards.ncpdp.org/Standards/media/
pdf/Correspondence/2021/20210820_To_CMS_
RTPBandFandBStandardsAdoptionRequest.pdf.
36 https://standards.ncpdp.org/Standards/media/
pdf/Correspondence/2022/202201NCPDPSCRIPTNextVersionLetter.pdf.
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less time may be provided if determined
to be necessary.
CMS routinely receives feedback
requesting that we do not require the
use of new or updated electronic
prescribing standards starting on
January 1 due to end-of-year ‘‘code
freezes,’’ which prohibit updates to
internal systems and plan enrollment
changes that contribute to a general high
workload at the start of a new plan year.
CMS reminds entities impacted by the
proposed regulatory changes that,
consistent with § 423.516, CMS is
prohibited from imposing new,
significant regulatory requirements on
Part D sponsors midyear. If the
approach proposed in this proposed
rule to align CMS’s requirements for
certain Part D electronic prescribing
standards by cross-referencing standards
adopted in ONC regulations is finalized,
CMS and ONC will coordinate to
establish appropriate timeframes for
updating adopted standards and
expiration dates for prior versions of
adopted standards. CMS, working with
ONC, will consider transition periods
longer than 24 months following
publication of a final rule to permit a
sufficient transition period prior to
January 1. Since a new, significant
requirement must be effective January 1,
a new or updated version of a standard
could be required January 1 of the year
following 24 months after a final rule is
effective. For example, if a final rule
containing a provision to update an
electronic prescribing standard to a new
version were effective May 30, 2024,
then CMS would anticipate requiring
the new version of the standard by
January 1, 2027. This would allow for a
31-month transition period during
which either version of a required
standard could be used. Part D sponsors
would need to plan accordingly to
completely transition to the updated
version of the standard ahead of the
January 1 date to meet their internal
production calendars. Using the prior
example, we would assume that to
avoid implementing the updated
version of a standard on January 1,
2027, Part D sponsors would transition
to the updated version of the standard
by approximately May 30, 2026.
ONC is proposing January 1, 2027, as
the date NCPDP SCRIPT standard
version 2023011 would be the required
version of this standard, as a product of
the proposed expiration for NCPDP
SCRIPT standard version 2017071 and
our proposed cross-reference, in
§ 423.160(b)(1), to a standard in 45 CFR
170.205(b). We are proposing the
required use of NCPDP F&B standard
version 60 and NCPDP RTPB standard
version 13 by January 1, 2027, in the
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text of § 423.160(b)(3) and (5),
respectively, as previously discussed.
We are also aware that Part D sponsors
and the health IT industry are awaiting
HHS’ final rule on the proposals to
update the NCPDP Telecommunication
standard from version D.0 to version F6
(87 FR 67638), update the equivalent
NCPDP Batch Standard version 15 (87
FR 67639), and implement the NCPDP
Batch Standard Pharmacy Subrogation
version 10 (87 FR 67640) proposed in
the November 2022 Administrative
Simplification proposed rule.
Taking all of these proposals into
consideration, we ask interested parties
to comment on the proposed January 1,
2027, date for the required use of
NCPDP SCRIPT standard version
2023011, NCPDP RTPB standard version
13, and NCPDP F&B standard version
60. It is expressly outside the scope of
this proposed rule, and we do not seek
comment on, the compliance date for
the proposals in HHS’ November 2022
Administrative Simplification proposed
rule; however, we ask for comments on
the feasibility of updating multiple
standards simultaneously.
8. Standards for Eligibility Transactions
We propose to revise the Part D
requirements to indicate that eligibility
transactions must comply with 45 CFR
162.1202. The requirements for
eligibility transactions currently
codified at § 423.160(b)(3)(i) and (ii)
name the Accredited Standards
Committee X12N 270/271-Health Care
Eligibility Benefit Inquiry and Response,
Version 5010, April 2008, ASC X12N/
005010x279 and the NCPDP
Telecommunication Standard
Specification, Version D, Release 0
(Version D.0), August 2007, and
equivalent NCPDP Batch Standard
Batch Implementation Guide, Version 1,
Release 2 (Version 1.2), January 2006
supporting Telecommunications
Standard Implementation Guide,
Version D, Release 0 (Version D.0),
August 2007. We adopted these
standards to align with those adopted at
45 CFR 162.1202, pursuant to the final
rule titled ‘‘Health Insurance Reform;
Modifications to the Health Insurance
Portability and Accountability Act
(HIPAA) Electronic Transaction
Standards,’’ which appeared in the
January 16, 2009, Federal Register (74
FR 3326).
The November 2022 Administrative
Simplification proposed rule proposes
to update the HIPAA standards used for
eligibility transactions (87 FR 67638).
We therefore propose to update the Part
D regulation by proposing, at
§ 423.160(b)(2), that eligibility inquiries
and responses between the Part D
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sponsor and prescribers and between
the Part D sponsor and dispensers must
comply with the applicable HIPAA
regulation in 45 CFR 162.1202, as
opposed to naming standards
independently, which would ensure,
should the HIPAA standards for
eligibility transactions be updated as a
result of HHS rulemaking or in the
future, that the Part D regulation would
be synchronized with the required
HIPAA standards. We foresee no
immediate impact of this proposed
change since the HIPAA regulation at 45
CFR 162.1202 currently identifies the
same standards as those named in the
Part D regulation at § 423.160(b)(3)(i)
and (ii), but we believe establishing a
cross-reference would help avoid
potential future conflicts and mitigate
potential compliance challenges for the
healthcare industry and enforcement
challenges for HHS.
Thus, we propose to delete existing
§ 423.160(b)(3)(i) and (ii) and modify
§ 423.160(b)(2) (as renumbered per the
technical proposals in section III.B.9. of
this proposed rule) to require that
eligibility transactions must comply
with 45 CFR 162.1202.
We solicit comment on these
proposals.
9. Technical Changes Throughout
§ 423.160
In the spirit of alignment with ONC’s
approach to adopting standards, we
reviewed § 423.160 in its entirety and
identified areas where we can
reorganize text throughout this section.
We do not believe we should continue
to list historical requirements that are
no longer relevant and have resulted in
repetitive content being added to the
regulation. We propose removing
reference to old effective dates (for
example, ‘‘After January 1, 2009 . . .’’ at
§ 423.160(a)(3)(ii)). Additionally, certain
exemptions have long since expired. For
example, at § 423.160(a)(3)(iv), entities
transmitting prescriptions or
prescription-related information where
the prescriber is required by law to issue
a prescription for a patient to a nonprescribing provider (such as a nursing
facility) that in turn forwards the
prescription to a dispenser have not
been exempt from using the SCRIPT
standard since November 1, 2014.
We are proposing a correction at
§ 423.160(a)(3)(iii), where regulation
text refers to prescriptions and
prescription-related information
transmitted ‘‘internally when the sender
and the beneficiary are part of the same
legal entity.’’ The exemption currently
at § 423.160(a)(3)(iii) was previously
codified at § 423.160(a)(3)(ii) as
‘‘Entities may use either HL7 messages
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or the NCPDP SCRIPT Standard to
transmit prescriptions or prescriptionrelated information internally when the
sender and the recipient are part of the
same legal entity . . .’’ as finalized in
the November 2005 final rule, which
codified the foundation standards for
Medicare Part D electronic prescription
drug programs (70 FR 67594). Section
423.160(a)(3)(ii) was redesignated as
§ 423.160(a)(3)(iii) subsequent to
changes made in the final rule titled
‘‘Medicare Program; Revisions to
Payment Policies Under the Physician
Fee Schedule, and Other Part B Payment
Policies for CY 2008; Revisions to the
Payment Policies of Ambulance
Services Under the Ambulance Fee
Schedule for CY 2008; and the
Amendment of the E-Prescribing
Exemption for Computer Generated
Facsimile Transmissions,’’ (hereinafter
referred to as ‘‘the November 2007 final
rule’’) which appeared in the November
27, 2007 Federal Register (72 FR
66222). There is no indication of intent
in the November 2007 final rule to
change the wording in
§ 423.160(a)(3)(iii) when it was
redesignated, nor can we find evidence
of when this paragraph may have been
altered in subsequent rules. Therefore,
we believe the word ‘‘recipient’’ was
inadvertently changed to ‘‘beneficiary’’
in the distant past and we are proposing
to change this back to ‘‘recipient.’’
Section 423.160(a)(1) and (2) already
indicate that the entities listed must
comply with the applicable standards in
§ 423.160(b); therefore, the language
currently at § 423.160(b)(1), ‘‘Entities
described in paragraph (a) of this
section must comply with the following
adopted standards for transactions
under this section,’’ is redundant. We
propose to remove it from the text of
§ 423.160(b)(1). Moreover,
§ 423.160(b)(1)(i) through (iv) and
(b)(2)(i) through (iii) contain longoutdated requirements going back to the
start of the electronic prescribing
program in Medicare Part D. We
propose to delete references to outdated
requirements so that the regulation text
will include only relevant and
applicable requirements. Transition
periods would no longer be specifically
spelled out as starting at a particular
date (historically, 6 months after the
effective date of a final rule). Rather, the
transition period would begin as of the
effective date of a final rule effectuating
a change from one version of a standard
to a new version and would last until
the prior version of the standard is
expired, as proposed to be codified in
ONC regulation, or until the date
specified in Part D regulation. For
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versions of standards adopted by ONC,
CMS would consider the necessary
transition period when working with
ONC to establish the appropriate
expiration date for prior versions of
standards in rulemaking. This would
align the Part D approach with the
approach that ONC has used in its own
regulations.
As currently organized, separate
sections for ‘‘Prescription’’ at
§ 423.160(b)(2), ‘‘Medication history’’ at
§ 423.160(b)(4), and ‘‘Electronic prior
authorization’’ at § 423.160(b)(8) has
resulted in multiple versions of the
NCPDP SCRIPT standard, and relevant
transactions, being repeated in these
sections. Because § 423.160(a)(1) and (2)
state that the entities listed must comply
‘‘with the applicable standards in
paragraph (b),’’ we believe that we can
group the functions in paragraph (b)
according to the standard used for those
functions to avoid repetition. Therefore,
we propose to combine ‘‘Prescriptions,
electronic prior authorization, and
medication history’’ at § 423.160(b)(1),
which will require the use of the NCPDP
SCRIPT standard version or versions as
proposed via cross-reference to ONC
regulations. We propose to delete
§ 423.160(b)(4) and (8). The ePA
transactions previously listed at
§ 423.160(b)(8)(i)(A) through (D) are
proposed at § 423.160(b)(1)(i)(V)
through (Y). We are proposing to delete
reference to versions of the NCPDP F&B
standard, currently codified at
§ 423.160(b)(5) introductory text and
(b)(5)(i) and (ii), that are no longer
applicable. The remaining paragraphs in
§ 423.160(b) are renumbered such that
§ 423.160(b)(2) refers to eligibility,
§ 423.160(b)(3) refers to formulary and
benefits, § 423.160(b)(4) refers to
provider identifier, and § 423.160(b)(5)
refers to real-time benefit tools.
We are proposing to delete standards
incorporated by reference at § 423.160(c)
that are: no longer applicable (that is,
were associated with outdated
requirements that we have proposed to
delete); are being proposed for
incorporation by reference by ONC at 45
CFR 170.299; or are already
incorporated by reference by HHS at 45
CFR 162.920. The standards
incorporated by reference at
§ 423.160(c)(1)(i), (ii), and (v) are no
longer applicable, and we propose to
delete them. The standards for
eligibility transactions currently
incorporated by reference at
§ 423.160(c)(1)(iii) and (c)(2)(i) and (ii)
have already been incorporated by
reference by HHS at 45 CFR 162.920.
We propose to delete these specified
§ 423.160(c)(1) and (2) incorporations by
reference in light of our proposals in
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section III.B.8. of this proposed rule to
indicate that entities must comply with
45 CFR 162.1202 for eligibility
transactions. In section III.B.11. of this
proposed rule, we discuss how we
propose to renumber the applicable
standards currently incorporated by
reference and where we propose to
incorporate by reference the proposed
new versions of standards as discussed
in sections III.B.4., III.B.5., and III.B.6. of
this proposed rule.
We believe these changes improve the
overall readability of the section. With
the exception of proposed changes
described in sections III.B.4., III.B.5.,
III.B.6., and III.B.8., we do not intend for
technical changes to alter current
requirements.
We solicit comment on these
proposals.
10. Summary of Standards for Electronic
Prescribing Proposals
Sections III.B.4. though III.B.9. of this
proposed rule include the following
proposals:
• Requiring, via cross-reference to a
standard in 45 CFR 170.205(b), use of
NCPDP SCRIPT standard version
2023011, which ONC proposes for
adoption at 45 CFR 170.205(b)(2), and
retiring use of NCPDP SCRIPT standard
version 2017071, via the same proposed
cross-reference, for communication of a
prescription or prescription-related
information supported by Part D
sponsors. This proposal includes a
transition period beginning on the
effective date of the final rule when
either version of the NCPDP SCRIPT
standard may be used. The transition
period would end on January 1, 2027,
which is the date that ONC has
proposed that NCPDP SCRIPT standard
version 2017071 would expire for the
purposes of HHS use, as described in
section III.C.8.a. of this proposed rule. If
finalized as proposed, starting January
1, 2027, NCPDP SCRIPT standard
version 2023011 would be the only
version of the NCPDP SCRIPT standard
available for HHS use and for purposes
of the Medicare Part D electronic
prescribing program;
• Requiring, beginning January 1,
2027, prescriber RTBTs implemented by
Part D sponsors to comply with a
standard in 45 CFR 170.205(c), where
ONC proposes to adopt NCPDP RTPB
standard version 13;
• Requiring transmission of formulary
and benefit information between
prescribers and Medicare Part D
sponsors to comply with a standard in
45 CFR 170.205(u), where ONC
proposes to adopt NCPDP F&B standard
version 60, and retiring use of NCPDP
F&B version 3.0 for transmitting
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formulary and benefit information
between prescribers and Part D
sponsors. This proposal includes a
transition period beginning on the
effective date of the final rule and
ending January 1, 2027, where entities
would be permitted to use either NCPDP
F&B version 3.0 (currently named in
regulation at § 423.160(b)(5)(iii) and
proposed to be named at § 423.160(b)(3)
consistent with the proposed technical
changes in this rule) or NCPDP F&B
standard version 60, proposed for
adoption at 45 CFR 170.205(u). If
finalized as proposed, starting January
1, 2027, only a version of the standard
adopted for HHS use at 45 CFR
170.205(u) would be permitted for use
in Part D electronic prescription drug
program, which would be NCPDP F&B
standard version 60 if the proposal in
section III.C.8.c. of this rule is finalized
as proposed;
• Cross-referencing standards
adopted for eligibility transactions in
HIPAA regulations at 45 CFR 162.1202
for requirements related to eligibility
inquiries; and
• Making multiple technical changes
to the regulation text throughout
§ 423.160 for clarity by removing
requirements and incorporations by
reference that are no longer applicable
or redundant, re-organizing existing
requirements, and correcting a technical
error. CMS invites comment on all
aspects of these proposals, including the
proposed date of January 1, 2027, for
required use of NCPDP SCRIPT standard
version 2023011, NCPDP RTPB standard
version 13, and NCPDP F&B standard
version 60.
11. Incorporation by Reference and
Availability of Incorporation by
Reference Materials
The Office of the Federal Register
(OFR) has regulations concerning
incorporation by reference (IBR) at 1
CFR part 51. If the regulations reference
a standard, either in general or by name,
in another section, IBR approval is
required. In order for CMS to require
use of standards in § 423.160 by cross
citation to 45 CFR 170.205(b), those
standards must be published in full in
the Federal Register or CFR. Therefore,
CMS must incorporate by reference the
materials referenced in the proposals in
sections III.B.4., III.B.5., and III.B.6. of
this proposed rule which cross cite
standards in ONC regulations.
For a proposed rule, agencies must
discuss in the preamble to the proposed
rule ways that the materials the agency
proposes to incorporate by reference are
reasonably available to interested
parties or how the agency worked to
make the materials reasonably available.
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Additionally, the preamble to the
proposed rule must summarize the
materials. See also section III.C.10. of
this proposed rule for summaries of the
standards proposed for incorporation by
reference by ONC.
Consistent with those requirements
CMS has established procedures to
ensure that interested parties can review
and inspect relevant materials. The
proposals related to the Part D
electronic prescribing standards have
relied on the following materials which
we propose to incorporate by reference
where specified:
• NCPDP SCRIPT Standard,
Implementation Guide Version 2017071,
approved July 28, 2017, which is
currently incorporated by reference at
§ 423.160(c)(1)(vii). We propose to
renumber this incorporation by
reference as § 423.160(c)(2);
• NCPDP SCRIPT Standard,
Implementation Guide Version 2023011,
published April 2023, (Approval Date
for American National Standards
Institute [ANSI]: January 17, 2023). We
propose to incorporate by reference at
§ 423.160(c)(3);
• NCPDP Real-Time Prescription
Benefit Standard, Implementation Guide
Version 13, published July 2023
(Approval Date for ANSI: May 19, 2022).
We propose to incorporate by reference
at § 423.160(c);
• NCPDP Formulary and Benefits
Standard, Implementation Guide,
Version 3, Release 0 (Version 3.0),
published April 2012, which is
currently incorporated by reference at
§ 423.160(c)(1)(vi). We propose to
renumber this incorporation by
reference at § 423.160(c)(1); and
• NCPDP Formulary and Benefit
Standard, Implementation Guide
Version 60, published April 2023
(Approval Date for ANSI: April 12,
2023). We propose to incorporate by
reference at § 423.160(c)(5).
NCPDP members may access these
materials through the member portal at
www.ncpdp.org. Non-NCPDP members
may obtain these materials for
information purposes by contacting the
CMS at 7500 Security Boulevard,
Baltimore, Maryland 21244 by calling
(410) 786–4132 or (877) 267–2323 (toll
free), or emailing PartDPolicy@
cms.hhs.gov.
C. Adoption of Health IT Standards and
Incorporation by Reference (45 CFR
170.205 and 170.299)
1. Overview
In this section, ONC proposes to
adopt standards for electronic
prescribing and related activities on
behalf of HHS under the authority in
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section 3004 of the Public Health
Service Act (42 U.S.C. 300jj–14). ONC is
proposing these standards for adoption
by HHS as part of a nationwide health
information technology infrastructure
that supports reducing burden and
health care costs and improving patient
care. ONC proposes to adopt these
standards on behalf of HHS in one
location within the Code of Federal
Regulations for HHS use, including by
the Part D Program as proposed in
section III.B. of this proposed rule.
These proposals reflect a unified
approach across the Department to
adopt standards for electronic
prescribing (e-prescribing) activities that
have previously been adopted
separately by CMS and ONC under
independent authorities. This approach
is intended to increase alignment across
HHS and reduce regulatory burden for
interested parties subject to program
requirements that incorporate these
standards.
In the Medicare Program; Contract
Year 2024 Policy and Technical
Changes to the Medicare Advantage
Program, Medicare Prescription Drug
Benefit Program, Medicare Cost Plan
Program, Medicare Parts A, B, C, and D
Overpayment Provisions of the
Affordable Care Act and Programs of
All-Inclusive Care for the Elderly;
Health Information Technology
Standards and Implementation
Specifications’’ (December 2022
proposed rule), which appeared in the
Federal Register December 27, 2022 (87
FR 79552 through 79557), we proposed
the adoption of NCPDP SCRIPT
standard version 2022011 and NCPDP
Real-Time Prescription Benefit standard
version 13, as well as related proposals.
We considered whether to issue a final
rule based on that proposed rule, but
considering the concerns raised by the
commenters regarding which version of
the standards to use, we have opted not
to do so. Specifically, some commenters
recommended adoption of NCPDP
SCRIPT standard version 2023011,
rather than the proposed NCPDP
SCRIPT standard version 2022011.
Other commenters recommended
adoption of NCPDP RTPB standard
version 13, rather than the proposed
NCPDP RTPB standard version 12. See
additional discussion in section III.B.5.
of this rule. Therefore, we are
withdrawing the proposals in sections
III.T. and III.U. of the December 2022
proposed rule (87 FR 79552 through
79557). We are issuing a series of new
proposals in this proposed rule that take
into consideration the feedback we
received from commenters on the
December 2022 proposed rule and
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further build on these proposals.
Additionally, summaries of the
standards we propose to adopt and
subsequently incorporate by reference
in the Code of Federal Regulations can
be found below in section III.C.10. of
this rule.
2. Statutory Authority
The Health Information Technology
for Economic and Clinical Health Act
(HITECH Act), Title XIII of Division A
and Title IV of Division B of the
American Recovery and Reinvestment
Act of 2009 (the Recovery Act) (Pub. L.
111–5), was enacted on February 17,
2009. The HITECH Act amended the
Public Health Service Act (PHSA) and
created ‘‘Title XXX—Health Information
Technology and Quality’’ (Title XXX) to
improve health care quality, safety, and
efficiency through the promotion of
health IT and exchange of electronic
health information (EHI). Subsequently,
Title IV of the 21st Century Cures Act
(Pub. L. 114–255) (Cures Act) amended
portions of the HITECH Act by
modifying or adding certain provisions
to the PHSA relating to health IT.
3. Adoption of Standards and
Implementation Specifications
Section 3001 of the PHSA directs the
National Coordinator for Health
Information Technology (National
Coordinator) to perform duties in a
manner consistent with the
development of a nationwide health
information technology infrastructure
that allows for the electronic use and
exchange of information. Section
3001(b) of the PHSA establishes a series
of core goals for development of a
nationwide health information
technology infrastructure that—
• Ensures that each patient’s health
information is secure and protected, in
accordance with applicable law;
• Improves health care quality,
reduces medical errors, reduces health
disparities, and advances the delivery of
patient-centered medical care;
• Reduces health care costs resulting
from inefficiency, medical errors,
inappropriate care, duplicative care, and
incomplete information;
• Provides appropriate information to
help guide medical decisions at the time
and place of care;
• Ensures the inclusion of meaningful
public input in such development of
such infrastructure;
• Improves the coordination of care
and information among hospitals,
laboratories, physician offices, and other
entities through an effective
infrastructure for the secure and
authorized exchange of health care
information;
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• Improves public health activities
and facilitates the early identification
and rapid response to public health
threats and emergencies, including
bioterror events and infectious disease
outbreaks;
• Facilitates health and clinical
research and health care quality;
• Promotes early detection,
prevention, and management of chronic
diseases;
• Promotes a more effective
marketplace, greater competition,
greater systems analysis, increased
consumer choice, and improved
outcomes in health care services; and
• Improves efforts to reduce health
disparities.
Section 3004 of the PHSA identifies a
process for the adoption of health IT
standards, implementation
specifications, and certification criteria,
and authorizes the Secretary to adopt
such standards, implementation
specifications, and certification criteria.
As specified in section 3004(a)(1) of the
PHSA, the Secretary is required, in
consultation with representatives of
other relevant Federal agencies, to
jointly review standards,
implementation specifications, and
certification criteria endorsed by the
National Coordinator under section
3001(c) of the PHSA and subsequently
determine whether to propose the
adoption of any grouping of such
standards, implementation
specifications, or certification criteria.
The Secretary is required to publish all
determinations in the Federal Register.
Section 3004(b)(3) of the PHSA,
which is titled ‘‘Subsequent Standards
Activity,’’ provides that the Secretary
shall adopt additional standards,
implementation specifications, and
certification criteria as necessary and
consistent with the schedule published
by the Health IT Advisory Committee
(HITAC). As noted in the final rule,
‘‘2015 Edition Health Information
Technology (Health IT) Certification
Criteria, 2015 Edition Base Electronic
Health Record (EHR) Definition, and
ONC Health IT Certification Program
Modifications,’’ which appeared in the
October 16, 2015 Federal Register, we
consider this provision in the broader
context of the HITECH Act and the
Cures Act to grant the Secretary the
authority and discretion to adopt
standards, implementation
specifications, and certification criteria
that have been recommended by the
HITAC and endorsed by the National
Coordinator, as well as other
appropriate and necessary health IT
standards, implementation
specifications, and certification criteria
(80 FR 62606).
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Under the authority outlined in
section 3004(b)(3) of the PHSA, the
Secretary may adopt standards,
implementation specifications, and
certification criteria as necessary even if
those standards have not been
recommended and endorsed through the
process established for the HITAC under
section 3002(b)(2) and (3) of the PHSA.
Moreover, while HHS has traditionally
adopted standards and implementation
specifications at the same time as
adopting certification criteria that
reference those standards, the
Secretary’s authority under section
3004(b)(3) of the PHSA is not limited to
adopting standards or implementation
specifications at the same time
certification criteria are adopted.
Finally, the Cures Act amended the
PHSA by adding section 3004(c), which
specifies that in adopting and
implementing standards under section
3004, the Secretary shall give deference
to standards published by standards
development organizations and
voluntary consensus-based standards
bodies.
4. Alignment With Federal Advisory
Committee Activities
The HITECH Act established two
Federal advisory committees, the HIT
Policy Committee (HITPC) and the HIT
Standards Committee (HITSC). Each
was responsible for advising the
National Coordinator on different
aspects of health IT policy, standards,
implementation specifications, and
certification criteria.
Section 4003(e) of the Cures Act
amended section 3002 of the PHSA and
replaced the HITPC and HITSC with one
committee, the HITAC. After that
change, section 3002(a) of the PHSA
establishes that the HITAC advises and
recommends to the National
Coordinator standards, implementation
specifications, and certification criteria
relating to the implementation of a
health IT infrastructure, nationally and
locally, that advances the electronic
access, exchange, and use of health
information. The Cures Act specifically
directed the HITAC to advise on two
areas: (1) A policy framework to
advance an interoperable health
information technology infrastructure
(section 3002(b)(1) of the PHSA); and (2)
priority target areas for standards,
implementation specifications, and
certification criteria (section 3002(b)(2)
of the PHSA).
For the policy framework, as
described in section 3002(b)(1)(A) of the
PHSA, the Cures Act tasked the HITAC
with providing recommendations to the
National Coordinator on a policy
framework for adoption by the Secretary
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consistent with the Federal Health IT
Strategic Plan under section 3001(c)(3)
of the PHSA. In February of 2018, the
HITAC made recommendations to the
National Coordinator for the initial
policy framework 37 and subsequently
published a schedule in the Federal
Register and an annual report on the
work of the HITAC and ONC to
implement and evolve that
framework.38 For the priority target
areas for standards, implementation
specifications, and certification criteria,
section 3002(b)(2)(A) of the PHSA
identified that in general, the HITAC
would recommend to the National
Coordinator, for purposes of adoption
under section 3004 of the PHSA,
standards, implementation
specifications, and certification criteria
and an order of priority for the
development, harmonization, and
recognition of such standards,
specifications, and certification criteria.
In October of 2019, the HITAC finalized
recommendations on priority target
areas for standards, implementation
specifications, and certification
criteria.39
5. Aligned Approach to Standards
Adoption
Historically, the ONC Health IT
Certification Program and the Part D
Program have maintained
complementary policies of aligning
health IT certification criteria and
associated standards related to
electronic prescribing, medication
history, and electronic prior
authorization for prescriptions. While
CMS and ONC have worked closely
together to ensure consistent adoption
of standards through regulatory actions,
we recognize that the practice of
different HHS components conducting
parallel adoption of the same standards
may result in additional regulatory
burden and confusion for interested
parties. For instance, due to
discrepancies between regulatory
timelines, adoption of the NCPDP
SCRIPT standard version 2017071 in
different rules (respectively, 21st
Century Cures Act: Interoperability,
Information Blocking, and the ONC
37 HITAC Policy Framework Recommendations,
February 21, 2018: https://www.healthit.gov/sites/
default/files/page/2019-07/2018-02-21_HITAC_
Policy-Framework_FINAL_508-signed.pdf.
38 Health Information Technology Advisory
Committee (HITAC) Annual Report for Fiscal Year
2019 published March 2, 2020: https://
www.healthit.gov/sites/default/files/page/2020-03/
HITAC%20Annual%20Report%20for%20FY19_
508.pdf.
39 HITAC recommendations on priority target
areas, October 16, 2019: https://www.healthit.gov/
sites/default/files/page/2019-12/2019-10-16_ISP_
TF_Final_Report_signed_508.pdf.
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Health IT Certification Program final
rule (85 FR 25642) and the Medicare
Program; Contract Year 2019 Policy and
Technical Changes to the Medicare
Advantage, Medicare Cost Plan,
Medicare Fee-for-Service, the Medicare
Prescription Drug Benefit Programs, and
the PACE Program final rule which
appeared in the April 16, 2018 Federal
Register (83 FR 16440)) led to a period
where ONC had to exercise special
enforcement discretion in the ONC
Health IT Certification Program.40 Given
these concerns, ONC and CMS
proposals in the December 2022
proposed rule (87 FR 79552 through
79557) reflected a new approach to
alignment of standards under which
ONC proposed to adopt and incorporate
by reference, on behalf of HHS, the
NCPDP SCRIPT standard version
2022011 and the NCPDP RTPB standard
version 12 in a single Code of Federal
Regulations location at 45 CFR 170.205,
where CMS proposed to cross-reference
these standards for requirements in the
Part D program.
For additional discussion of this
approach see the December 2022
proposed rule (87 FR 79552 through
79557) and CMS’s discussion in
sections III.B.3 through III.B.7. of this
proposed rule. We note that the
proposals in this rule continue to reflect
an aligned approach with CMS to
adoption of health IT standards for eprescribing and related purposes. We
believe our proposed adoption of these
standards in a single CFR location for
HHS use will help to address concerns
around alignment across HHS programs.
6. Regulatory History
For a summary of past standards
adoption activities under section 3004
of the PHSA intended to ensure
alignment for electronic prescribing and
related activities across the ONC Health
IT Certification Program and the Part D
Program, we refer readers to the
December 2022 proposed rule (87 FR
79553). In this proposed rule, we also
propose to adopt the NCPDP Formulary
and Benefit (F&B) standard version 60,
which was not previously discussed in
the December 2022 proposed rule (87
FR 79553). For a summary of previous
notice-and-comment rulemaking related
to formulary and benefit management
capabilities in the ONC Health IT
Certification Program, we refer readers
to the ‘‘Health Data, Technology, and
Interoperability: Certification Program
Updates, Algorithm Transparency, and
40 See the archived version of the Certification
Companion Guide for the ‘‘electronic prescribing’’
certification criterion in 45 CFR 170.315(b)(3):
https://www.healthit.gov/sites/default/files/page/
2020-12/b3_ccg.pdf.
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Information Sharing’’ proposed rule
(HTI–1 Proposed Rule) (88 FR 23853
through 23854).
7. Interoperability Standards Advisory
ONC’s Interoperability Standards
Advisory (ISA) supports the
identification, assessment, and public
awareness of interoperability standards
and implementation specifications that
can be used by the health care industry
to address specific interoperability
needs.41 The ISA is updated on an
annual basis based on recommendations
received from public comments and
subject matter expert feedback. This
public comment process reflects
ongoing dialogue, debate, and
consensus among industry interested
parties when more than one standard or
implementation specification could be
used to address a specific
interoperability need.
ONC currently identifies the
standards proposed for adoption in this
section within the ISA as available
standards for a variety of potential use
cases. The NCPDP SCRIPT standard
version 2023011, the NCPDP Real-Time
Prescription Benefit standard version
13, and the NCPDP Formulary and
Benefits standard version 60 are
currently identified in sections of the
ISA including the ‘‘Pharmacy
Interoperability’’ 42 and ‘‘Administrative
Transactions—Non-Claims.’’ 43 We
encourage interested parties to review
the ISA to better understand key
applications for the implementation
specifications proposed for adoption in
this proposed rule.
8. Proposal To Adopt Standards for Use
by HHS
Consistent with section 3004(b)(3) of
the PHSA and the efforts, as previously
described, to evaluate and identify
standards for adoption, we propose to
adopt the following implementation
specifications in 45 CFR 170.205(b)(2),
(c)(1), and (u)(1), on behalf of the
Secretary, to support the continued
development of a nationwide health
information technology infrastructure as
described under section 3001(b) of the
PHSA, and to support Federal alignment
of standards for interoperability and
health information exchange.
Specifically, we propose to adopt the
following standards:
• NCPDP SCRIPT Standard,
Implementation Guide, Version
2023011.
41 See
https://www.healthit.gov/isa.
https://www.healthit.gov/isa/section/
pharmacyinteroperability.
43 See https://www.healthit.gov/isa/section/
administrative-transactions-non-claims.
78501
• NCPDP Real-Time Prescription
Benefit (RTPB) Standard,
Implementation Guide, Version 13.
• NCPDP Formulary and Benefits
(F&B) Standard, Implementation Guide,
Version 60.
In addition to comments on the
individual proposals below, we invite
comments on whether there are
alternative versions, including any
newer versions, of these or other
standards that we should consider for
adoption for HHS use. In particular, we
would be interested in, and would
consider for adoption in a final rule, any
newer version of the proposed
standard(s) that may correct any
unidentified errors or clarify
ambiguities that would support
successful implementation of the
standard(s) and the interoperability of
health IT.
a. NCPDP SCRIPT Standard Version
2023011 (45 CFR 170.205(b))
ONC has previously adopted three
versions of the NCPDP SCRIPT standard
in 45 CFR 170.205. Most recently, we
adopted NCPDP SCRIPT standard
version 2017071 in the ONC 21st
Century Cures Act final rule to facilitate
the transfer of prescription data among
pharmacies, prescribers, and payers (85
FR 25678).
The updated NCPDP SCRIPT standard
version 2023011 includes important
enhancements relative to NCPDP
SCRIPT standard version 2017071.
Enhancements have been added to
support electronic prior authorization
functions as well as electronic transfer
of prescriptions between pharmacies.
NCPDP SCRIPT standard version
2023011 also includes functionality that
supports a 3-way transaction among
prescriber, facility, and pharmacy,
which will enable electronic prescribing
of controlled substances in the longterm care (LTC) setting.44
We propose to adopt NCPDP SCRIPT
standard version 2023011 in 45 CFR
170.205(b)(2), replacing NCPDP SCRIPT
standard version 10.6 which is currently
in 170.205(b)(2). We propose to
incorporate NCPDP SCRIPT standard
version 2023011 by reference in 45 CFR
170.299. Regarding NCPDP SCRIPT
standard version 2017071, we propose
to revise the regulatory text in 45 CFR
170.205(b)(1) to specify that adoption of
this standard will expire on January 1,
2027. If these proposals are finalized,
this would mean that both the 2017071
and 2023011 versions of the NCPDP
SCRIPT standard would be available for
42 See
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44 See https://standards.ncpdp.org/Standards/
media/pdf/Correspondence/2023/20230213_To_
CMS_CMS_4201_P_NPRM.pdf.
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HHS use from the effective date of a
final rule until January 1, 2027. On and
after January 1, 2027, only the 2023011
version of the NCPDP SCRIPT standard
would be available for HHS use, for
instance, where use of a standard in 45
CFR 170.205(b) is required. We refer
readers to section III.B.4. of this
proposed rule, where CMS discusses its
proposal at § 423.160(b)(1) to require
use of a standard in 45 CFR 170.205(b)
for communication of a prescription or
prescription-related information to
fulfill the requirements for
prescriptions, electronic prior
authorization, and medication history.
We request comment on these
proposals.
b. NCPDP Real-Time Prescription
Benefit (RTPB) Standard Version 13 (45
CFR 170.205(c))
The NCPDP Real-Time Prescription
Benefit standard version 13 enables the
exchange of coverage status and
estimated patient financial
responsibility for a submitted product
and pharmacy, and identifies coverage
restrictions and alternatives when they
exist. See section III.B.5. of this
proposed rule for a description of RealTime Prescription Benefit standard
functionality and enhancements of
NCPDP Real-Time Prescription Benefit
standard version 13 relative to NCPDP
Real-Time Prescription Benefit standard
version 12.
Our proposal to adopt this standard
supports the requirements of Division
CC, Title I, Subtitle B, section 119 of the
Consolidated Appropriations Act, 2021
(CAA), Public Law 116–260, which
required sponsors of Medicare
prescription drug plans to implement a
real-time benefit tool that meets
technical standards named by the
Secretary, in consultation with ONC. In
addition, section 119(b) of the CAA
amended the definition of a ‘‘qualified
electronic health record’’ in section
3000(13) of the PHSA to specify that a
‘‘qualified electronic health record’’
must include or be capable of including
a real-time benefit tool. ONC intends to
address this provision in future
rulemaking for the ONC Health IT
Certification Program and will ensure
alignment with the proposed NCPDP
Real-Time Prescription Benefit standard
version 13, if finalized, and related
proposals in the Part D program where
appropriate.
We also note that the HITAC has
previously addressed real-time
prescription benefit standards,
consistent with its statutory role to
recommend standards. In 2019, the
HITAC accepted the recommendations
included in the 2018 report of the
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Interoperability Priorities Task Force,
including recommendations to continue
to monitor standards then being
developed for real-time prescription
benefit transactions, and, when the
standards are sufficiently validated, to
require EHR vendors to provide
functionality that integrates real time
patient-specific prescription benefit
checking into the prescribing
workflow.9 In early 2020, the National
Committee on Vital and Health
Statistics (NCVHS) and HITAC
convened another task force, the
Intersection of Clinical and
Administrative Data (ICAD) Task Force,
which was charged with convening
industry experts and producing
recommendations related to electronic
prior authorizations. The task force
report was presented to HITAC in
November 2020 10 and discussed the
NCPDP Real-Time Prescription Benefit
standard as an important tool for
addressing administrative transactions
around prescribing.
We are proposing in 45 CFR
170.205(c) to add a new section heading
‘‘Real-Time Prescription Benefit.’’ We
are also proposing to adopt the NCPDP
Real-Time Prescription Benefit standard
version 13 45 in 45 CFR 170.205(c)(1)
and to incorporate this standard by
reference in 45 CFR 170.299. We refer
readers to section III.B.5. of this rule,
where CMS proposes at § 423.160(b)(5)
to require Part D sponsors’ RTBTs to
comply with a standard in 45 CFR
170.205(c) by January 1, 2027, to fulfill
the requirements for real-time benefit
tools. As previously noted, ONC will
consider proposals to require use of this
standard to support real-time benefit
tool functionality in the ONC Health IT
Certification Program, consistent with
section 119 of the CAA, in future
rulemaking.
We request comment on these
proposals.
c. NCPDP Formulary and Benefit (F&B)
Standard Version 60 (45 CFR
170.205(u))
The NCPDP Formulary and Benefit
(F&B) standard version 60 46 provides a
uniform means for prescription drug
plan sponsors to communicate planlevel formulary and benefit information
to prescribers through electronic
prescribing/EHR systems. The NCPDP
F&B standard transmits, on a batch
basis, data on the formulary status of
drugs, preferred alternatives, coverage
restrictions (that is., utilization
45 See https://standards.ncpdp.org/Access-toStandards.aspx.
46 See https://standards.ncpdp.org/Access-toStandards.aspx.
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management requirements), and cost
sharing consistent with the benefit
design for example, cost sharing for
drugs on a particular tier). The NCPDP
F&B standard serves as a foundation for
other electronic prescribing transactions
including ePA, real-time benefit check,
and specialty medication eligibility
when used in conjunction with other
standards.
We propose to add a new paragraph
heading at 45 CFR 170.205(u),
‘‘Formulary and benefit.’’ We propose to
adopt the NCPDP Formulary and Benefit
standard version 60 at 45 CFR
170.205(u)(1) and to incorporate this
standard by reference in 45 CFR
170.299. We refer readers to section
III.B.6. of this proposed rule, where
CMS proposes at § 423.160(b)(3) to
require, by January 1, 2027, use of a
standard in 45 CFR 170.205(u) by Part
D plan sponsors to fulfill the
requirements for exchange of formulary
and benefit information with
prescribers.
9. ONC Health IT Certification Program
We are not proposing new or revised
certification criteria based on the
proposed adoption of standards within
this rulemaking. We note that section
119 of the CAA does not require ONC
to adopt certification criteria for realtime prescription benefit capabilities at
the same time as a standard is adopted
by HHS. We are therefore proposing to
adopt the standard for HHS use and, as
previously discussed, ONC would
address new or revised certification
criteria referencing the standard, if
finalized, in separate rulemaking. ONC
recently published a Request for
Information in the HTI–1 Proposed Rule
seeking information related to a realtime prescription benefit criterion (88
FR 23853 through 23854). ONC will
continue to collaborate with CMS to
ensure that any future proposals in the
ONC Health IT Certification Program
continue to advance alignment with
program requirements under the Part D
Program.
We believe the approach reflected in
the standards proposals in this proposed
rule will support Federal alignment and
coordination of Federal activities with
adopted standards and implementation
specifications for a wide range of
systems, use cases, and data types
within the broad scope of health
information exchange. Historically,
State, Federal, and local partners have
leveraged the standards adopted by
ONC on behalf of HHS to inform
program requirements, technical
requirements for grants and funding
opportunities, and systems
implementation for health information
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exchange. We believe the adoption of
these standards will support HHS
partners in setting technical
requirements and advancing the use of
innovative health IT solutions for
electronic prescribing and related
activities.
10. Incorporation by Reference (45 CFR
170.299)
The Office of the Federal Register has
established requirements for materials
(for example, standards and
implementation specifications) that
agencies propose to incorporate by
reference in the Code of Federal
Regulations (79 FR 66267; 1 CFR
51.5(a)). Specifically, 1 CFR 51.5(a)
requires agencies to discuss, in the
preamble of a proposed rule, the ways
that the materials it proposes to
incorporate by reference are reasonably
available to interested parties or how it
worked to make those materials
reasonably available to interested
parties; and summarize, in the preamble
of the proposed rule, the material it
proposes to incorporate by reference.
To make the materials we intend to
incorporate by reference reasonably
available, we provide a uniform
resource locator (URL) for the standards
and implementation specifications. In
many cases, these standards and
implementation specifications are
directly accessible through the URLs
provided. In instances where they are
not directly available, we note the steps
and requirements necessary to gain
access to the standard or
implementation specification. In most of
these instances, access to the standard
or implementation specification can be
gained through no-cost (monetary)
participation, subscription, or
membership with the applicable
standards developing organization
(SDO) or custodial organization. In
certain instances, where noted, access
requires a fee or paid membership. As
an alternative, a copy of the standards
may be viewed for free at the U.S.
Department of Health and Human
Services, Office of the National
Coordinator for Health Information
Technology, 330 C Street SW,
Washington, DC 20201. Please call (202)
690–7171 in advance to arrange
inspection.
The National Technology Transfer
and Advancement Act (NTTAA) of 1995
(15 U.S.C. 3701 et seq.) and the Office
of Management and Budget (OMB)
Circular A–119 require the use of,
wherever practical, technical standards
that are developed or adopted by
voluntary consensus standards bodies to
carry out policy objectives or activities,
with certain exceptions. The NTTAA
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and OMB Circular A–119 provide
exceptions to selecting only standards
developed or adopted by voluntary
consensus standards bodies, namely
when doing so would be inconsistent
with applicable law or otherwise
impractical. We have followed the
NTTAA and OMB Circular A–119 in
proposing standards and
implementation specifications for
adoption, and note that the technical
standards proposed for adoption in 45
CFR 170.205 in this proposed rule were
developed by NCPDP, which is an
ANSI-accredited, not-for-profit
membership organization using a
consensus-based process for standards
development.
As required by 1 CFR 51.5(a), we
provide summaries of the standards we
propose to adopt and subsequently
incorporate by reference in the Code of
Federal Regulations. We also provide
relevant information about these
standards and implementation
specifications in the preamble where
these standards are proposed for
adoption. We propose to revise
§ 170.299(k) with the following updated
standards:
• National Council for Prescription
Drug Programs (NCPDP) SCRIPT
Standard, Implementation Guide,
Version 2023011, April 2023 (Approval
Date for ANSI: January 17, 2023)
URL: https://standards.ncpdp.org/
Access-to-Standards.aspx.
Access requires registration, a
membership fee, a user account, and a
license agreement to obtain a copy of
the standard.
Summary: SCRIPT is a standard
created to facilitate the transfer of
prescription data between pharmacies,
prescribers, and payers. The current
standard supports transactions
regarding new prescriptions,
prescription changes, renewal requests,
prescription fill status notification, and
prescription cancellation.
Enhancements have been added for drug
utilization review/use (DUR/DUE) alerts
and formulary information as well as
transactions to relay medication history
and for a facility to notify a pharmacy
of resident information. Enhancements
have been added to support electronic
prior authorization functions as well as
electronic transfer of prescriptions
between pharmacies.
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• National Council for Prescription
Drug Programs (NCPDP) Real-Time
Prescription Benefit Standard,
Implementation Guide, Version 13, July
2023 (Approval Date for ANSI: May 19,
2022)
URL: https://standards.ncpdp.org/
Access-to-Standards.aspx.
Access requires registration, a
membership fee, a user account, and a
license agreement to obtain a copy of
the standard.
Summary: The NCPDP Real-Time
Prescription Benefit Standard
Implementation Guide is intended to
meet the industry need within the
pharmacy services sector to facilitate the
ability for pharmacy benefit payers/
processors to communicate to providers
and to ensure a consistent
implementation of the standard
throughout the industry. The Real-Time
Prescription Benefit (RTPB) Standard
enables the exchange of patient
eligibility, product coverage, and benefit
financials for a chosen product and
pharmacy, and identifies coverage
restrictions, and alternatives when they
exist.
• National Council for Prescription
Drug Programs (NCPDP) Formulary and
Benefit Standard, Implementation
Guide, Version 60, April 2023
(Approval Date for ANSI: April 12,
2023)
URL: https://standards.ncpdp.org/
Access-to-Standards.aspx.
Access requires registration, a
membership fee, a user account, and a
license agreement to obtain a copy of
the standard.
Summary: The NCPDP Formulary and
Benefit Standard Implementation Guide
is intended to provide a standard means
for pharmacy benefit payers (including
health plans and Pharmacy Benefit
Managers) to communicate formulary
and benefit information to prescribers
via technology vendor systems.
D. Improvements to Drug Management
Programs (§§ 423.100 and 423.153)
Section 1860D–4(c)(5)(A) of the Social
Security Act (the Act) requires that Part
D sponsors have a drug management
program (DMP) for beneficiaries at risk
of abuse or misuse of frequently abused
drugs (FADs), currently defined by CMS
as opioids and benzodiazepines. CMS
codified the framework for DMPs at
§ 423.153(f) in the April 16, 2018 final
rule ‘‘Medicare Program; Contract Year
2019 Policy and Technical Changes to
the Medicare Advantage, Medicare Cost
Plan, Medicare Fee-for-Service, the
Medicare Prescription Drug Programs,
and the PACE Program’’ (83 FR 16440),
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hereafter referred to as the April 2018
final rule.
Under current DMP policy, CMS
identifies potential at-risk beneficiaries
(PARBs) who meet the clinical
guidelines described at § 423.153(f)(16),
which CMS refers to as the minimum
Overutilization Monitoring System
(OMS) criteria. CMS, through the OMS,
reports such beneficiaries to their Part D
plans for case management under their
DMP. There are also supplemental
clinical guidelines, or supplemental
OMS criteria, which Part D sponsors can
apply themselves to identify additional
PARBs. Under § 423.153(f)(2), sponsors
are required to conduct case
management for PARBs, which must
include informing the beneficiary’s
prescribers of their potential risk for
misuse or abuse of FADs and requesting
information from the prescribers
relevant to evaluating the beneficiary’s
risk, including whether they meet the
regulatory definition of exempted
beneficiary.
If the sponsor determines through
case management that the enrollee is an
at-risk beneficiary (ARB), after notifying
the beneficiary in writing, the sponsor
may limit their access to opioids and/or
benzodiazepines to a selected prescriber
and/or network pharmacy(ies) and/or
through a beneficiary-specific point-ofsale claim edit, in accordance with the
requirements at § 423.153(f)(3). CMS
regulations at § 423.100 define
exempted beneficiary, at-risk
beneficiary, potential at-risk beneficiary,
and frequently abused drug.
policy to exempt beneficiaries with
cancer from DMPs was developed
through feedback from interested parties
and alignment with the 2016 CDC
Guideline’s active cancer treatment
exclusion. Patients within the scope of
the 2016 CDC Guideline included
cancer survivors with chronic pain who
have completed cancer treatment, were
in clinical remission, and were under
cancer surveillance only. The 2022 CDC
Clinical Practice Guideline for
Prescribing Opioids for Pain (2022 CDC
Guideline) 48 expands and updates the
2016 CDC Guideline to provide
evidence-based recommendations for
prescribing opioid pain medication for
acute, subacute, and chronic pain for
outpatients aged ≥18 years, excluding
pain management related to sickle cell
disease, cancer-related pain treatment,
palliative care, and end-of-life care.
In the interest of alignment with the
2022 CDC Guideline regarding
applicability in individuals with cancer,
we are proposing to amend the
regulatory definition of ‘‘exempted
beneficiary’’ at § 423.100 by replacing
the reference to ‘‘active cancer-related
pain’’ with ‘‘cancer-related pain.’’ With
this proposal we expand the definition
of exempted beneficiary to more broadly
refer to enrollees being treated for
cancer-related pain to include
beneficiaries undergoing active cancer
treatment, as well as cancer survivors
with chronic pain who have completed
cancer treatment, are in clinical
remission, or are under cancer
surveillance only.
1. Definition of Exempted Beneficiary
§ 423.100
Section 1860D–4(c)(5)(C)(ii) of the Act
defines an exempted individual as one
who receives hospice care, who is a
resident of a long-term care facility for
which frequently abused drugs are
dispensed for residents through a
contract with a single pharmacy, or who
the Secretary elects to treat as an
exempted individual. At § 423.100 CMS
defines an exempted beneficiary as an
enrollee being treated for active cancerrelated pain, or has sickle-cell disease,
residing in a long-term care facility, has
elected to receive hospice care, or is
receiving palliative or end-of-life care.
The OMS criteria finalized in the
April 2018 final rule were developed to
align with available information and
guidelines, such as the Centers for
Disease Control and Prevention (CDC)
Guideline for Prescribing Opioids for
Chronic Pain (2016 CDC Guideline)
issued in March 2016.47 The current
2. Drug Management Program Notices:
Timing and Exceptions § 423.153(f)(8)
As discussed above, sponsors must
provide case management for any PARB
that meets the OMS criteria to
determine whether the individual is an
ARB and whether to implement a
limitation on their access to FADs.
Under section 1860D–4(c)(5)(B)(i)(I) of
the Act, a sponsor must send an initial
and second notice to such beneficiary
prior to imposing such limitation. In the
April 2018 final rule (83 FR 16440),
CMS adopted requirements for the
initial and second notices at
§ 423.153(f)(5) and (6). The initial notice
must inform the beneficiary that they
have been identified as a PARB and
must include information outlined in
§ 423.153(f)(5)(ii). The second notice
must inform the beneficiary that they
have been identified as an ARB and of
the limitations on the beneficiary’s
coverage of FADs, as specified in
§ 423.153(f)(6)(ii). In the event that, after
47 https://www.cdc.gov/mmwr/volumes/65/rr/
rr6501e1.htm.
48 https://www.cdc.gov/mmwr/volumes/71/rr/
rr7103a1.htm.
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sending an initial notice, a sponsor
determines that a PARB is not an ARB,
a second notice would not be sent;
instead, an alternate second notice
would be sent. Though not required by
the Act, CMS codified a requirement at
§ 423.153(f)(7) to provide an alternate
second notice for the purpose of
informing the beneficiary that they are
not an ARB and that no limitation on
their coverage of FADs will be
implemented under the DMP.
Section 1860D–4(c)(5)(B)(iv) of the
Act establishes that sponsors must send
a second notice on a date that is not less
than 30 days after the initial notice. The
30 days allow sufficient time for the
beneficiary to provide information
relevant to the sponsor’s determination,
including their preferred prescribers
and pharmacies. CMS codified at
§ 423.153(f)(8) the timing for providing
both the second notice and alternate
second notice. Currently, CMS requires
sponsors to send either the second or
alternate second notice on a date not
less than 30 days from the date of the
initial notice and not more than the
earlier of the date the sponsor makes the
determination or 60 days after the date
of the initial notice.
Based on program experience during
the first several years of DMPs, we
propose to change the timeframe within
which a sponsor must provide an
alternate second notice to a beneficiary
who is determined to be exempt from
the DMP subsequent to receiving an
initial notice. Specifically, we propose
to redesignate existing § 423.153(f)(8)(ii)
as § 423.153(f)(8)(iii), and to revise the
text at § 423.153(f)(8)(ii) to specify that,
for such exempted beneficiaries, the
sponsor must provide the alternate
second notice within 3 days of
determining the beneficiary is exempt,
even if that occurs less than 30 days
from the date of the initial notice. In
other words, we propose to remove the
requirement that sponsors wait at least
30 days from the date of the initial
notice to send the alternate second
notice to exempted beneficiaries.
Through program oversight, including
audits of Part D sponsors, CMS has
observed that initial notices are
sometimes sent to Part D enrollees who
meet the definition of an exempted
beneficiary at § 423.100, often because
the sponsor does not have the necessary
information—for example, that the
enrollee has a cancer diagnosis or is
receiving palliative care or end-of-life
care—at the time the sponsor sends the
initial notice. However, this information
may be provided later by the enrollee or
their prescriber in response to the initial
notice. In some cases, sponsors identify
exemptions very quickly after issuing
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the initial notice, prior to 30 days
elapsing. Under current CMS
regulations, if a beneficiary meets the
definition of an exempted beneficiary,
the beneficiary does not meet the
definition of a PARB. For this reason,
exempted beneficiaries cannot be placed
in a Part D sponsor’s DMP. Therefore, as
stated in the preamble to the April 2018
final rule (83 FR 16455), a sponsor must
remove an exempted beneficiary from a
DMP as soon as it reliably learns that
the beneficiary is exempt (whether that
be via the beneficiary, their
representative, the facility, a pharmacy,
a prescriber, or an internal or external
data source, including an internal
claims system). CMS understands that
sponsors may have already been
sending alternate second notices after
determining that a beneficiary is
exempt, without waiting for 30 days to
elapse. This proposed change would
specify that it is required to send such
notices to exempted beneficiaries sooner
than 30 days after the provision of the
initial notice.
CMS reminds Part D sponsors that,
during their review and during case
management, they are expected to use
all available information to identify
whether a PARB is exempt in advance
of sending an initial notice to protect
these vulnerable beneficiaries from
unnecessary burden, anxiety, and
disruptions in medically necessary drug
therapy. Thorough review of plan
records and robust outreach efforts to
prescribers during case management
help to minimize the risk that an
exempted beneficiary would receive an
initial notice.
On April 20, 2023, CMS released
updated DMP guidance.49 Sections 8.1
and 8.2.2 of the guidance state that if a
sponsor learns that a beneficiary is
exempt after sending an initial notice,
the sponsor should inform the
beneficiary that the initial notice is
rescinded. If less than 30 days have
passed since the initial notice, a sponsor
should send a Part D Drug Management
Program Retraction Notice for Exempted
Beneficiaries. The model retraction
notice addresses the required 30-day
timing issue in the current regulation. If
this proposal to require sponsors to
provide an alternate second notice to a
beneficiary who is determined to be
exempt from the DMP prior to the
required 30 days elapsing since the
initial notice is finalized, the Part D
Drug Management Program Retraction
Notice for Exempted Beneficiaries
would no longer be used because
sponsors would instead send the
49 https://www.cms.gov/files/zip/cy-2023-part-ddmp-guidance-april-20-2023.zip.
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alternate second notice. We are not
estimating any reduction of burden for
sponsors no longer using the Retraction
Notice. The Retraction Notice was
implemented as a temporary solution
for Part D sponsors to use for exempted
beneficiaries in place of the alternate
second notice, which had been
accounted for in the latest version of
CMS–10141 (OMB control number
0938–0964).
We note that sponsors may determine
that a PARB is not an ARB prior to 30
days elapsing for reasons other than the
beneficiary being exempted. However,
we believe the current 30-day
requirement before a sponsor may send
an alternate second notice in such
situations is important to maintain
because it allows the beneficiary and
other prescribers enough time to
provide the sponsor with information
that may influence the sponsor’s
determination.
We propose an additional technical
change related to the timeframe for
providing second and alternate second
notices. The current regulation at
§ 423.153(f)(8)(i) requires that a sponsor
provide a second or alternate second
notice not more than the earlier of the
date the sponsor makes the relevant
determination or 60 days after the date
of the initial notice. It is critical that
beneficiaries receive timely written
notice about changes to their access to
Part D drugs, as well as information
about appeal rights, and the second and
alternate second notices are tied to the
date of the plan’s determination.
However, CMS understands that
sponsors may not always be able to
issue printed notices on the exact day
they make a determination for a variety
of reasons, such as they made the
determination on a day when there is no
USPS mail service, or later in the day
after files have been sent to a print
vendor.
Specifically, we propose to add at
§ 423.153(f)(8)(i)(A) a window of up to
3 days to allow for printing and mailing
the second notice or alternate second
notice. We note a 3-day window would
align with requirements for providing
written notice of a standard or
expedited Part D coverage
determination after initial oral notice, as
described at §§ 423.568(d) and (f) and
423.572(b), respectively, and is therefore
familiar to sponsors. However, unlike
the circumstances covered by those
regulatory provisions, sponsors would
not be providing an initial oral notice,
as it would be impracticable to verbally
convey the details of a second notice or
alternate second notice to an enrollee.
This proposed change would provide
sponsors sufficient time to print and
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mail the notices while ensuring that
beneficiaries receive timely information
about DMP limitations. Sponsors must
continue to issue these notices as soon
as possible when a determination is
made, and CMS does not expect that
sponsors will routinely take the
maximum amount of time.
We are not proposing to change the
requirement in § 423.153(f)(8)(i)(B) that
the second notice or alternate second
notice must be provided no later than 60
days from the date of the initial notice.
This is because sponsors have ample
time to account in advance for the days
needed to print and mail these notices.
3. OMS Criteria Request for Feedback
CMS regulations at § 423.153(f)(16)
specify that PARBs and ARBs are
identified using clinical guidelines that
are developed with stakeholder
consultation, derived from expert
opinion backed by analysis of Medicare
data, and include a program size
estimate. In addition, the clinical
guidelines (also referred to as the ‘‘OMS
criteria’’) are based on the acquisition of
FADs from multiple prescribers,
multiple pharmacies, the level of FADs
used, or any combination of these
factors, or a history of opioid-related
overdose.
PARBs are the Part D beneficiaries
whom CMS believes are potentially at
the highest risk of opioid-related
adverse events or overdose. The current
minimum OMS criteria 50 identifies
PARBs who (1) use opioids with an
average daily morphine milligram
equivalents (MME) of greater or equal to
90 mg for any duration during the most
recent six months, who have received
opioids from 3 or more opioid
prescribers and 3 or more opioid
dispensing pharmacies, or from 5 or
more opioid prescribers regardless of
the number of dispensing pharmacies
(also referred to as ‘‘MIN1’’ minimum
OMS criteria), or (2) have a history of
opioid-related overdose, with a medical
claim with a primary diagnosis of
opioid-related overdose within the most
recent 12 months and a Part D opioid
prescription (not including Medication
for Opioid Use Disorder 51 (MOUD))
within the most recent 6 months (also
referred to as ‘‘MIN2’’ minimum OMS
criteria). The current supplemental
OMS criteria are for sponsors to address
plan members who are receiving opioids
from a large number of prescribers or
50 April 20, 2023 HPMS memorandum,
CORRECTION—Contact Year 2023 Drug
Management Program Guidance available at:
https://www.cms.gov/medicare/prescription-drugcoverage/prescriptiondrugcovcontra/rxutilization.
51 Referred to as medication-assisted treatment
(MAT) in past guidance.
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pharmacies, but who do not meet a
particular MME threshold. These are (1)
use of opioids (regardless of average
daily MME) during the most recent 6
months; AND (2) 7 or more opioid
prescribers OR 7 or more opioid
dispensing pharmacies.
In 2019, CMS assigned the Health
Federally Funded Research and
Development Center (FFRDC) to
develop evidence-based
recommendations for improving the
OMS criteria for the future. The Health
FFRDC conducted a literature review,
facilitated a Technical Expert Panel
(TEP), and performed data analyses. All
three activities served as inputs into the
evidence-based recommendations. The
Health FFRDC recommended that the
results of the literature review and data
analysis support the continued
inclusion of average MME, number of
opioid dispensing pharmacies, and
number of opioids prescribers as
indicators for PARBs. In addition, they
recommended that further data analysis
would be necessary to determine which
additional criteria would be appropriate
to potentially adopt. CMS conducted
subsequent literature reviews and
analysis.
In recent years, there has been a
marked decrease in Medicare Part D
prescription opioid overutilization, but
opioid-related overdose deaths continue
to be a growing problem throughout the
United States.52 While the CDC found
synthetic opioids (other than
methadone) to be the main driver of
opioid overdose deaths, accounting for
82 percent of all opioid-involved deaths
in 2020,53 we must remain vigilant
regarding the risks of prescription
opioids including misuse, opioid use
disorder (OUD), overdoses, and death.
CMS tracks prevalence rates for
Medicare Part D beneficiaries with an
OUD 54 diagnosis and beneficiaries with
an opioid poisoning (overdose). While
overall opioid-related overdose
prevalence rates among Medicare Part D
enrollees have declined over the period
from contract year 2017 through 2021 at
about 6.5 percent per annum, overall
opioid-related overdose prevalence rates
increased by 1.0 percent between 2020
and 2021. Furthermore, about 1.6
percent of all Part D enrollees had a
provider diagnosed OUD in contract
52 Spencer, Merianne R. et al. (2022). Drug
Overdose Deaths in the United States, 2001–2021.
(457).
53 https://www.cdc.gov/drugoverdose/deaths/
synthetic/.
54 CMS used a modified version of the Chronic
Condition Warehouse (CCW) definition that
excludes undiagnosed OUD beneficiaries such as
those with an opioid OD event and also limits
analysis to the particular measurement period
instead of the prior two years.
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year 2021 and the OUD prevalence rate
has grown by 3.2 percent per annum
since contract year 2017.
A past overdose is the risk factor most
predictive for another overdose or
suicide-related event.55 CMS finalized
regulations to implement section 2004
of the Substance Use-Disorder
Prevention that Promotes Opioid
Recovery and Treatment for Patients
and Communities (SUPPORT) Act to
include beneficiaries with a history of
opioid-related overdose as PARBs in
DMPs. While the implementation of the
SUPPORT ACT enables identification of
beneficiaries with a history of opioidrelated overdose and continues to
identify PARBs who receive high levels
of opioids through multiple providers
who may be more likely to misuse
prescription opioids,56 CMS is working
on models that can identify
beneficiaries potentially at risk before
their risk level is diagnosed as an OUD
or the person experiences an opioidrelated overdose.
A recently published article that
evaluated the use of machine learning
algorithms for predicting opioid
overdose risk among Medicare
beneficiaries taking at least one opioid
prescription concluded that the
machine learning algorithms appear to
perform well for risk prediction and
stratification of opioid overdose
especially in identifying low-risk groups
having minimal risk of overdose.57
Machine learning is a method of data
analysis that automates analytical model
building, based on the idea that systems
can learn from data, identify patterns
and make decisions with minimal
human intervention.
While we are not proposing changes
to the clinical guidelines or OMS
criteria in this proposed rule, we
provide information on our data
analysis to date and welcome feedback
for future changes. Using predictor
variables identified through the
literature reviews, CMS performed a
55 Bohnert K.M., Ilgen M.A., Louzon S., McCarthy
J.F., Katz I.R., Substance use disorders and the risk
of suicide mortality among men and women in the
U.S. Veterans Health Administration. Addiction.
2017 Jul;112(7):1193–1201. doi: 10.1111/add.13774.
56 Over 30,000 Part D enrollees met the minimum
OMS criteria and were reported to sponsors through
OMS reports in 2022 (18 percent met the level of
opioid use though multiple provider criteria, and 82
percent met the history of history of opioid-related
overdose criteria).
57 Lo-Ciganic WH, Huang J.L., Zhang H.H., Weiss
J.C., Wu Y., Kwoh C.K., Donohue J.M., Cochran G.,
Gordon A.J., Malone D.C., Kuza C.C., Gellad W.F.
Evaluation of Machine-Learning Algorithms for
Predicting Opioid Overdose Risk Among Medicare
Beneficiaries With Opioid Prescriptions. JAMA
Netw Open. 2019 Mar 1;2(3):e190968. doi: 10.1001/
jamanetworkopen.2019.0968. Erratum in: JAMA
Netw Open. 2019 Jul 3;2(7):e197610. PMID:
30901048; PMCID: PMC6583312.
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data analysis to determine the top risk
factors for Part D enrollees at high-risk
for one of two outcomes: (1) having a
new opioid poisoning (overdose) or (2)
developing newly diagnosed OUD.
Since Part D enrollees with a known
opioid-related overdose are already
identified in OMS, CMS focused on
individuals at high risk for a new
opioid-related overdose or OUD. We
anticipate no burden since, as indicated,
we are not proposing regulatory changes
and are soliciting feedback.
In this analysis, we utilize Medicare
data and traditional logistic regression
as well as machine learning models like
Random Forest, Least Absolute
Shrinkage and Selection Operator
(LASSO), and Extreme Gradient
Boosting (XGBoost) 58 Cross Validation
(CV) to examine and evaluate
performance in predicting risk of opioid
overdose and OUD. The models were
compared based on the following
criteria: Area Under the Curve (AUC),
sensitivity, specificity, positive
predictive value (PPV), negative
predictive value (NPV), and number
needed to examine (NNE). An XGBoost
model with CV performed best
according to the specified criteria and
was selected as the model of choice for
predicting a beneficiary with a new
opioid overdose or OUD diagnosis.
The model population included
6,756,152 Medicare beneficiaries
contemporaneously enrolled in Part D
and Parts A, B, or C during the period
from January to June 2019, who were
prescribed at least one non-MOUD
prescription opioid during the
measurement period and did not have a
DMP exemption (that is, cancer, sickle
cell disease, hospice, LTC facility
resident, palliative care, or end-of-life
care). We excluded beneficiaries with a
prior opioid-related overdose or an OUD
diagnosis in the year prior to the
prediction period. The training dataset
used to build the model consisted of a
random 75 percent sample of the study
population (5,067,114). The remaining
25 percent of the population (1,689,038)
was used for validating the prediction
performance of the model. The
measurement period to obtain
information for the predictor variables
(for example, opioid use patterns,
demographics, comorbidities, etc.) was
from January 1 to June 30, 2019, and the
prediction period we used to identify
beneficiaries with a new opioid
58 Extreme Gradient Boosting (XGBoost) model—
data mining technique that is similar to Random
Forest that combines multiple decision trees into a
single strong prediction model, but it differs in
doing so in an iterative manner by building one tree
at a time and optimizing a differentiable loss
function.
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overdose event or new OUD diagnosis
was from July 1 to December 31, 2019.
78507
The following risk factors 59 were
incorporated into the XGBoost model:
BILLING CODE 4120–01–P
Description
Beneficiary age in years
Female or Male sex
White, Black, Asian, Hispanic,
Native American, Other or
Unknown race/ethnicity
LIS
Beneficiary low-income
subsidy status
Dual
Beneficiary dual-eligibility
status
Current Medicare Entitlement Beneficiary current Medicare
entitlement: ESRD (1) / nonESRD (2)
MME
Average daily morphine
milligram equivalents (MME)
Number of Opioid Pharmacies Number of different pharmacies
with an opioid prescription drug
event (PDE) claim
Number of Opioid Prescribers Number of different opioid
prescribers
Number of Short-Acting
Number of short-acting opioid
Opioid Fills
PDEs
Number of Long-Acting Opioid Number of long-acting opioid
Fills
PDEs
Number of Different
Number of different opioids
Prescription Opioids
prescribed (GPI-1460)
Number ofMOUD Days
Number of Medication-Assisted
Treatment (MOUD) days
Hepatitis
Hepatitis diagnosis
Cervical nerve injury
Cervical nerve iniurv diagnosis
59 Multicollinearity tests were undertaken in
order to ensure that there was no collinearity among
the explanatory variables used in the model.
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60 The Generic Product Identifier (GPI) designates
any or all of a drug’s group, class, sub-class, name,
dosage form, and strength.
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Risk Factor Fla~
A~e
Sex
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
Risk Factor Flae
Lumbar nerve iniury
Thoracic nerve injury
Neuropathy
Other chronic pain
Number of Mental Health
Conditions
Number of Substance Use
Disorders
Antianxiety Dru~ Fill
Antipsychotic Drug Fill
Anticonvulsant Drug Fill
Concurrent use of opioid and
benzodiazepine (1 or more
days)
Concurrent use of opioid and
benzodiazepine (30 or more
days)
Codeine Fill
Fentanyl Fill
Methadone Fill
Morphine Fill
Oxycodone Fill
Oxymorphone Fill
Tramadol Fill
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Hydrocodone Fill
Hydromorphone Fill
Other Opioid Fill
We evaluated the performance of the
model using the confusion matrix
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Descriotion
Lumbar nerve iniurv diagnosis
Thoracic nerve injury diagnosis
Neuropathv diagnosis
Other chronic pain diagnosis
Number of mental health
conditions (ADHD, anxiety,
bipolar, depression, PTSD,
personality disorder,
schizophrenia) diagnosed
Number of substance use
disorders (alcohol, cannabis,
hallucinogen, inhalant, nonpsychoactive, psychoactive,
sedative, stimulant) diagnosed
PDE claim for antianxiety drug
PDE claim for antipsychotic
drug
PDE claim for anticonvulsant
drug
Concurrent PDE for opioid and
benzodiazepine (1 + day
overlap)
Concurrent PDE for opioid and
benzodiazepine (30+ day
overlap)
PDE opioid claim for codeine
(GPI-10)
PDE opioid claim for fentanyl
(GPI-10)
PDE opioid claim for
methadone (GPI-10)
PDE opioid claim for morphine
(GPI-10)
PDE opioid claim for
oxvcodone (GPI-10)
PDE opioid claim for
oxvmorphone (GPI-10)
PDE opioid claim for tramadol
(GPI-10)
PDE opioid claim for
hvdrocodone (GPI-10)
PDE opioid claim for
hydromorphone (GPI-10)
PDE opioid claim for other
opioid (GPI-10)
generated by applying the prediction
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model to the validation dataset to
calculate various metrics.
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78509
Confusion Matrix and Performance
Metrics for the XGBoost model:
Actual New OUD
or Opioid-Related
Overdose
Diagnosis:
Predicted New
OUD or OpioidRelated
Overdose
Diagnosis: No
No
1,154,395
Predicted New
OUD or OpioidRelated
Overdose
Diagnosis:
Yes
513,551
1,667,946
3,920
17,172
21,092
1,158,315
530,732
1,689,038
Yes
Total
Criteria
Result
AUC
0.8253
Sensitivity
81.41 Percent
Specificity
69.21 Percent
PPV
3 .24 Percent
NPV
99.66 Percent
NNE
31
Probability Threshold
Total
0.474
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The top 15 risk factors that were
highly associated with a new OUD or
opioid-related overdose diagnosis were:
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Rank
Risk Factor Variable
Gain
1
Number of Short-Acting Opioid Fills
0.3853
2
MME*
0.1256
3
Age
0.0882
4
Number of Long-Acting Opioid Fills
0.0729
5
Number of Mental Health Conditions
0.0539
6
Number of Substance Use Disorders
0.0298
7
Anticonvulsant Drug Fill
0.0294
8
Number of Different Prescription Opioids
0.0234
9
Oxycodone Fill
0.0230
10
Other Opioid Fill
0.0227
11
Dual
0.0200
12
Number of Opioid Prescribers*
0.0148
13
0.0134
14
Concurrent use of opioid and benzodiazepine (30 or more
days)
Morphine Fill
0.0112
15
LIS
0.0102
The number of short-acting
prescription opioid fills and the average
daily MME were found to contribute
most to XGBoost model predictions of a
new OUD or opioid-related overdose
diagnosis. Risk was present across a
range of MME levels and increased with
higher MME levels. The risk of
developing a new OUD or opioid-related
overdose diagnosis also increased with
the number of diagnosed mental health
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or substance use disorders. Utilization
of opioids with other high-risk
medications like anticonvulsants,
benzodiazepines, anti-psychotics, and
anti-anxiety medications were
positively associated with higher risk.
Also, utilization of opioids like
oxycodone and morphine were
positively associated with higher risk,
while utilization of codeine, tramadol,
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and opioids in the other category were
positively associated with lower risk.
Lastly, we applied our finalized
model to data from October 1, 2021,
through March 31, 2022, to predict
future new opioid-related overdose
events and OUD diagnoses during the
period from April 1, 2022, to September
30, 2022, to understand program size
estimates and NNE values.
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*Part of current minimum OMS criteria.
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Risk Probability
Threshold
Number of Beneficiaries
Number of PPV
with Predicted New OUD True
(Percent)
or Opioid-Related
Positives*
Overdose Diaswosis
16,862
1,860
11.01
Top 1 percent**
NNE
9
(Validation Data)
Top 1 percent
62,571
5,445
8.70
11
Top 50,000
50,000
4,562
9.12
11
Top 40,000
40,000
3,792
9.48
11
Top 30,000
30,000
2,996
9.99
10
Top 20,000
20,000
2,168
10.84
9
Top 10,000
10,000
1,219
12.19
8
Top 5,000
5,000
679
13.58
7
Top 1,000
1,000
150
15.00
7
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BILLING CODE 4120–01–C
Between 9 percent and 15 percent of
the beneficiaries with a predicted new
opioid-related overdose/OUD actually
experienced a new overdose or OUD
diagnosis during the evaluation period
(April 1, 2022, through September 30,
2022) depending on the Risk Probability
Threshold. The Top 1 percent threshold
(n = 62,571) reported the lowest
precision score, while the Top 1,000
threshold showed the highest precision.
Among those who had a new opioidrelated overdose/OUD in the evaluation
period, about 92 percent developed a
new OUD; the proportion with a new
opioid overdose increased from 10
percent to 17 percent as the risk
probability threshold increased from the
Top 1 percent to the Top 1,000; and, as
the risk probability threshold increased,
about 2 percent to 8 percent had both
a new opioid overdose and were
identified as having a newly diagnosed
OUD. Among the different Risk
Probability Thresholds, between 93 to
98 percent of the correctly predicted
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new overdoses/OUDs do not meet the
current OMS criteria. The percentage
that meets the current OMS criteria
decreases as the Risk Probability
Threshold becomes more restrictive.
Thus, our analysis shows that there is
very little overlap between the
population identified through this
model and beneficiaries already
identified through the OMS.61
Furthermore, our analysis confirms that
machine learning models can analyze
large datasets and identify complex
patterns that are not easily discernible
by current non-statistical approaches.
This makes them a powerful tool for
identifying new opioid-related overdose
or OUD risk and capturing an additional
population of potential at-risk
beneficiaries who have not been
identified through our current OMS
criteria.
61 CMS also notes that historically, only about 1.6
percent of the beneficiaries meeting the history of
opioid-related overdose (MIN2) OMS criteria also
meet the (MIN1) minimum OMS criteria.
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CMS next plans to assess risk in the
model, validate the stability of the
model as new data become available,
and develop guidelines on how to
feasibly implement the model into the
existing DMP and OMS processes. We
solicit feedback on the following:
• Potentially using such a model to
enhance the minimum or supplemental
OMS criteria in the future (either in
addition to the current criteria or as a
replacement).
• How to avoid the stigma and/or
misapplication of identification of a
PARB at high risk for a new opioidrelated overdose or OUD using the
variables in the model.
• Implementation considerations,
such as effectively conducting case
management, as described in
§ 423.153(f)(2), with prescribers of
PARBs identified by the model;
opportunities to promote MOUD, coprescribing of naloxone, or care
coordination; or potential unintended
consequences for access to needed
medications.
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*True Positives are beneficiaries that were categorized into the given risk probability threshold group based on data
from the October l, 2021, to March 31, 2022, measurement period, then were subsequently found to have
experienced a new opioid OD/OUD during the April l, 2022, to September 30, 2022, prediction period.
**Validation data: random 25 percent sample of total population: January l, 2019, to June 30, 2019, measurement
period, and July l, 2019, to December 31, 2019, prediction period.
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• Other factors to consider.
E. Codification of Complaints
Resolution Timelines and Other
Requirements Related to the Complaints
Tracking Module (CTM) (42 CFR
417.472(l), 422.125, 423.129, and
460.119)
CMS maintains the CTM in the Health
Plan Management System (HPMS) as the
central repository for complaints
received by CMS from various sources,
including, but not limited to the
Medicare Ombudsman, CMS
contractors, 1–800–MEDICARE, and
CMS websites. The CTM was developed
in 2006 and is the system used to
comply with the requirement of section
3311 of the Affordable Care Act for the
Secretary to develop and maintain a
system for tracking complaints about
MA and Part D plans received by CMS,
CMS contractors, the Medicare
Ombudsman, and others. Complaints
from beneficiaries, providers, and their
representatives regarding their Medicare
Advantage (MA) organizations, Cost
plans, Programs of All-inclusive Care for
the Elderly (PACE) organizations, and
Part D sponsors are recorded in the CTM
and assigned to the appropriate MA
organization, Cost plan, PACE
organization, and Part D sponsor if CMS
determines the plan, organization, or
sponsor is responsible for resolving the
complaint. Unless otherwise noted,
‘‘plans’’ applies to Medicare Advantage
(MA) organizations, Part D sponsors,
Cost plans, and PACE organizations for
purposes of this proposal.
We are proposing to codify existing
guidance for the timeliness of complaint
resolution by plans in the CTM.
Currently, §§ 422.504(a)(15) and
423.505(b)(22) require MA organizations
and Part D sponsors to address and
resolve complaints received by CMS
against the MA organization and Part D
sponsor through the CTM; we are
proposing to codify the expectation in
guidance that Cost plans and PACE
organizations also address and resolve
complaints in the CTM. We are
proposing to codify the existing priority
levels for complaints based on how
quickly a beneficiary needs to access
care or services and to codify a new
requirement for plans to make first
contact with individuals filing nonimmediate need complaints within
three (3) calendar days. This time frame
would not apply to immediate need
complaints because those complaints
need to be resolved within two calendar
days.
CMS codified the requirement for MA
organizations and Part D sponsors to
address and resolve complaints in the
CTM at §§ 422.504(a)(15) and
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423.505(b)(22) in the ‘‘Medicare
Program; Changes to the Medicare
Advantage and the Medicare
Prescription Drug Benefit Programs for
Contract Year 2012 and Other Changes’’
(76 FR 21431), which appeared in the
April 15, 2011 Federal Register
(hereafter referred to as the ‘‘April 2011
final rule’’). As described in the April
2011 final rule, the regulation requires
that MA organizations and Part D
sponsors provide a summary of the
resolution in the CTM when a
complaint is resolved. (76 FR 21470)
As Part D sponsors, Cost plans and
PACE organizations that offer Part D
coverage have been required to comply
with § 423.505(b)(22). We are proposing
to add language to §§ 417.472(l) and
460.119 to codify in the Cost plan
regulations and PACE regulations,
respectively, the requirement that Cost
plans and PACE organizations address
and resolve complaints in the CTM.
This proposed new requirement would
apply to all complaints in the CTM for
Cost plans and PACE organizations, not
just complaints about Part D.
In addition, CMS has issued guidance
describing our expectations for how
complaints should be handled. In the
Complaints Tracking Module Plan
Standard Operational Procedures (CTM
SOP), the most recent version of which
was released on May 10, 2019, via
HPMS memo,62 CMS provides detailed
procedures for plans to use when
accessing and using the CTM to resolve
complaints. This includes describing
the criteria CMS uses in designating
certain complaints as ‘‘immediate need’’
or ‘‘urgent’’ (all other complaints are
categorized ‘‘No Issue Level’’ in the
CTM), setting forth our expectation that
plans should review all complaints at
intake, and documentation requirements
for entering complaint resolutions in the
CTM. The CTM SOP defines an
‘‘immediate need complaint’’ for MA
organizations, Cost plans, and PACE
organizations as ‘‘a complaint where a
beneficiary has no access to care and an
immediate need exists.’’ For Part D
sponsors, ‘‘an immediate need
complaint is defined as a complaint that
is related to a beneficiary’s need for
medication where the beneficiary has
two or less days of medication
remaining.’’ The CTM SOP defines an
‘‘urgent complaint’’ for MA
organizations, Cost plans, and PACE
organizations as a complaint that
‘‘involves a situation where the
beneficiary has no access to care, but no
immediate need exists.’’ For Part D
sponsors, ‘‘an urgent complaint is
defined as a complaint that is related to
the beneficiary’s need for medication
where the beneficiary has 3 to 14 days
of medication left.’’
In chapter 7, section 70.1 of the
Prescription Drug Benefit Manual,
‘‘Medication Therapy Management and
Quality Improvement Program,’’ 63 CMS
requires Part D sponsors to resolve any
‘‘immediate need’’ complaints within
two (2) calendar days of receipt into the
CTM and any ‘‘urgent’’ complaints
within seven (7) calendar days of receipt
into the CTM. Chapter 7, section 70.1
also sets forth CMS’s expectation that
Part D sponsors promptly review CTM
complaints and notify the enrollee of
the plan’s action as expeditiously as the
case requires based on the enrollee’s
health status.
Requirements for resolution of
complaints received in the CTM do not
override requirements related to the
handling of appeals and grievances set
forth in 42 CFR part 422, subpart M
(which apply to cost plans as well as
MA organizations per § 417.600), part
423, subpart M, for Part D sponsors, and
§§ 460.120 through 460.124 for PACE
organizations. Rather, CTM
requirements supplement the appeals
and grievance requirements by
specifying how organizations must
handle complaints received by CMS in
the CTM and passed along to the plan.
The requirement for organizations to
enter information on the resolution of
complaints in the CTM within specified
time periods allows CMS to track and
ensure accountability for complaints
CMS itself received, either directly from
beneficiaries or via entries in the CTM
from the Medicare ombudsman, CMS
contractors, or others. A beneficiary
who filed a complaint directly with
CMS may later contact CMS to find out
the status of the complaint and the
plan’s use of the system would allow
CMS to answer the beneficiaries
inquires more expeditiously. In order to
comply with the applicable regulations,
plans must handle any CTM complaint
that is also an appeal or grievance
within the meaning of the regulation in
such a way that complies with the
notice, timeliness, procedural, and other
requirements of the regulations
governing appeals and grievances.
We are proposing to codify the
timeliness requirements for MA
organizations and Part D plans at new
§§ 422.125 and 423.129, both titled
‘‘Resolution of Complaints in
Complaints Tracking Module.’’ We are
62 Available at https://www.hhs.gov/guidance/
sites/default/files/hhs-guidance-documents/
ctm%20plan%20sop%20eff053019.pdf.
63 Available at https://www.cms.gov/medicare/
prescription-drug-coverage/prescriptiondrug
covcontra/downloads/dwnlds/chapter7pdf.
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proposing to codify these requirements
for Cost plans and PACE organizations
at §§ 417.472(l) and 460.119 by
incorporating §§ 422.504(a)(15) and
422.125 by reference into the
requirements for Cost plans and PACE
organizations, respectively.
Specifically, we propose to codify at
§§ 422.125(a) and 423.129(a) the
definitions of ‘‘immediate need’’ and
‘‘urgent’’ complaints in substantially the
same way as they are currently defined
in guidance for MA and Part D-related
complaints. However, we propose to
specify that immediate need and urgent
complaints for MA plans (as well as
Cost plans, and PACE) also include
situations where a beneficiary has
access to enough of a drug or supply to
last fewer than 2 days or from 3 to 14
days, respectively, as part of the
definition that these complaints are
about situations that prevent the
beneficiary from accessing care or a
service. This proposed change
recognizes that some complaints to an
MA organization (or Cost plan or PACE
organization) may overlap with Part D
access, such as when a beneficiary
reports a problem with their enrollment
in an MA–PD plan that is blocking
access to Part D coverage. The change
also recognizes that non-Part D MA,
Cost plan, and PACE complaints relate
not just to access to physician services
but to drugs and supplies that may be
covered by the MA plan, Cost plan, or
PACE organization’s non-Part D benefit
(for example, Part B drugs or diabetic
test strips covered under the medical
benefit of an MA plan). Further, MA
plans, Cost plans, and PACE also cover
Part B drugs.
We also propose to codify at
§§ 422.125(b) and 423.129(b) the current
timeframes reflected in section 70.2 of
chapter 7 of the Prescription Drug
Benefit Manual for resolving immediate
need and urgent complaints. A two (2)
calendar day deadline for resolving
plan-related immediate need complaints
is both consistent with current practice
by plans and logically follows from the
definition of an ‘‘immediate need’’
complaint. By its nature, an immediate
need complaint requires swift action.
Because we define immediate need, in
part, as a situation where a beneficiary
has access to two or fewer days’ worth
of a drug or supply they need, a timeline
greater than two calendar days for
resolving a complaint would represent
an unacceptable risk to beneficiaries.
Similarly, a seven (7) calendar day
deadline for ‘‘urgent’’ complaints
reflects the importance of not delaying
resolution of a situation that is
preventing access to care or services a
beneficiary needs. Because we define
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‘‘urgent’’ in part as a situation where a
beneficiary has 3 to 14 days’ worth of
a drug or supply they need, allowing
more than a week to elapse before
resolving the complaint would put
beneficiaries at unacceptable risk of not
receiving replacement drugs or supplies
timely.
For all other Part D and non-Part D
complaints in the CTM, we propose
requiring resolution within 30 days of
receipt. This is consistent with current
practice and the guidance in section
70.2 of chapter 7 of the Prescription
Drug Benefit Manual, and we believe
would prevent complaints from
lingering for months without resolution
in the CTM. Further, a 30-day timeframe
for resolving complaints in the CTM
aligns with the 30-day period provided
in §§ 422.564(e) and 423.564(e) for
resolution of grievances. Although those
regulations permit an extension of up to
14 days for resolving the grievance if the
enrollee requests the extension or if the
organization justifies a need for
additional information and documents
how the delay is in the interest of the
enrollee, we do not believe that
including the authority to extend the
deadline to resolve complaints in the
CTM is appropriate because complaints
received into the CTM are often the
result of failed attempts to resolve issues
directly with the plan. Allowing plans
to further extend the time to resolve the
complaint only allows further delays in
addressing beneficiary concerns.
Moreover, recent evidence indicates that
the vast majority of non-immediate need
or urgent complaints are resolved
within 30 days—98% of such
complaints were resolved by plans
within 30 days in 2022.
All timeframes for resolution would
continue to be measured from the date
a complaint is assigned to a plan in the
CTM, rather than the date the plan
retrieves the complaint from the CTM.
This is consistent with current guidance
and practice. Measuring the timeframe
in this manner is the best way to protect
beneficiaries from delayed resolution of
complaints and encourages
organizations to continue retrieving
CTM complaints in a timely manner so
that they have sufficient time to resolve
complaints.
We do not anticipate that plans will
have difficulty meeting these
timeframes. The vast majority of
complaints are currently resolved in the
timelines specified for the priority level
of the complaint. For example, in 2022,
plans resolved 97 percent of complaints
within the required time frames for the
level of complaint. Plans resolved 94
percent of immediate need complaints
within 2 calendar days, 97 percent of
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78513
urgent complaints within 7 calendar
days, and 98 percent of complaints with
no issue level designated within 30
calendar days. Codifying the timeframes
as proposed merely formalizes CMS’s
current expectations and the level of
responsiveness currently practiced by
plans.
We are also proposing to create a new
requirement for plans to contact
individuals filing non-immediate need
complaints. At §§ 422.125(c) and
423.129(c), we propose to require plans
to contact the individual filing a
complaint within three (3) calendar
days of the complaint being assigned to
a plan. While current guidance
generally includes the expectation that
organizations inform individuals of the
progress of their complaint, CMS has
never specified a timeframe for reaching
out to a complainant. CMS has observed
that, particularly for complaints that are
not assigned a priority level, plans
sometimes wait until the timeframe for
resolution has almost elapsed to contact
the complainant. Because the timeframe
for resolving uncategorized complaints
is 30 days, an individual who files a
complaint may wait weeks to hear back
from the plan responsible for resolving
it. We believe that such delays cause
unnecessary frustration for beneficiaries
and are inconsistent with the customer
service we expect from plans.
We acknowledge that our proposed
timeframe for reaching out to the
complainant concerning a CTM
complaint is more specific than our
requirement at §§ 422.564(b) and
423.564(b) for plans to ‘‘promptly
inform the enrollee whether the
complaint is subject to its grievance
procedures or its appeals procedures.’’
We are proposing a specific timeframe
for contacting the beneficiary regarding
a CTM complaint because, unlike with
complaints received by the plans
outside the CTM, the complainant has
not reached out directly to the plan and
may not know that their complaint has
been passed on to the plan by CMS via
the CTM. Moreover, as previously
noted, CMS monitors the handling of
complaints it receives through the CTM
in real time. Part of handling CTM
complaints through the CTM, as
required by §§ 422.504(a)(15) and
423.505(b)(22), is entering information
into the CTM when the plan reaches out
to the complainant. CMS would
therefore be able to monitor whether a
plan has reached out to a beneficiary
within the required timeframe and
follow up with the plan well before
timeframe for resolving the complaint
has elapsed.
We are proposing a 3 calendar day
timeframe for reaching out to the
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individual filing the complaint because
it would provide a timely update to
individuals filing both urgent and
uncategorized complaints without
delaying resolution of immediate need
complaints. We expect that a plan
would indicate in this communication
that the plan has received and is
working on the complaint, and that they
provide contact information that the
individual filing the complaint could
use to follow up with the plan regarding
the complaint. We solicit comment on
whether this timeframe is appropriate
and whether a longer or shorter
timeframe would better balance the
needs of beneficiaries with the capacity
of plans to respond to complaints.
We are also proposing conforming
changes to §§ 422.504(a)(15) and
423.505(b)(22) to incorporate the
proposed new requirements into the
existing contractual requirements for
MA organizations and Part D sponsors.
The proposed revisions to §§ 417.472(l)
and 460.119 incorporate both the
requirements in proposed § 422.125 and
the requirement for a contract term for
resolving complaints received by CMS
through the CTM for Cost plans and
PACE organizations and their contracts
with CMS.
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F. Additional Changes to an Approved
Formulary—Biosimilar Biological
Product Maintenance Changes and
Timing of Substitutions (§§ 423.4,
423.100, and 423.120(e)(2))
1. Introduction
Section 1860D–11(e)(2) of the Act
provides that the Secretary may only
approve Part D plans if certain
requirements are met, including the
provision of qualified prescription drug
coverage. Section 1860D–11(e)(2)(D) of
the Act specifically permits approval
only if the Secretary does not find that
the design of the plan and its benefits,
including any formulary and tiered
formulary structure, are likely to
substantially discourage enrollment by
certain Part D eligible individuals.
Section 1860D–4(c)(1)(A) of the Act
requires ‘‘a cost-effective drug
utilization management program,
including incentives to reduce costs
when medically appropriate.’’ Lastly,
section 1860D–4(b)(3)(E) of the Act
requires Part D sponsors to provide
‘‘appropriate notice’’ to the Secretary,
affected enrollees, physicians,
pharmacies, and pharmacists before
removing a covered Part D drug from a
formulary or changing the preferred or
tiered cost-sharing status of such a drug.
In section III.Q., Changes to an
Approved Formulary, of the proposed
rule titled ‘‘Medicare Program; Contract
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Year 2024 Policy and Technical
Changes to the Medicare Advantage
Program, Medicare Prescription Drug
Benefit Program, Medicare Cost Plan
Program, Medicare Parts A, B, C, and D
Overpayment Provisions of the
Affordable Care Act and Programs of
All-Inclusive Care for the Elderly;
Health Information Technology
Standards and Implementation
Specifications,’’ which appeared in the
December 27, 2022 Federal Register
(hereinafter referred to as the December
2022 proposed rule), we proposed
regulations related to (1) Part D sponsors
obtaining approval to make changes to
a formulary already approved by CMS,
including extending the scope of
immediate formulary substitutions (also
generally referred to as immediate
substitutions herein); 64 and (2) Part D
sponsors providing notice of such
changes.
The December 2022 proposed rule
proposed to reorganize current
regulatory text to incorporate and as
necessary conform with longstanding
sub-regulatory guidance and operations
with respect to changes to an approved
formulary and associated notice
provisions. For example,
§ 423.120(b)(5)(iv) currently permits a
plan sponsor to immediately remove a
brand name drug from its formulary
when adding a therapeutically
equivalent generic drug, subject to
certain requirements. If finalized, the
December 2022 proposed rule would
expand immediate substitutions in a
new § 423.120(e)(2)(i) to allow plan
sponsors to substitute an authorized
generic for a brand name drug, an
interchangeable biological product for a
reference product, or an unbranded
biological product for its corresponding
brand name biological product under
the same biologics license application
(BLA).
These and other proposals discussed
in section III.Q., Changes to an
Approved Formulary, of the December
2022 proposed rule have not been
finalized and remain under
consideration. As we noted in the April
2023 final rule, CMS intends to address
remaining proposals from the December
64 We note the distinction between formulary
substitutions made by a plan sponsor and product
substitutions made by a pharmacist at the point-ofdispensing. As we describe in section III.F.2.a.(2) of
this proposed rule, State laws govern the ability of
pharmacists to substitute biological products at the
point-of-dispensing. By contrast, the Secretary’s
statutory authority under section 1860D–11(e)(2) of
the Act governs approval of, and by extension any
changes to, Part D formularies. The provisions we
describe throughout section III.F of this proposed
rule strictly apply to changes to Part D formularies
made by plan sponsors, and do not apply to
substitutions made by pharmacists at the point-ofdispensing.
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2022 proposed rule in subsequent
rulemaking, which would be effective
no earlier than January 1, 2025. As we
continue to consider comments we
received in response to the December
2022 proposed rule, we identified a
limited number of changes that we
would like to make to the proposed
regulatory text relating to section III.Q.
of the December 2022 proposed rule.
Accordingly, this proposed rule reflects
our intent to consider section III.Q. of
the December 2022 proposed rule, as
updated by the limited proposed
changes discussed herein, for inclusion
in future rulemaking. While we discuss
below certain comments regarding the
December 2022 proposed rule that
informed the limited proposed changes
herein, we will respond to comments
received in response to section III.Q. of
the December 2022 proposed rule, as
well as comments received in response
to the changes proposed below, if we
decide to move forward with such
proposals in future rulemaking.
Commenters on section III.Q. of the
December 2022 proposed rule did not
agree on the requirements that should
apply to formularies substituting Food
and Drug Administration (FDA)
approved and licensed biosimilar
biological products. Different
commenters submitted divergent
requests that substitutions of biosimilar
biological products other than
interchangeable biological products be
treated as immediate substitutions, be
treated as maintenance changes, or not
be permitted whatsoever. Our proposed
regulatory text in the December 2022
proposed rule only addressed
substitution of interchangeable
biological products and did not specify
how Part D sponsors could treat
substitution of biosimilar biological
products other than interchangeable
biological products, and we believe, in
part because of the interest in the topic,
that it would be appropriate to propose
to do so now in order to solicit comment
directly on the subject.
Accordingly, we are proposing to
update the regulatory text we proposed
in the December 2022 proposed rule to
the extent necessary to permit Part D
sponsors to treat substitutions of
biosimilar biological products other
than interchangeable biological
products as ‘‘maintenance changes,’’ as
defined in the December 2022 proposed
rule, for the reasons discussed below.
We are also proposing to define a new
term, ‘‘biosimilar biological product,’’
distinct from our previously proposed
term ‘‘interchangeable biological
products.’’ (We propose some technical
changes to the latter term as well.)
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We propose to define biosimilar
biological products consistent with
sections 351(i) and (k) of the Public
Health Service Act to include
interchangeable biological products. In
section III.Q (87 FR 79536) of the
December 2022 proposed rule, we
proposed to permit maintenance
changes and immediate substitutions
involving interchangeable biological
products, and that proposal is still
under consideration. In this proposed
rule, we are also proposing to allow
substitution of biosimilar biological
products other than interchangeable
biological products for reference
products as a maintenance change. To
ensure clarity, we are proposing to
address the application of these policies
to interchangeable biological products
and to biosimilar biological products
other than interchangeable biological
products in separate paragraphs of the
proposed definition of maintenance
change in § 423.100.
Further, in considering a comment on
immediate formulary substitutions, we
also determined it would be appropriate
to propose providing Part D sponsors
with additional flexibility with respect
to maintenance changes and immediate
substitutions than as originally
proposed in the December 2022
proposed rule. Rather than requiring a
Part D sponsor to add a ‘‘corresponding
drug’’ and make a ‘‘negative formulary
change’’ (as both such terms are defined
in the December 2022 proposed rule) to
its related drug ‘‘at the same time,’’ we
are proposing additional flexibility.
Specifically, we propose to allow Part D
sponsors to make a negative formulary
change to the related drug within a
certain period of time following the
addition of the corresponding drug—
rather than at the same time they add
the corresponding drug.
Additionally, we propose a technical
change to our proposed definition of
‘‘corresponding drug’’ in § 423.100
included in the December 2022
proposed rule to specify that the
reference to an ‘‘unbranded biological
product of a biological product’’ is
intended to be a reference to ‘‘an
unbranded biological product marketed
under the same BLA as a brand name
biological product.’’
Lastly, we are taking this opportunity
to address a technical change to the
regulatory text proposed in the
December 2022 proposed rule to specify
in introductory language to the
§ 423.100 proposed definition of
‘‘maintenance change’’ that changes
apply with respect to ‘‘a covered Part D
drug.’’
Our goal in this proposed rule is to
focus only on these specific changes to
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the original proposals in the December
2022 proposed rule that remain under
consideration, but as updated below.
We are re-proposing in this proposed
rule only the regulatory text in the
December 2022 proposed rule necessary
to address new policy considerations
and, therefore, we include only the
updated parts of the three following
sections of proposed regulatory text in
the December 2022 proposed rule:
§§ 423.4; 423.100; and 423.120(e)(2).
Section III.F.2.a. of tis proposed rule
includes both language and synopses of
the preamble to the December 2022
proposed rule as necessary to provide
context for the updates we are
proposing in this proposed rule. Except
as specified in this proposed rule,
stakeholders should assume, as does the
discussion in this proposed rule, that
the proposals for regulatory text
regarding changes to approved
formularies otherwise remain under
consideration as proposed in the
December 2022 proposed rule. If any
provisions regarding this topic are
finalized, the final rule would include
the provisions proposed in the
December 2022 proposed rule, as
revised by the proposed changes in this
proposed rule and taking into
consideration any potential changes in
response to comments.
We received numerous comments on
section III.Q. of the December 2022
proposed rule on changes to an
approved formulary, comments which
we have carefully reviewed and
continue to consider (and some of
which are discussed in this proposed
rule). We solicit comments on any
aspects regarding the changes we are
proposing in this rule to the December
2022 proposed rule’s provisions.
2. Substituting Biosimilar Biological
Products for Their Reference Products
as Maintenance Changes
a. Previously Proposed Provisions
(1) Certain Previously Proposed
Provisions Related to Maintenance and
Non-Maintenance Changes
In section III.Q.2.b., Proposed
Provisions for Approval of Formulary
Changes, of the December 2022
proposed rule, we proposed to define
terms such as ‘‘negative formulary
change’’ and ‘‘affected enrollee.’’ In
categorizing negative formulary
changes, we discussed the fact that
chapter 6 of the Prescription Drug
Benefit Manual also classifies negative
formulary changes as either
maintenance or non-maintenance
changes. Maintenance changes are
changes generally expected to pose a
minimal risk of disrupting drug therapy
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78515
or are warranted to address safety
concerns or administrative needs (for
example, drug availability due to
shortages and determining appropriate
payment such as coverage under Part B
or Part D). We noted that in our
experience the vast majority of negative
formulary changes are ‘‘maintenance’’
changes that CMS routinely approves,
and the vast majority of maintenance
changes are generic substitutions, in
which the Part D sponsor removes a
brand name drug and adds its generic
equivalent.
We then noted that consistent with
our current manual policy and
operations, we were proposing at
§ 423.100 to define ‘‘maintenance
changes’’ to mean the following negative
formulary changes: (1) making any
negative formulary changes to a drug
and at the same time adding a
corresponding drug at the same or lower
cost-sharing tier and with the same or
less restrictive prior authorization (PA),
step therapy (ST), or quantity limits
(QL) requirements (other than those
meeting the requirements of immediate
substitutions currently permitted and
that we proposed to permit in the
December 2022 proposed rule); (2)
removing a non-Part D drug; (3) adding
or making more restrictive PA, ST, or
QL requirements based upon a new
FDA-mandated boxed warning; (4)
removing a drug deemed unsafe by FDA
or withdrawn from sale by the
manufacturer if the Part D sponsor
chooses not to treat it as an immediate
negative formulary change; (5) removing
a drug based on long-term shortage and
market availability; (6) making negative
formulary changes based upon new
clinical guidelines or information or to
promote safe utilization; or (7) adding
PA to help determine Part B versus Part
D coverage. We additionally stated that
we intended through the use of the
plural tense to clarify that Part D
sponsors may request to apply more
than one negative formulary change
simultaneously to that drug.
We noted that non-maintenance
changes, which are infrequently
warranted, are negative formulary
changes that limit access to a specific
drug without implementing a
corresponding offset (such as adding an
equivalent drug) or addressing safety or
administrative needs. We proposed to
define ‘‘non-maintenance change’’ at
§ 423.100 to mean a negative formulary
change that is not a maintenance change
or (as discussed in the next paragraph)
an immediate negative formulary
change.
We also introduced a third category of
negative formulary changes in § 423.100
to capture negative formulary changes
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that fall within certain parameters and
that may be made immediately. We
proposed to define ‘‘immediate negative
formulary changes’’ as those which meet
the requirements as either an immediate
substitution or market withdrawal
under § 423.120(e)(2)(i) or (ii)
respectively. We noted, however, that
while such changes may be made
immediately, Part D sponsors retain the
option to implement such changes as
maintenance changes. This means that
those Part D sponsors that can meet all
applicable requirements would have a
choice as to whether to make such
changes immediately and thereafter
provide notice of specific changes or
submit a negative change request and
provide specific notice of such changes
to affected enrollees at least 30 days
before they occur.
We also proposed to define
‘‘corresponding drug’’ in § 423.100 to
mean, respectively, a generic or
authorized generic of a brand name
drug, an interchangeable biological
product of a reference product, or an
unbranded biological product of a
biological product and to move and
retain our current regulatory description
of ‘‘other specified entities’’ currently in
§ 423.120(b)(5)(i) to be a standalone
definition of the term in § 423.100.
We proposed in § 423.120(e) that Part
D sponsors may not make any negative
formulary changes to the CMS-approved
formulary except as specified in the
regulation.
We proposed to codify our existing
policy with respect to maintenance
changes, which would, at proposed
§ 423.120(e)(3)(i), permit Part D
sponsors that have submitted a
maintenance change request to assume
that CMS has approved their negative
change request if they do not hear back
from CMS within 30 days of
submission. We proposed to codify our
existing policy with respect to nonmaintenance changes as well, which
would specify at § 423.120(e)(3)(ii) that
Part D sponsors must not implement
non-maintenance changes until they
receive notice of approval from CMS.
We also proposed to codify our
longstanding policy that affected
enrollees are exempt from approved
non-maintenance changes for the
remainder of the contract year at
§ 423.120(e)(3)(ii).
In section III.Q.3.b., Alignment of
Approval and Notice Policy, of the
December 2022 proposed rule, we noted
in relevant part that: we first proposed
in § 423.120(f)(1) to specify that only
maintenance and non-maintenance
negative formulary changes would
require 30 days’ advance notice to CMS
and other specified entities, and in
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writing to affected enrollees. We also
proposed to retain at § 423.120(f)(1) an
alternative option for Part D sponsors to
provide an affected enrollee who
requests a refill of an approved month’s
supply of the Part D drug under the
same terms as previously allowed, as
well as written notice of the change. We
further proposed in § 423.120(f)(5)(i) to
require Part D sponsors to provide
advance general notice of other
formulary changes to all current and
prospective enrollees and other
specified entities, in formulary and
other applicable beneficiary
communication materials, advising that
the formulary may change subject to
CMS requirements; providing
information about how to access the
plan’s online formulary and contact the
plan; and stating that the written notice
of any change made when provided
would describe the specific drugs
involved. For immediate substitutions,
we indicated we would require
information on the steps that enrollees
may take to request coverage
determinations and exceptions. We
noted that our current model documents
already largely provide advance general
notice of such changes. Section
423.120(f)(5)(ii) as proposed in the
December 2022 proposed rule would
further require that Part D sponsors
provide enrollees and other specified
entities notice of specific formulary
changes by complying with
§ 423.128(d)(2) and provide CMS with
notice of specific changes through
formulary updates.
We proposed to revise and renumber
the existing regulation to specify that,
except for immediate negative formulary
changes, negative formulary changes
require at least 30 days advance notice.
Consistent with our proposal for
approval of maintenance changes, we
proposed that a Part D sponsor could
submit the negative change request,
which would constitute its notice to
CMS, and notice to other specified
entities at the same time. We explained
this would permit the Part D sponsor to
implement the maintenance change
once it is deemed approved under
proposed § 423.120(e)(3)(i)—although
facing the risk of sending notice of a
change that is subsequently disapproved
by CMS.
We also noted that Part D sponsors
currently submit negative change
requests to CMS via HPMS that specify
the negative change’s intended effective
date, which under our proposed
approach, would have to be at least 30
days after submission for a maintenance
change. However, consistent with our
previous proposal under
§ 423.120(f)(3)(ii) to prohibit Part D
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sponsors from implementing nonmaintenance changes until they receive
notice of approval from CMS, Part D
sponsors would not be permitted to
provide notice to other specified entities
or affected enrollees, or to otherwise
update formularies or other materials,
until CMS has approved the nonmaintenance change. We also discussed
updating online notice of negative
formulary changes at § 423.128(d)(2)(iii).
(2) Certain Previously Proposed
Provisions Related to Interchangeable
Biological Products as Immediate
Negative Formulary Changes
In section III.Q.2.b.(3), Immediate
Negative Formulary Changes, of the
December 2022 proposed rule, we
proposed to permit immediate
substitutions of interchangeable
biological products for their reference
products. In our preamble, we reviewed
how, under the current
§ 423.120(b)(5)(iv), we permit
immediately substituting new generic
drugs for brand name drugs, and that
current § 423.120(b)(5)(iii) permits the
immediate removal of drugs deemed
unsafe by FDA or withdrawn from sale
by their manufacturers. We then
discussed our proposal to broaden the
scope of permitted immediate
substitutions at § 423.120(e)(2)(i) to
include authorized generics as defined
at § 423.4.
We noted that when we first adopted
the immediate substitution policy, we
stated that the regulation would not
apply to biological products, but that we
would reconsider the issue when
interchangeable biological products
became available in Part D. In the
December 2022 proposed rule, we noted
there was at least one interchangeable
biological product and also an
unbranded biological product marketed
under the same license, and that other
licensed interchangeable biological
products may become available in Part
D in the future.65 Accordingly, we stated
we believed it appropriate to expand
our policy to include interchangeable
biological products and unbranded
biological products marketed under the
same license as the brand name
biological products when immediate
substitution would not disrupt existing
therapy. We noted that as discussed in
the preamble to the proposed rule titled,
‘‘Medicare Program; Contract Year 2019
Policy and Technical Changes to the
Medicare Advantage, Medicare Cost
Plan, Medicare Fee-for-Service, the
65 The December 2022 proposed rule cited
Semglee® (insulin glargine-yfgn). Other
interchangeable biological products now available
include Cyltezo® (adalimumab-adbm) and
RezvoglarTM (insulin glargine-aglr).
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Medicare Prescription Drug Benefit
Programs, and the PACE Program,’’
which appeared in the November 28,
2017 Federal Register (82 FR 56413), in
deciding to permit immediate generic
substitutions without advance direct
notice of specific changes to affected
enrollees, CMS, or other specified
entities, we weighed the need to
maintain the continuity of a plan’s
formulary for beneficiaries who enroll
in plans based on the drugs offered at
the time of enrollment against the need
to provide Part D sponsors more
flexibility to facilitate the use of new
generics. We stated that key to our
decision to permit such substitutions
was the fact that the rule would apply
only to therapeutically equivalent
generics of the affected brand name drug
because such generics are the same as
an existing approved brand name drug
in dosage form, safety, strength, route of
administration, and quality. Congress,
we noted, defined ‘‘interchangeable’’ in
reference to biological products, stating
that interchangeable biological products
‘‘may be substituted for the reference
product without the intervention of the
health care professional who prescribed
the reference product.’’ 66 We also
explained that FDA reports that this is
similar to how generic drugs are
routinely substituted for brand name
drugs.67
We then noted that all 50 States now
permit or require pharmacists to
substitute interchangeable biological
products when available, for prescribed
reference products at the point-ofdispensing, subject to varying
requirements regarding patient and
prescriber notice, documentation of the
substitution, and patient savings as a
result of the substitution, among other
safeguards.68 In the context of a growing
market for interchangeable biological
products, to follow the lead of FDA in
encouraging uptake of these products,
and to provide flexibility that could lead
to better management of the Part D
benefit that does not impede State
pharmacy practices, we proposed at
§ 423.120(e)(2)(i) to permit Part D
sponsors meeting the applicable
requirements to immediately substitute
an interchangeable biological product
for the reference product on its
formulary. In support of that proposal,
we also proposed the following
definitions at § 423.4: An
‘‘interchangeable biological product’’
would mean a product licensed under
section 351(k) of the Public Health
Service Act (PHSA) (42 U.S.C. 262(k))
that FDA has determined to be
interchangeable with a reference
product in accordance with sections
351(i)(3) and 351(k)(4) of the PHSA (42
U.S.C. 262(i)(3) and 262(k)(4)).69 We
stated that a ‘‘biological product’’ would
mean a product licensed under section
351 of the PHSA, and a ‘‘reference
biological product’’ would mean a
product as defined in section 351(i)(4)
of the PHSA.
We also noted that in addition to
interchangeable biological products,
unbranded biological products have
recently been marketed. We explained
that in the frequently asked questions of
FDA’s ‘‘Purple Book Database of
Licensed Biological Products,’’ available
at https://purplebooksearch.fda.gov/
faqs#11, FDA describes an ‘‘unbranded
biologic’’ or ‘‘unbranded biological
product’’ as an approved brand name
biological product that is marketed
under its approved BLA without its
brand name on its label. Thus, like an
authorized generic, an unbranded
biological product is the same product
as the brand name biological product.
Accordingly, since we proposed in the
December 2022 proposed rule to permit
Part D sponsors to immediately
substitute an authorized generic for a
brand name drug, we similarly proposed
at § 423.120(e)(2)(i) in that proposed
rule to permit immediately substituting,
as specified, unbranded biological
products for corresponding brand name
biological products. We further
proposed at § 423.4 to define ‘‘brand
name biological products’’ to mean
biological products licensed under
section 351(a) or 351(k) of the PHSA
and marketed under a brand name. We
also proposed at § 423.4 to define
‘‘unbranded biological products’’ as
biological products licensed under a
BLA under section 351(a) or 351(k) of
the PHSA and marketed without a brand
name.
ddrumheller on DSK120RN23PROD with PROPOSALS2
69 See
66 Public Health Service Act section 351(i)(3) (42
U.S.C. 262(i)(3)).
67 ‘‘Biosimilar and Interchangeable Biologics:
More Treatment Choices’’ at the following FDA
website: https://www.fda.gov/consumers/consumerupdates/biosimilar-and-interchangeable-biologicsmore-treatment-choices. Accessed April 26, 2022.
68 Cardinal Health. Biosimilar Interchangeability
Laws by State. Updated July 2021. Available from:
https://www.cardinalhealth.com/content/dam/
corp/web/documents/publication/Cardinal-HealthBiosimilar-Interchangeability-Laws-by-State.pdf.
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section 351(k)(4) of the PHSA (42 U.S.C.
262(k)(4)). We cited as current at the time,
‘‘Considerations in Demonstrating
Interchangeability With a Reference Product
Guidance for Industry’’ at the following FDA
website: https://www.fda.gov/regulatoryinformation/search-fda-guidance-documents/
considerations-demonstrating-interchangeabilityreference-product-guidance-industry. Accessed
September 2, 2022. See also section 351(i)(3) of the
PHSA (42 U.S.C. 262(i)(3)) for the statutory
definition of the term ‘‘interchangeable’’ or
‘‘interchangeability.’’
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We also noted we were not proposing
to permit Part D sponsors to
immediately substitute all ‘‘biosimilar
products’’ (87 FR 79539) because not all
biosimilar biological products have met
additional requirements to support a
demonstration of interchangeability, as
outlined by the Biologics Price
Competition and Innovation (BPCI) Act
of 2009.70 Nevertheless, we encouraged
Part D plan sponsors to offer such
products on their formularies.
The remainder of the section covered
a variety of topics including proposed
changes to terminology; use of plural
tense for negative formulary changes to
reflect the possibility of concurrent
changes; exemption of immediate
negative formulary changes from
negative change request and approval
processes and inclusion in formulary
updates; market withdrawals including
renumbering; and exemption of all
immediate negative formulary changes
from transition requirements.
In section III.Q.3.c., Notice of
Negative Immediate Changes, of the
December 2022 proposed rule, we noted
that, consistent with our existing
requirements for immediate generic
substitutions (which we proposed to
broaden to include other corresponding
drugs), we were proposing to require
advance general notice of immediate
substitutions and market withdrawals at
§ 423.120(f)(2), followed by written
notice to affected enrollees as soon as
possible under § 423.120(f)(3), but by no
later than the end of the month
following any month in which a change
takes effect. We provided details on the
content of the direct written notice at
§ 423.120(f)(4), noted it could be
provided for both maintenance and nonmaintenance changes, and noted that we
were renumbering some current
regulatory requirements.
b. Current Proposals
(1) Substituting Biosimilar Biological
Products for Their Reference Products
as Maintenance Changes
In the December 2022 proposed rule,
we indicated that biosimilar biological
products 71 other than interchangeable
70 We note that in the December 2022 proposed
rule, the actual statement read: ‘‘Biosimilar
products have not met additional requirements to
support a demonstration of interchangeability based
on further evaluation and testing of the product, as
outlined by the Biologics Price Competition and
Innovation (BPCI) Act.’’ This statement failed to
capture the nuances that the definition of a
biosimilar biological product includes
interchangeable biological products, and that a
determination of interchangeability may not require
additional testing.
71 We propose a definition of ‘‘biosimilar
biological product’’ later in this section.
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biological products did not qualify for
immediate substitutions but nonetheless
encouraged their inclusion on
formularies. However, neither the
preamble at section III.Q., Changes to an
Approved Formulary, in the December
2022 proposed rule, nor the
accompanying proposed regulatory text,
explicitly discussed whether we would
treat the substitution of biosimilar
biological products other than
interchangeable biological products for
their reference products as nonmaintenance changes or as maintenance
changes, as respectively proposed to be
defined in section § 423.100 in the
December 2022 proposed rule. Our
current guidance treats such
substitutions as non-maintenance
changes.
Nevertheless, we received multiple
comments regarding this issue with a
range of views. Commenters asking CMS
to treat substitutions of reference
products with biosimilar biological
products, including interchangeable
biological products, as immediate
formulary changes or maintenance
changes noted, for example, that FDA
states that biosimilar biological
products, including interchangeable
biological products, are as safe and
effective as the reference product they
were compared to,72 and that
beneficiaries could benefit from
additional treatment options and the
potential for savings. Commenters
asking CMS to restrict immediate
substitutions to interchangeable
biological products noted, among other
things, that the PHSA distinguishes
between biosimilar biological products
based on interchangeability.
Commenters asking us not to permit
immediate substitutions, or even any
substitutions, of biosimilar biological
products, including interchangeable
biological products, for reference
products noted, for instance, that
established drug therapies should not be
changed for non-clinical reasons to
avoid risk to patient safety and that
prescribers need to be consulted before
changing medications.
We appreciate all the comments we
received. In response thereto, and after
further consideration of these issues, we
have revisited our current policy, which
treats substitutions of biosimilar
biological products for reference
products as non-maintenance changes,
as well as our proposal in the December
2022 proposed rule. Upon further
consideration, we are now proposing in
this rule to include substitutions of
72 FDA. Overview of Biosimilar Products.
Available from: https://www.fda.gov/media/
151058/download?attachment.
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biosimilar biological products other
than interchangeable biological
products 73 for their reference products
as maintenance changes. All FDAlicensed biosimilar biological products,
including FDA-licensed interchangeable
biological products, must be highly
similar to and have no clinically
meaningful differences from the
reference product in terms of safety and
effectiveness notwithstanding minor
differences in clinically inactive
components. Thus, based on FDA’s
standards for approval, health care
providers and patients can be confident
in the safety and effectiveness of all
biosimilar biological products, just as
they would be for their reference
products. The FDA has noted that all
biosimilar biological products are as
safe and effective as their reference
product:
Both are rigorously and thoroughly
evaluated by the FDA before approval.
For [biosimilar biological products] to
be approved by the FDA, manufacturers
must show that patients taking
[biosimilar biological products] do not
have any new or worsening side effects
as compared to people taking the
[reference products].
As it does with all medication
approvals, the FDA carefully reviews
the data provided by manufacturers and
takes several steps to ensure that all
[biosimilar biologic products] meet
standards for patient use. The FDA’s
thorough evaluation makes sure that all
[biosimilar biological products] are as
safe and effective as their [reference
products] and meet the FDA’s high
standards for approval. This means
[consumers] can expect the same safety
and effectiveness from the [biosimilar
biological product] over the course of
treatment as [they] would from the
original product.
In addition, the FDA closely regulates
the manufacturing of [biosimilar
biological products]. The same quality
manufacturing standards that apply to
the [reference product] also apply to the
73 We would note that in our December 2022
proposed rule, we already proposed the option for
Part D sponsors to treat substitution of
interchangeable biological products for their
reference products as maintenance changes: We
proposed in paragraph (1) of the proposed
definition of ‘‘maintenance change’’ in § 423.100 to
mean, in part, making any negative formulary
changes to a drug and at the same time adding a
corresponding drug as specified. In turn, we
proposed to define ‘‘corresponding drug’’ in
§ 423.100 to include an interchangeable biological
product of a reference product. In this proposed
rule, we are proposing to add a new paragraph (2)
to the proposed definition of ‘‘maintenance change’’
in § 423.100 to treat substitution of biosimilar
biological products other than interchangeable
biological products for their reference products as
maintenance changes.
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[biosimilar biological product]. It must
be manufactured in accordance with
Current Good Manufacturing
Practice[74] requirements, which cover:
Methods, Facilities, and Controls for the
manufacturing, processing, packaging,
or holding of a medication. This helps
to prevent manufacturing mistakes or
unacceptable impurities, and to ensure
consistent product quality.
*
*
*
*
*
[All biosimilar biological products,
not just interchangeable biological
products,] are as safe and effective as
the [reference product] they were
compared to, and they can both be used
in its place. This means that health care
professionals can prescribe either a
biosimilar [biological product] or
interchangeable [biological] product
instead of the [reference product].75
However, we note that under the
PHSA an FDA determination that a
biological product is interchangeable
with the reference product means that
the interchangeable biological product
may be substituted without the
intervention of the health care provider
who prescribed the reference product. A
manufacturer of a proposed
interchangeable biological product must
show that the product is biosimilar to its
reference product and that it can be
expected to produce the same clinical
results as the reference product in any
given patient and there are no greater
risks in terms of safety or diminished
efficacy with alternating or switching
between the reference product and the
interchangeable biological product.76
We appreciate the importance of
provider and patient education to
advance uptake and acceptance as the
development and market for biosimilar
biological products, including
interchangeable biological products,
continues to grow.
We believe that including
substitutions of biosimilar biological
products other than interchangeable
biological products for their reference
products as maintenance changes would
strike the right balance between
promoting utilization of more biosimilar
biological products and providing
enrollees with sufficient advance notice
74 https://www.fda.gov/drugs/pharmaceuticalquality-resources/current-good-manufacturingpractice-cgmp-regulations. Accessed October 18,
2023.
75 See FDA website entitled ‘‘Biosimilar and
Interchangeable Biologics: More Treatment
Choices’’ at: https://www.fda.gov/consumers/
consumer-updates/biosimilar-and-interchangeablebiologics-more-treatmentchoices#:∼:text=Biosimilars%20
are%20a%20type%20of,macular%20
degeneration%2C%20and%20some%20cancers.
Accessed October 18, 2023.
76 See 42 U.S.C. 262(i)(3) and (k)(4).
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of such changes. This proposal would
provide Part D sponsors with more
flexibility than the current policy of
treating such changes as nonmaintenance changes (which do not
apply to enrollees who are currently
taking a reference product when the
change takes effect 77) but would not
extend the flexibility to what is
permitted for immediate substitutions
(which apply to all enrollees, including
those currently taking a reference
product, but only require direct notice
of specific changes made to affected
enrollees after the fact 78). We realize
now that not addressing in the
December 2022 proposed rule the
treatment of biosimilar biological
products other than interchangeable
biological products suggested that we
wanted to continue our sub-regulatory
policy of treating substitution of
reference products by biosimilar
biological products other than
interchangeable biological products as
non-maintenance changes. However,
continuing to treat such changes as nonmaintenance would not support our
goal to encourage greater use of
biosimilar biological products.
At the same time, we are not
convinced that it is appropriate at this
time to propose to permit immediate
substitutions of reference products for
biosimilar biological products other
than interchangeable biological
products without 30 days advance
notice. In this regard, we would note
that, pharmacists generally cannot
substitute a biosimilar biological
product other than an interchangeable
biological product for its reference
product without first consulting the
prescribing health care provider, subject
to State pharmacy laws. If a biosimilar
biological product other than an
interchangeable biological product were
able to be immediately substituted, the
result is that any enrollee seeking a refill
on their prescription for a reference
product after a Part D sponsor has
substituted a biosimilar biological
product for that reference product
(regardless of whether such a formulary
change were permitted to take place as
an immediate substitution or a
maintenance change) would be told that
their plan no longer covers the reference
product. And, subject to State pharmacy
laws, a pharmacist in most cases would
not be able to provide the corresponding
biosimilar biological product to the
77 See proposed § 423.120(e)(3)(ii), of the
December 2022 proposed rule, which would codify
longstanding policy regarding non-maintenance
changes.
78 See § 423.120(b)(5)(iv).
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enrollee unless they receive a new
prescription from a prescriber.
The above would mean that, were we
to treat substitutions of biosimilar
biological products other than
interchangeable biological products as
immediate substitutions, enrollees
currently taking a reference product
would receive no direct advance notice
of specific changes made and would
likely find themselves at the pharmacy
counter unable to obtain coverage for
their reference product and needing to
either request an exception or obtain a
new prescription for the biosimilar
biological product. Such enrollees
would receive a notice at the point of
sale telling them what they or their
prescriber would need to do to request
an exception to stay on the reference
product and that they can call their plan
for more information. To avoid a
situation in which the enrollee might
not have medication on hand and need
to take quick action, but at the same
time still encourage the use of all
biosimilar biological products, we are
proposing to treat such substitutions as
maintenance changes. Given that
maintenance changes would apply to all
enrollees under proposed
§ 423.120(e)(3) in the December 2022
proposed rule, permitting Part D
sponsors to substitute such biosimilar
biological products for their reference
products as maintenance changes would
presumably result in more widespread
use of such products than continuing
our current sub-regulatory policy that
treats such substitutions as nonmaintenance changes. Further, under
current sub-regulatory policy and
proposed § 423.120(e)(3)(i) in the
December 2022 proposed rule, Part D
sponsors that submit a maintenance
change request are able to assume that
CMS has approved their negative
change request if they do not hear back
from CMS within 30 days of
submission, which could result in
changes that take place more quickly.
Additionally, we believe that the 30day notice period is appropriate for a
variety of reasons. We have applied the
30-day time frame in other contexts
(such as notice of changes required
under current § 423.120(b)(5)(i)(A) and
for changes proposed in our December
2022 proposed rule) and are hesitant to
create more confusion by carving out
certain biosimilar biological products.
We understand the nature of the change
is different from, for instance,
substituting generic drugs for brand
name drugs, in that in most states the
enrollees that are prescribed reference
products must at this time obtain new
prescriptions for biosimilar biological
products other than interchangeable
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78519
biological products. However, this
would not be the only time an enrollee
has 30 days’ notice within which to
obtain a new prescription. For instance,
in the final rule titled ‘‘Medicare
Program; Contract Year 2019 Policy and
Technical Changes to the Medicare
Advantage, Medicare Cost Plan,
Medicare Fee-for-Service, the Medicare
Prescription Drug Benefit Programs, and
the PACE Program,’’ which appeared in
the April 16, 2018 Federal Register, we
reduced the time for advance direct
notice of certain formulary changes from
60 to 30 days and since its effective
date, § 423.120(b)(5)(i)(A) has required
only 30 days’ notice of changes to the
formulary that are not immediate. A
similar period applies to the transition
process for enrollees prescribed Part D
drugs that are not on the Part D plan’s
formulary: under § 423.120(b)(3)(iii),
enrollees receive a month’s supply of a
drug after which they must obtain a new
prescription for an alternate drug or
apply for an exception. If we required
Part D sponsors to issue notice earlier,
for instance to provide advance notice
90 days prior to the formulary change,
the lengthened notice period would
provide Part D sponsors less time within
a year for a change to be effective and
might unintentionally motivate them to
wait until the next plan year—which
would defeat the goal of this proposal to
encourage uptake of biosimilar
biological products other than
interchangeable biological products
sooner than would otherwise be the
case.
If a Part D sponsor were to implement
a maintenance change for a biosimilar
biological product other than an
interchangeable biological product
under our proposal, then it would work
as follows: Part D sponsors removing or
making any negative changes to a
reference product would be required to
add a biosimilar biological product
other than an interchangeable biological
product at the same or a lower costsharing tier and with the same or less
restrictive PA, ST, or QL requirements
as the reference product. Part D
sponsors adding a biosimilar biological
product other than an interchangeable
biological product would also be
required to provide 30 days’ advance
written notice before making any
negative change to the reference
product. The written notice under
proposed § 423.120(f)(4) would include
details regarding the change, including
the specific biosimilar biological
product to be added to the formulary;
whether the sponsor will be removing
the related reference product, subjecting
it to a new or more restrictive PA, ST,
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or QL, or moving it to a higher costsharing tier; and identification of
whether appropriate alternatives, other
than the biosimilar biological product
that is the subject of the notice, are
available on the formulary at the same
or lower cost-sharing tier as the
reference product. The written notice
would also include the means by which
the affected enrollee can request a
coverage determination under § 423.566
or an exception to a coverage rule under
§ 423.578. Specifically, under § 423.566,
the enrollee can always ask for a
coverage determination, including an
exception to a coverage rule, and might
choose to do so after receiving their
notice of a specific change due to occur
within 30 days. Furthermore, the
enrollee can also request an expedited
determination if their health requires.
Again, treating the change as a
maintenance change would mean
enrollees have 30 days to take action
before the change becomes effective.
We would note that the Part D
transition policy does not apply to
midyear maintenance changes. An
enrollee is only entitled to a transition
supply under § 423.120(b)(3)(i)(A) if the
enrollee is new to the plan or stayed in
the plan until the next contract year and
a drug they are taking is affected by
formulary changes in the next contract
year. Formulary changes from one
contract year to the next do not
constitute changes to an approved
formulary since formularies are
submitted for review and approval
annually as part of the Part D bid
submission process. Rather, the advance
direct notice of changes currently
required under § 423.120(b)(5)(i), and
which we proposed to require in the
December 2022 proposed rule at the
proposed § 423.120(f)(1), provides an
affected enrollee with time to obtain a
new prescription for that biosimilar
biological product other than an
interchangeable biological product or to
seek an exception, before the reference
product comes off the formulary.
We assume that in most cases,
substituting a biosimilar biological
product other than an interchangeable
biological product for the reference
product on the formulary will be more
financially favorable to enrollees since
biosimilar biological products are
generally lower cost than reference
products and must be added to the same
or lower cost-sharing tier as the
reference product. However, differences
in plan benefit designs make it
challenging to predict the degree of
savings an enrollee may experience. For
example, if a Part D sponsor removes a
reference product from the formulary
and adds a biosimilar biological product
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other than an interchangeable biological
product to the formulary on the same
tier, the affected enrollee likely would
experience savings if the cost sharing for
the tier is based on a percent
coinsurance, but not if the cost sharing
for the tier is a fixed copay. If an
affected enrollee pursues a formulary
exception to continue to take the nonformulary reference product, these
enrollees may be faced with higher outof-pocket costs, depending on the tier
that the Part D sponsor designates for
Part D drugs obtained through formulary
exceptions and the tier that the
reference product was originally on. If
the reference product was on a preferred
tier, but the formulary exception tier
designated in the plan benefit package
is the non-preferred tier, then affected
enrollees who obtain a formulary
exception may be subject to higher cost
sharing than previously.
For the reasons discussed above, we
are now proposing to update the
proposed definition of ‘‘maintenance
changes’’ at § 423.100 in the December
2022 proposed rule to include a new
paragraph (2) on making any negative
formulary changes to a reference
product when adding a biosimilar
biological product other than an
interchangeable biological product to
the same or a lower cost-sharing tier and
with the same or less restrictive PA, ST,
or QL requirements. We would
renumber the remaining maintenance
changes listed in the proposed
definition in the December 2022
proposed rule.
We are also proposing in this
proposed rule at § 423.4 to define
‘‘biosimilar biological product’’ to mean
a biological product licensed under
section 351(k) of the PHSA that, in
accordance with section 351(i)(2) of the
PHSA, is highly similar to the reference
product, notwithstanding minor
differences in clinically inactive
components, and has no clinically
meaningful differences between the
biological product and the reference
product, in terms of the safety, purity,
and potency of the product. The
proposed term, biosimilar biological
product, includes interchangeable
biological products as we proposed to
define them in our December 2022
proposed rule. We are also proposing a
technical correction to the proposed
definition of an interchangeable
biological product to mean a product
licensed under section 351(k) of the
PHSA (42 U.S.C. 262(k)) that FDA has
determined meets the standards
described in section 351(k)(4) of the
PHSA (42 U.S.C. 262(k)(4)).
We solicit comment on our proposal
to treat formulary substitutions of
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biosimilar biological products other
than interchangeable biological
products for reference products as
maintenance changes, as well as our
proposed definition of biosimilar
biological product. We also would be
interested in any comments on our
proposal that enrollees taking a
reference product would receive 30
days’ notice before the change is made
and whether that is sufficient time to
obtain a new prescription for the
biosimilar biological product other than
an interchangeable biological product,
as well as how that 30-day notice period
relates to the timing of other notice
requirements. We also solicit comment
on our proposal that the biosimilar
biological product other than the
interchangeable biological product be
placed on the same or a lower costsharing tier as the reference product it
replaces or that is subject to negative
formulary changes.
(2) Updated Proposal Related to Timing
of Substitutions
In reexamining our proposed
definition of ‘‘maintenance changes’’ in
§ 423.100 in the December 2022
proposed rule to add a new category for
biosimilar biological products other
than interchangeable biological
products in paragraph (2), as discussed
above, we also revisited paragraph (1) of
the proposed definition, in which we
proposed to require Part D sponsors
making a negative formulary change to
a drug to ‘‘at the same time’’ add a
corresponding drug at the same or lower
cost-sharing tier and with the same or
less restrictive PA, ST, or QL
requirements (excluding immediate
substitutions permitted under the
proposed § 423.120(e)(2)(i) of the
December 2022 proposed rule).
Considering that our current subregulatory guidance does not require
maintenance substitutions to occur ‘‘at
the same time,’’ we have reconsidered
and do not believe it is necessary to
propose imposing such strict timing
requirements for a maintenance
change—whether it be related to plan
sponsors removing or making negative
changes (1) to a brand name or reference
product when adding a corresponding
drug that is not an immediate
substitution, or (2) to a reference
product when adding a biosimilar
biological product other than an
interchangeable biological product. We
would like to encourage plans to offer
more choices by adding corresponding
drugs (the proposed definition of which
in the December 2022 proposed rule
includes interchangeable biological
products) and biosimilar biological
products other than interchangeable
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biological products to their formularies
as soon as possible. We are concerned
that requiring such an addition to occur
‘‘at the same time’’ as the negative
formulary change to the brand name
drug or reference product could cause a
Part D sponsor to delay adding a
corresponding drug or biosimilar
biological product other than an
interchangeable biological product until
the Part D sponsor has taken the steps
it deems necessary to operationalize the
negative changes that would be made to
the brand name drug or reference
product currently on the formulary,
which in turn would delay enrollee
access to the corresponding drug or
biosimilar biological product other than
an interchangeable biological product.
Therefore, we propose to remove the
requirement to have changes take place
‘‘at the same time’’ in the December
2022 proposed rule’s definition of
‘‘maintenance change’’ at proposed
§ 423.100, and will not add that
modifier for the change for biosimilar
biological products other than
interchangeable biological products that
we are proposing in this proposed rule,
with the understanding that the
addition of the corresponding drug or
biosimilar biological product other than
an interchangeable biological product
would need to come before the negative
change is applied to the brand name
drug or reference product. Further, this
proposed update to the definition of a
maintenance change does not alter other
proposed requirements for maintenance
changes in the December 2022 proposed
rule, including that CMS must be
provided a 30-day opportunity to review
any such changes and in all cases
enrollees will receive at least 30 days’
notice before a drug is removed or
subject to any other negative formulary
change.
At the same time, we are not
proposing an unlimited window in
which to make a negative formulary
change to the related drug after adding
a corresponding drug under paragraph
(1) or adding a biosimilar biological
product other than an interchangeable
biological product under paragraph (2)
of the proposed § 423.100 definition of
a ‘‘maintenance change.’’ We believe
Part D sponsors should make such
negative changes within a reasonable
amount of time after adding
corresponding drugs and biosimilar
biological products other than
interchangeable biological products as
specified in order to best achieve the
goal of increasing their utilization. We
understand that Part D sponsors may be
eager to add, for example, a newly
approved generic drug or biosimilar
biological product to their formularies,
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but may need additional time to
operationalize the negative formulary
change to the brand name or reference
product, respectively; however, we do
not believe that Part D sponsors should
have an unlimited amount of time to
effectuate the negative formulary change
because this presents challenges for
CMS to monitor and deviates from the
idea that such formulary changes are in
many cases substitutions of one drug for
another. In other words, the addition of
a corresponding drug or a biosimilar
biological product other than an
interchangeable biological product
justifies the negative formulary change
to the brand name or reference product.
Nevertheless, we do not want to
establish too short a timeframe
requirement to make the negative
change to the brand name drug or
reference product because it could
increase the chance that Part D sponsors
will miss the formulary update
opportunity, resulting in more
continued utilization of the brand name
drug or reference product and less
utilization of the corresponding drug or
biosimilar biological product other than
an interchangeable biological product
than otherwise could be achieved. To
strike a balance, we are proposing to
codify our longstanding operational
limitation of a 90-day timeframe for a
Part D sponsor to remove a brand name
drug from the formulary when a generic
drug is added. Our experience suggests
that this timeframe would provide Part
D sponsors with sufficient time to
implement the negative formulary
change for a brand name drug or
reference product after adding a
corresponding drug or biosimilar
biological product other than an
interchangeable biological product, but
still ensure the removal of the brand
name drug or reference product is
timely enough to help increase
utilization of the corresponding drug or
biosimilar biological product other than
an interchangeable biological product.
Accordingly, we believe negative
formulary changes to the brand name
drug or reference product should have
to take effect within 90 days after a
generic or other corresponding drug, or
biosimilar biological product other than
an interchangeable biological product, is
added as specified to the formulary.
To provide Part D sponsors with more
flexibility, we propose to remove from
paragraph (1) of the proposed definition
of ‘‘maintenance change’’ in § 423.100 of
the December 2022 proposed rule the
requirement that the corresponding drug
be added and the related drug be subject
to negative formulary changes ‘‘at the
same time.’’ Rather, we now propose to
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78521
revise paragraph (1) to require Part D
sponsors to make any negative
formulary changes ‘‘within 90 days of’’
adding a corresponding drug. Similarly,
the newly proposed paragraph (2) of the
proposed definition of ‘‘maintenance
change’’ in § 423.100, as discussed
above, would require Part D sponsors to
make negative formulary changes to a
reference product ‘‘within 90 days of’’
adding a biosimilar biological product
other than an interchangeable biological
product.
In this vein, we note that a commenter
on the December 2022 proposed rule
requested that we remove the
requirement in the proposed
§ 423.120(e)(2)(i) of the December 2022
proposed rule (currently appearing at
§ 423.120(b)(5)(iv)(A)) that Part D
sponsors making immediate
substitutions remove or make any other
negative formulary changes to a related
drug ‘‘at the same time’’ they add its
corresponding drug. The commenter
suggested that this requirement might
discourage them from adding new
corresponding drugs, which could be
lower in cost than related drugs, as soon
as possible because they often need
more time to implement the changes
with respect to the related drug. For
instance, they suggested it takes time to
evaluate new products; check their
availability; communicate changes;
update operations; and assess suitability
for substitution among interchangeable
biological products. We appreciate the
comment and reiterate that we favor
expeditious access for enrollees to Part
D drugs that could be lower in cost. The
purpose of the immediate substitutions
policy is to encourage quick action with
respect to immediately placing a
corresponding drug on the formulary
after it is released.
Accordingly, with respect to the
proposed § 423.120(e)(2)(i) in the
December 2022 proposed rule, we now
propose to remove the requirement that
immediate substitutions occur ‘‘at the
same time’’ and instead state that
negative formulary changes may still
qualify as immediate substitutions if
made within 30 days of adding a
corresponding drug to a formulary. As
proposed in the December 2022
proposed rule, for immediate
substitutions, Part D sponsors would be
required to submit such changes to
CMS, in a form and manner specified by
CMS, in their next required or
scheduled formulary update.
We note that we are proposing
different windows of time in which Part
D sponsors can make negative formulary
changes to the related drug based on
whether there is an immediate
substitution (that is, within 30 days after
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adding the corresponding drug) or a
maintenance change (that is, within 90
days after adding the corresponding
drug). The different requirements reflect
a distinction in the nature of the
changes themselves. As noted earlier,
the entire purpose of immediate
substitutions is quick action, such that
Part D sponsors can put a newer
corresponding drug on the formulary
and remove the related drug it is
replacing as soon as possible. For that
reason, we continue to encourage that
immediate substitutions take place ‘‘at
the same time,’’ but propose setting a
30-day limit. To encourage this, Part D
sponsors implementing immediate
substitutions may provide notice to
affected enrollees of the specific
changes after they have taken effect.
For the reasons discussed above, for
other kinds of maintenance changes that
are not immediate, we propose that we
would approve only negative formulary
changes to the related drug that take
effect within 90 days after a
corresponding drug is added to the
formulary.
We invite comment on these proposed
changes, the reasons why Part D
sponsors would need a period of time
after adding a corresponding drug or
biosimilar biological product other than
an interchangeable biological product in
which to take action, and any other
appropriate window of time in which to
permit maintenance changes or
immediate substitutions to take place,
including whether we should maintain
a distinction between the two.
(3) Miscellaneous Changes
In re-examining our proposed
definition of ‘‘maintenance change’’ in
the December 2022 proposed rule at
§ 423.100, we found a technical error, in
that we did not specify in the
introductory clause that the changes
would apply with respect to ‘‘a covered
Part D drug.’’ We hereby propose to
make that correction in this proposed
rule.
We propose a technical change to our
proposed definition of ‘‘corresponding
drug’’ included in the December 2022
proposed rule in § 423.100 to specify
that the reference to ‘‘an unbranded
biological product of a biological
product’’ is intended to be a reference
to ‘‘an unbranded biological product
marketed under the same BLA as a
brand name biological product.’’
3. Summary
In conclusion, we are proposing the
changes below to three sections of
regulatory text originally proposed in
the December 2022 proposed rule. We
are currently not proposing updates to
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the other proposed regulatory text in the
December 2022 proposed rule related to
section III.Q., Changes to an Approved
Formulary, which, as noted above,
remains under consideration.
• In § 423.4, to add a definition of
‘‘biosimilar biological product;’’
• In § 423.4, to make technical
corrections to the proposed definition of
an ‘‘interchangeable biological
product;’’
• In § 423.100, to revise the proposed
definition of ‘‘maintenance change’’ as
follows: to add an introductory clause
noting its application to covered Part D
drugs; to revise paragraph (1) to require
changes ‘‘within 90 days of,’’ rather than
‘‘at the same time as,’’ adding a
corresponding drug; to add a new
paragraph (2) to include substitution of
biosimilar biological products other
than interchangeable biological
products as a type of maintenance
change; and to renumber the remaining
maintenance changes listed;
• In § 423.100, to revise the proposed
definition of ‘‘corresponding drug’’ to
specify that the reference to ‘‘an
unbranded biological product of a
biological product’’ is intended to be a
reference to ‘‘an unbranded biological
product marketed under the same BLA
as a brand name biological product;’’
and
• In proposed § 423.120(e)(2)(i), to
require changes ‘‘within 30 days of,’’
rather than ‘‘at the same time as,’’
adding a corresponding drug.
G. Parallel Marketing and Enrollment
Sanctions Following a Contract
Termination (§§ 422.510(e) and
423.509(f))
Sections 1857(c)(2) and 1860D–
12(b)(3)(B) of the Act provide CMS with
the ability to terminate MA (including
MA–PD) and PDP contracts if we
determine that a contract(s) has met any
of the following thresholds:
• Has failed substantially to carry out
the contract.
• Is carrying out the contract in a
manner that is inconsistent with the
efficient and effective administration of,
respectively, Part C or Part D of Title
XVIII of the Act (that is, the Medicare
statute).
• No longer substantially meets the
applicable conditions of the applicable
part of the statute.
This termination authority is codified
at 42 CFR 422.510(a)(1) through (3) and
423.509(a)(1) through (3), respectively.
In addition, section 1857(g)(3) of the Act
(incorporated for Part D sponsors under
section 1860D–12(b)(3)(F)) specifies that
intermediate sanctions and civil money
penalties (CMPs) can be imposed on the
same grounds upon which a contract
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could be terminated (63 FR 34968 and
70 FR 4193). CMS codified this
authority at §§ 422.752(b) and
423.752(b) with respect to intermediate
sanctions, and §§ 422.752(c)(1)(i) and
423.752(c)(1)(i) with respect to CMPs.
If CMS terminates an MA organization
or Part D sponsor contract(s) during the
plan year but the termination is not
effective until January 1 of the following
year, the MA organization or Part D
sponsor could potentially continue to
market and enroll eligible beneficiaries
(as described in part 422, subpart B, and
part 423, subpart B) into plans under the
terminating contract(s) unless CMS
imposes separate marketing and
enrollment sanctions on the terminating
contract(s).79 A terminating contract
that continues to market to and enroll
eligible beneficiaries would cause
confusion and disruption for
beneficiaries who enroll in the period of
time between when the termination
action is taken and the January 1
effective date of the termination.
For these reasons, we propose to add
paragraph (e) to § 422.510 and
paragraph (f) to § 423.509 that, effective
contract year 2025, marketing and
enrollment sanctions will automatically
take effect after a termination is
imposed. At paragraph (e)(1) of
§ 422.510 and paragraph (f)(1) of
§ 423.509, we propose to state that the
marketing and enrollment sanctions will
go into effect 15 days after CMS issues
a contract termination notice. This
timeframe is consistent with the number
of days CMS often designates as the
effective date for sanctions after CMS
issues a sanction notice.
At paragraph (e)(2) of § 422.510 and
paragraph (f)(2) of § 423.509, we
propose that MA organizations and Part
D sponsors would continue to be
afforded the same appeals rights and
procedures specific to contract
terminations under subpart N of 42 CFR
parts 422 and 423, however, there
would not be a separate appeal for the
sanction (in other words the appeal of
the termination would include the
associated marketing and enrollment
sanctions). In addition, at paragraph
(e)(3) of § 422.510 and paragraph (f)(3)
of § 423.509 we propose that if an MA
organization or Part D sponsor appeals
the contract termination, the marketing
and enrollment sanctions would not be
stayed pending the appeal consistent
with §§ 422.756(b)(3) and 423.756(b)(3).
Finally, at paragraph (e)(4) of § 422.510
and paragraph (f)(4) of § 423.509 we
79 Regulations in 42 CFR part 422, subpart B, and
part 423, subpart B, permit enrollees to enroll in a
plan mid-year during their initial election period or
special election periods.
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propose that the sanction would remain
in effect until the effective date of the
termination, or if the termination
decision is overturned on appeal, until
the final decision to overturn the
termination is made by the hearing
officer or Administrator.
CMS rarely terminates MA
organization and Part D sponsor
contracts and, on average, contract
terminations affect less than one MA
organization or Part D sponsor a year.
Therefore, we anticipate that this
proposal would not result in additional
costs or additional administrative
burden for affected MA organizations
and Part D sponsors. For example, an
MA organization and Part D sponsor
would not be required to submit a
corrective action plan, and if appealed
there would only be one appeal rather
than multiple. MA organizations and
Part D sponsors would continue to be
required to comply with existing
regulations that require public and
beneficiary notice that their contract is
being terminated under this proposal.
ddrumheller on DSK120RN23PROD with PROPOSALS2
H. Update to the Multi-Language Insert
Regulation (§§ 422.2267 and 423.2267)
Individuals with limited English
proficiency (LEP) experience obstacles
to accessing health care in the United
States. Language barriers negatively
affect the ability of patients with LEP to
comprehend their diagnoses and
understand medical instructions when
they are delivered in English, and
impact their comfort with postdischarge care regimens.80 For example,
Hispanic/Latino individuals with LEP
report worse access to care and receipt
of fewer preventive services than
Hispanic/Latino individuals who speak
English proficiently. For Asian
Americans who are not proficient in
English, language barriers are one of the
most significant challenges to accessing
health care, including making an
appointment, communicating with
health care professionals, and gaining
knowledge about an illness; this is even
more pronounced among older Asian
Americans, who are more likely to have
limited English proficiency.81 Studies
80 Espinoza, J. and Derrington, S. ‘‘How Should
Clinicians Respond to Language Barriers that
Exacerbate Health Inequity?’’, AMA Journal of
Ethics (February 2021) E109. Retrieved from https://
journalofethics.ama-assn.org/sites/
journalofethics.ama-assn.org/files/2021-02/cscm32102.pdf; Karliner, L., Perez-Stable, and E.,
Gregorich, S. ‘‘Convenient Access to Professional
Interpreters in the Hospital Decreases Readmission
Rates and Estimated Hospital Expenditures for
Patients with Limited English Proficiency’’, Med
Care (March 2017) 199–206. Retrieved from https://
pubmed.ncbi.nlm.nih.gov/27579909/.
81 Wooksoo, K. and Keefe, R. ‘‘Barriers to
Healthcare Among Asian Americans’’, Social Work
in Public Health (2010) 286–295. Retrieved from
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show that patients with LEP experience
longer hospital stays—leading to a
greater risk of line infections, surgical
infections, falls, and pressure ulcers—
when compared to English-speaking
patients; because patients with LEP
have greater difficulty understanding
medical instructions when those
instructions are given in English, they
are at higher risk of surgical delays and
readmissions.82 Although the use of
qualified interpreters is effective in
improving care for patients with LEP,
some clinicians choose not to use them,
fail to use them effectively, or rely
instead on ad hoc interpreters—such as
family members or untrained bilingual
staff.83 However, in addition to posing
legal and ethical concerns, ad hoc
interpreters are more likely to make
mistakes than professional
interpreters.84 Also, clinicians with
basic or intermediate non-English
spoken language skills often attempt to
communicate with the patient on their
own without using an interpreter,
increasing patient risk.85 These barriers
contribute to disparities in health
outcomes for individuals with LEP,
which likely worsened during the
COVID–19 pandemic.86
The multi-language insert (MLI)
required at §§ 422.2267(e)(31) and
423.2267(e)(33) is a standardized
communications material that informs
https://www.tandfonline.com/doi/pdf/10.1080/
19371910903240704?needAccess=true.
82 U.S. Department of Health & Human Services,
Agency for Healthcare Research & Quality.
‘‘Executive Summary: Improving Patient Safety
Systems for Patients with Limited English
Proficiency’’, (September 2020). Retrieved from
https://www.ahrq.gov/health-literacy/professionaltraining/lepguide/.
83 Espinoza, J. and Derrington, S. ‘‘How Should
Clinicians Respond to Language Barriers that
Exacerbate Health Inequity?’’, AMA Journal of
Ethics (February 2021) E110. Retrieved from https://
journalofethics.ama-assn.org/sites/
journalofethics.ama-assn.org/files/2021-02/cscm32102.pdf.
84 Glenn Flores et al., Errors of Medical
Interpretation and Their Potential Clinical
Consequences: A Comparison of Professional
Versus Ad Hoc Versus No Interpreters, 5 Annals of
Emerg. Med. 545 (Nov. 1, 2012), https://
pubmed.ncbi.nlm.nih.gov/22424655/; Ali Labaf et
al., The Effect of Language Barrier and NonProfessional Interpreters on the Accuracy of
Patient-Physician Communication in Emergency
Department, 3 Adv. J. Emerg. Med., June 6, 2019,
at p. 4, https://www.ncbi.nlm.nih.gov/pmc/articles/
PMC6789075/pdf/AJEM-3-e38.pdf.
85 U.S. Department of Health & Human Services,
Agency for Healthcare Research & Quality.
‘‘Executive Summary: Improving Patient Safety
Systems for Patients with Limited English
Proficiency’’, (September 2020). Retrieved from
https://www.ahrq.gov/health-literacy/professionaltraining/lepguide/exec-summary.html#what.
86 Lala Tanmoy Das et al., Addressing Barriers to
Care for Patients with Limited English Proficiency
During the COVID–19 Pandemic, Health Affairs
Blog (July 29, 2020), https://www.healthaffairs.org/
do/10.1377/hblog20200724.76821/full/.
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78523
enrollees and prospective enrollees that
interpreter services are available in
Spanish, Chinese, Tagalog, French,
Vietnamese, German, Korean, Russian,
Arabic, Italian, Portuguese, French
Creole, Polish, Hindi, and Japanese.
These are the 15 most common nonEnglish languages in the United States.
Additionally, §§ 422.2267(e)(31)(i) and
423.2267(e)(33)(i) require plans to
provide the MLI in any non-English
language that is the primary language of
at least five percent of the individuals
in a plan benefit package (PBP) service
area but is not already included on the
MLI. These regulations also provide that
a plan may opt to include the MLI in
any additional languages that do not
meet the five percent threshold, where
it determines that including the
language would be appropriate. The
MLI states, ‘‘We have free interpreter
services to answer any questions you
may have about our health or drug plan.
To get an interpreter, just call us at [1–
xxx–xxx–xxxx]. Someone who speaks
[language] can help you. This is a free
service.’’ The issuance of the MLI is
independent of the Medicare written
translation requirements for any nonEnglish language that meets the five
percent threshold, as currently required
under §§ 422.2267(a)(2) and
423.2267(a)(2), and the additional
written translation requirements for
fully integrated D–SNPs (FIDE SNPs)
and highly integrated D–SNPs (HIDE
SNPs) provided in §§ 422.2267(a)(4) and
423.3367(a)(4).87 Additionally, we note
that pursuant to CMS’s authority in
section 1876(c)(3)(C) to regulate
marketing and the authority in section
1876(i)(3)(D) to specify new section
1876 contract terms, we have also
established in § 417.428 that most of the
marketing and communication
regulations in subpart V of part 422,
including the MLI requirement in
§ 422.2267(e)(31), also apply to section
1876 cost plans.
On May 18, 2016, the Office for Civil
Rights (OCR) published a final rule (81
FR 31375; hereinafter referenced to as
the section 1557 final rule)
implementing section 1557 of the
Patient Protection and Affordable Care
Act (ACA).88 Section 1557 of the ACA
provides that an individual shall not be
excluded from participation in, be
denied the benefits of, or be subjected
to discrimination on the grounds
prohibited under Title VI of the Civil
Rights Act of 1964, 42 U.S.C. 2000d et
87 This proposal pertains only to the MLI
requirements in §§ 422.2267(e)(31) and
423.2267(e)(33), not §§ 422.2267 and 423.2267
broadly.
88 Public Law 111–148.
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seq. (race, color, national origin), Title
IX of the Education Amendments of
1972, 20 U.S.C. 1681 et seq. (sex), the
Age Discrimination Act of 1975, 42
U.S.C. 6101 et seq. (age), or section 504
of the Rehabilitation Act of 1973, 29
U.S.C. 794 (disability), under any health
program or activity, any part of which
is receiving Federal financial assistance;
any health program or activity
administered by the Department; or any
program or activity administered by any
entity established under Title I of the
Act. The 2016 regulations implementing
section 1557 included the requirement
that all covered entities include taglines
with all ‘‘significant communications.’’
The sample tagline provided by the
Department consisted of a sentence
stating, in the 15 most common nonEnglish languages in a State or States,
‘‘ATTENTION: If you speak [insert
language], language assistance services,
free of charge, are available to you. Call
1–xxx–xxx–xxxx (TTY: 1–xxx–xxx–
xxxx).’’ Because of the inherent
duplication with the MLI, CMS issued
an HPMS email on August 25, 2016, to
revise the Medicare Marketing
Guidelines (MMG) at that time to
remove the then-applicable MLI
requirements.
On June 19, 2020, OCR published a
second section 1557 final rule (2020
OCR Rule) (85 FR 37160), which is
currently in effect, that repealed the
notice and tagline requirements, citing
costs, confusion, and waste, but stated
that covered entities are still required
‘‘to provide taglines whenever such
taglines are necessary to ensure
meaningful access by LEP individuals to
a covered program or activity.’’ In the
February 2020 proposed rule (85 FR
9002), we proposed to require plans to
use a disclaimer tagline about the
availability of non-English translations
in all required materials. However, we
did not finalize that proposal in the
January 2021 final rule (86 FR 5864). We
based this decision on our belief that
future rulemaking regarding nonEnglish disclaimers, if appropriate,
would be best addressed by OCR, as
those requirements would be HHS-wide
instead of limited to CMS. We also
stated that deferring to OCR’s oversight
and management of any requirements
related to non-English disclaimers is in
the best interest of the Medicare
program (86 FR 5995).
It is important to note that none of the
actions impacting the various
notifications of interpreter services
changed the requirement that MA
organizations, Part D sponsors, or cost
plans must provide these services under
applicable law. Plans have long been
required to provide interpreters when
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necessary to ensure meaningful access
to individuals with LEP, consistent with
existing civil rights laws. In
implementing and carrying out the Part
C and D programs under sections
1851(h), 1852(c), 1860–1(b)(1)(B)(vi),
1860D–4(a), and 1860D–4(l) of the Act,
CMS considers the materials required
under §§ 422.2267(e) and 423.2267(e) to
be vital to the beneficiary decision
making process; ensuring beneficiaries
with LEP are aware of and are able to
access interpreter services provides a
clear path for this portion of the
population to properly understand and
access their benefits. For a more
detailed discussion of previous
rulemaking related to section 1557, the
MLI, and non-English translation and
interpreter requirements, we direct
readers to the August 4, 2022 HHS
notice of proposed rulemaking regarding
section 1557 of the Affordable Care Act
(87 FR 47853 through 47856)
(hereinafter referred to as the August
2022 proposed rule) and the January
2022 proposed rule (87 FR 1899 through
1900).89
In the Medicare Program; Contract
Year 2023 Policy and Technical
Changes to the Medicare Advantage and
Medicare Prescription Drug Benefit
Programs; Policy and Regulatory
Revisions in Response to the COVID–19
Public Health Emergency; Additional
Policy and Regulatory Revisions in
Response to the COVID–19 Public
Health Emergency final rule (87 FR
27704) (hereafter referred to as the May
2022 final rule), we reinstituted the
requirement to use the MLI at
§§ 422.2267(e)(31) and 423.2267(e)(33).
We noted that we gained additional
insight regarding the void created by the
lack of any notification requirement
associated with the availability of
interpreter services for Medicare
beneficiaries (87 CFR 27821). We stated
that we consider the materials required
under §§ 422.2267(e) and 423.2267(e) to
be vital to the beneficiary decisionmaking process. We also noted that we
reviewed complaint tracking module
(CTM) cases in the Health Plan
Management System (HPMS) related to
‘‘language’’ and found a pattern of
beneficiary confusion stemming from
not fully understanding materials based
on a language barrier. We noted that
solely relying on the requirements
delineated in the 2020 OCR Rule for
covered entities to convey the
availability of interpreter services is
insufficient for the MA, cost plan, and
89 Specifically, we highlight pages 1899–1900 and
1926–1927 of the August 2022 proposed rule and
87 FR 1899 through 1900 of the January 2022
proposed rule.
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Part D programs and is not in the best
interest of Medicare beneficiaries who
are evaluating whether to receive their
Medicare benefits through these plans
and who are enrolled in these plans. We
stated that we believed that informing
Medicare beneficiaries that interpreter
services are available is essential to
realizing the value of our regulatory
requirements for interpreter services.
On August 4, 2022, OCR published a
proposed rule (87 FR 47824) that
proposed to require covered entities to
notify the public of the availability of
language assistance services and
auxiliary aids and services for their
health programs and activities using a
‘‘Notice of Availability.’’ Proposed
§ 92.11(b) would require the Notice of
Availability to be provided in English
and at least in the 15 most common
languages spoken by individuals with
LEP in the relevant State or States, and
in alternate formats for individuals with
disabilities who request auxiliary aids
and services to ensure effective
communications. If finalized, these
proposed provisions would result in
misalignment with the MLI requirement
under §§ 422.2267(e)(31) and
423.2267(e)(33) which require that
notice be provided in the 15 most
common non-English languages in the
United States. At the time this proposed
rule is published, OCR has not issued a
final rule on its August 2022 proposed
rule, and the 2020 OCR Rule remains in
effect.
In addition, per § 438.10(d)(2), States
must require managed care
organizations (MCOs), prepaid inpatient
health plans (PIHPs), prepaid
ambulatory health plans (PAHPs), and
primary care case management
programs to include taglines in written
materials that are critical to obtaining
services for potential enrollees in the
prevalent non-English languages in the
State explaining the availability of oral
interpretation to understand the
information provided, information on
how to request auxiliary aids and
services, and the toll-free telephone
number of the entity providing choice
counseling services in the State. Several
States that use integrated Medicare and
Medicaid materials for D–SNPs and
Medicare-Medicaid Plans have
contacted CMS and requested that we
change the MLI to be based on the 15
most common languages in the State
rather than the 15 most common
languages nationally because the most
common languages in the State are often
not the same as the most common 15
languages nationally. For example,
while French Creole is included in the
current MLI list for the most common
languages nationally, it is not a common
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language in Minnesota. In Minnesota,
Hmong and Somali, which are not
included in the MLI, are two of the most
prevalent languages. In fact, Minnesota
informed CMS that only seven of the
languages on the national list were
included in their list of the 15 most
common languages in their State.
As a result of this conflict between the
MLI requirements at §§ 422.2267(e)(31)
and 423.2267(e)(33) and the Medicaid
requirement at § 438.10(d)(2), any
applicable integrated plans (AIPs), as
defined at § 422.561, that provide
integrated Medicare and Medicaid
materials for enrollees must currently
include the MLI in the 15 most common
languages nationally as well as the
Medicaid tagline in the prevalent nonEnglish languages in the State if they
want to comply with both Medicare and
Medicaid regulatory requirements.
Specifically, these plans that provide
integrated materials must comply with
the MLI requirements at
§§ 422.2267(e)(31) and 423.2267(e)(33)
and the Medicaid requirement at
§ 438.10(d)(2) to include taglines in
written materials that are critical to
obtaining services for potential enrollees
in the prevalent non-English languages
in the State. In the enrollee materials,
this can result in a very long multi-page
list of statements noting the availability
of translations services in many
languages. This lengthy list can be a
distraction from the main information
conveyed in the material. As discussed
in greater detail below, we are
proposing to update §§ 422.2267(e)(31)
and 423.2267(e)(33) to instead require
that notice of availability of language
assistance services and auxiliary aids
and services be provided in the 15 most
common languages in a State; we expect
that this proposed policy would better
align with the Medicaid translation
requirements at § 438.10(d)(2).90
We believe rulemaking regarding a
non-English notice of the availability of
language assistance services and
auxiliary aids and services is needed to
more closely reflect the actual languages
spoken in the service area. We also
believe it is in the best interest of
enrollees for the requirements to align
with the Medicaid translation
requirements because it will allow D–
SNPs that are AIPs to provide a more
applicable, concise Notice of
90 We expect the 15 most common languages for
a given State to include any language required by
the Medicaid program at § 438.10(d)(2). Therefore,
our proposed rule would reduce burden on fully
integrated dual eligible special needs plans and
highly integrated dual eligible special needs plans,
as defined at § 422.2, and applicable integrated
plans, as defined at § 422.561, to comply with
regulations at §§ 422.2267(a)(4) and 423.2267(a)(4).
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Availability to enrollees that does not
distract from the main purpose of the
document.
Noting that while OCR has yet to
finalize the Notice of Availability policy
described in its August 2022 proposed
rule, and thus that OCR’s proposed
policy could be subject to change or not
be finalized, alignment of Medicare and
OCR rules would help to prevent
confusion among MA organizations,
Part D sponsors, and cost plans
regarding which requirements they must
comply with. Should the OCR final rule
differ from the original August 2022
proposed rule, we will consider
modifying our final rule to align with
OCR’s final rule.
Therefore, we propose to amend
§§ 422.2267(e)(31) and 423.2267(e)(33).
First, we propose to replace references
to the MLI with references to a Notice
of Availability. We propose to modify
the language to reflect CMS’s proposal
that this notice be a model
communication material rather than a
standardized communication material
and thus that CMS would no longer
specify the exact text that must be used
in the required notice. We propose to
change paragraphs (e)(31) and (33) to
require MA organizations and Part D
sponsors to provide enrollees a notice of
availability of language assistance
services and auxiliary aids and services
that, at a minimum, states that MA
organizations and Part D sponsors
provide language assistance services
and appropriate auxiliary aids and
services free of charge. We are
proposing, in new paragraphs (e)(31)(i)
and (e)(33)(i), that the Notice of
Availability must be provided in
English and at least the 15 languages
most commonly spoken by individuals
with limited English proficiency of the
relevant State and must be provided in
alternate formats for individuals with
disabilities who require auxiliary aids
and services to ensure effective
communication. This proposed Statespecific standard would ensure that a
significant proportion of each State’s
particular LEP population receives key
information in the appropriate
languages. The U.S. Census Bureau’s
ACS 2009–2013 multi-year data show
that the top languages spoken in each
State can vary significantly.91 Statespecific language translations provide
for flexibility to maximize access to care
for individuals with LEP. This updated
notice must also include a statement
regarding the availability of appropriate
auxiliary aids and services to reduce
91 https://www2.census.gov/library/data/tables/
2008/demo/language-use/2009-2013-acs-langtables-nation.xls.
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barriers to access for individuals with
disabilities.
We believe this proposal would make
it easier for individuals to understand
the full scope of available Medicare
benefits (as well as Medicaid benefits
available through the D–SNPs, where
applicable), increasing their ability to
make informed health care decisions,
and promote a more equitable health
care system by increasing the likelihood
that MA enrollees have access to
information and necessary health care.
As an additional benefit, our proposed
changes would mitigate the risk that
§§ 422.2267(e)(31) and 423.2267(e)(33)
could conflict with § 438.10(d)(2) and
the forthcoming OCR final rule, if
finalized, requiring applicable Medicare
plans to comply with two, disparate sets
of requirements. Such an outcome adds
undue burden on plans. Further,
requiring MA organizations and Part D
sponsors to provide multiple sets of
translated statements accompanying
enrollee materials could lead to enrollee
confusion and detract from the enrollee
material message. Notwithstanding
OCR’s final rule policy, we believe our
proposed changes are appropriate given
the benefits of a non-English notice of
availability of language assistance
services and auxiliary aids and service
more closely reflecting the actual
languages spoken in the service area and
alignment with the Medicaid translation
requirements.
Additionally, we propose in
§§ 422.2267(e)(31)(ii) and
423.2267(e)(33)(ii) that if there are
additional languages in a particular
service area that meet the 5-percent
service area threshold, described in
paragraph §§ 422.2267(a)(2) and
423.2267(a)(2), beyond the languages
described in §§ 422.2267(e)(31)(i) and
423.2267(e)(33)(i), the Notice of
Availability must also be translated into
those languages, similar to the current
MLI requirements at
§§ 422.2267(e)(31)(i) and
423.2267(e)(33)(i). While
§§ 422.2267(a)(2) and 423.2267(a)(2)
apply to the Notice of Availability since
it is a required material under
§§ 422.2267(e) and 423.2267(e), we
wanted to clarify this in the regulation
text. MA organizations and Part D
sponsors may also opt to translate the
Notice of Availability in any additional
languages that do not meet the five
percent service area threshold at
§§ 422.2267(a)(2) and 423.2267(a)(2),
where the MA organization or Part D
sponsor determines that such inclusion
would be appropriate, which is also
included in the current MLI
requirements at §§ 422.2267(e)(31)(i)
and 423.2267(e)(33)(i). It is possible that
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there may be a subpopulation in the
plan benefit package service area that
uses a language that does not fall within
the top 15 languages or meet the five
percent service area of a plan benefit
package threshold that the plan
determines can benefit by receiving the
notice. We again note that pursuant to
CMS’s authority in section 1876(c)(3)(C)
to regulate marketing and the authority
in section 1876(i)(3)(D) to specify new
section 1876 contract terms, and as
established in § 417.428, this proposal
would also apply to section 1876 cost
plans.
To assist plans with fulfilling their
requirements under §§ 422.2267(a)(2)
and 423.2267(a)(2) to translate required
materials into any non-English language
that is the primary language of at least
5 percent of the population of a plan
service area, since 2009 CMS has
provided plans with a list of all
languages that are spoken by five
percent or more of the population for
every county in the U.S. Each fall, we
release an HPMS memorandum
announcing that MA organizations and
Part D sponsors can access this list in
the HPMS marketing review module.92
However, plans can also use Census
Bureau ACS data to determine the top
languages spoken in a given State or
service area. The September 2023
Medicare Part C & D Language Data
Technical Notes 93 outlines our
methodology for calculating the
percentage of the population in a plan’s
service area speaking a language other
than English and provides plans with
instructions to make these calculations
on their own.
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I. Expanding Permissible Data Use and
Data Disclosure for MA Encounter Data
(§ 422.310)
Section 1853(a) of the Act requires
CMS to risk-adjust payments made to
Medicare Advantage (MA)
organizations. In order to carry out risk
adjustment, section 1853(a)(3)(B) of the
Act requires submission of data by MA
organizations regarding the services
provided to enrollees and other
information the Secretary deems
necessary. The implementing regulation
92 We released the contract year 2024 version of
this HPMS memorandum titled, ‘‘Corrected
Contract Year 2024 Translated Model Materials
Requirements and Language Data Analysis’’ on
September 25, 2023. This memorandum can be
retrieved at: https://www.cms.gov/about-cms/
information-systems/hpms/hpms-memos-archiveweekly/hpms-memos-wk-4-september-18-22.
93 Found in HPMS as described in the September
25, 2023 HPMS memo, ‘‘Corrected Contract Year
2024 Translated Model Materials Requirements and
Language Data Analysis.’’ This memo can be
retrieved at https://www.cms.gov/about-cms/
information-systems/hpms/hpms-memos-archiveweekly/hpms-memos-wk-4-september-18-22.
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at § 422.310(b) requires that MA
organizations submit to CMS ‘‘the data
necessary to characterize the context
and purposes of each item and service
provided to a Medicare enrollee by a
provider, supplier, physician, or other
practitioner.’’ Currently, § 422.310(d)(1)
provides that MA organizations submit
risk adjustment data equivalent to
Medicare fee-for-service (FFS) data to
CMS as specified by CMS. MA
encounter data, which are
comprehensive data equivalent to
Medicare FFS data, are risk adjustment
data.94
Section 1106(a)(1) of the Act
authorizes the Secretary to adopt
regulations governing release of
information gathered in the course of
administering programs under the Act.
In addition, section 1856(b) of the Act
authorizes CMS to adopt standards to
carry out the MA statute, and section
1857(e)(1) of the Act authorizes CMS to
add contract terms that are not
inconsistent with the Part C statute and
are necessary and appropriate for the
program. Currently, § 422.310(f)(1)
establishes permissible CMS uses of MA
encounter data (referred to as ‘‘risk
adjustment data’’ in the regulation),
while § 422.310(f)(2) and (3) establish
rules for CMS release of data. Prior to
2008, § 422.310(f) provided for CMS to
use MA risk adjustment data to risk
adjust MA payments and, except for any
medical record data also collected under
§ 422.310, for other purposes. Over time,
we subsequently refined the regulatory
language describing the scope of
permissible uses and releases of the MA
risk adjustment data, including MA
encounter data, to (i) risk adjusting MA
payments, (ii) updating risk adjustment
models, (iii) calculating Medicare
disproportionate share hospital
percentages, (iv) conducting quality
review and improvement activities, (v)
for Medicare coverage purposes, (vi)
conducting evaluations and other
analysis to support the Medicare
program (including demonstrations) and
to support public health initiatives and
other health care-related purposes, (vii)
for activities to support administration
of the Medicare program, (viii) for
activities to support program integrity,
and (ix) for purposes authorized by
other applicable laws (70 FR 4588; 73
FR 48650 through 48654; 79 FR 50325
through 50334).
94 See System of Records Notices for the CMS
Encounter Data System (EDS), System No. 09–70–
0506, published June 17, 2014 (79 FR 34539), as
amended at February 14, 2018 (83 FR 6591); and
for the CMS Risk Adjustment Suite of Systems
(RASS), System No. 09–70–0508, published August
17, 2015 (80 FR 49237), as amended at February 14,
2018 (83 FR 6591).
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Section 422.310(f)(2) permits the
release of MA encounter data to other
HHS agencies, other Federal executive
branch agencies, States, and external
entities, while § 422.310(f)(3) of our
current regulation specifies
circumstances under which we may
release MA encounter data for the
purposes described in § 422.310(f)(1).
Currently, we may release the data only
after risk adjustment reconciliation for
the applicable payment year has been
completed or under certain emergency
preparedness or extraordinary
circumstances. We note that we
included a proposal to publicly report
aggregated counts of procedures
performed by providers, based on MA
encounter data, before risk adjustment
reconciliation is complete in the
Medicare and Medicaid Programs in the
CY 2024 Payment Policies Under the
Physician Fee Schedule and Other
Changes to Part B Payment and
Coverage Policies; Medicare Shared
Savings Program Requirements;
Medicare Advantage; Medicare and
Medicaid Provider and Supplier
Enrollment Policies; and Basic Health
Program proposed rule (hereafter
referred to as the August 2023 proposed
rule; 88 FR 52262).
Here, we are proposing to allow MA
encounter data to be used to support the
Medicaid program for certain purposes
already specified for use to support the
Medicare program in § 422.310(f)(1)(vi)
and (vii). Under our proposal, MA risk
adjustment data could be used for
supporting either program separately or
in conjunction. In addition, we are
proposing to allow release of MA
encounter data to State Medicaid
agencies (States) in advance of the
completion of risk adjustment
reconciliation for the specific purpose of
care coordination for individuals who
are dually eligible for Medicare and
Medicaid, also known as dually eligible
individuals. These proposals related to
disclosure of MA encounter data are
focused on expanding allowable
disclosures of these data to support not
only the Medicare program or MedicareMedicaid demonstrations, but also the
Medicaid program in the interest of
improving care for individuals who are
eligible for Medicaid.
We believe disclosure for the purpose
of improving States’ ability to
understand and improve care provided
to dually eligible individuals is
appropriate and consistent with our
intention in prior rulemaking. We
clarified that States may access and use
MA encounter data while ‘‘in the
administration of Medicare-Medicaid
demonstrations’’ in the Medicare
Program; Hospital Inpatient Prospective
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Payment Systems for Acute Care
Hospitals and the Long-Term Care
Hospital Prospective Payment System
and Fiscal Year 2015 Rates; Quality
Reporting Requirements for Specific
Providers; Reasonable Compensation
Equivalents for Physician Services in
Excluded Hospitals and Certain
Teaching Hospitals; Provider
Administrative Appeals and Judicial
Review; Enforcement Provisions for
Organ Transplant Centers; and
Electronic Health Record (EHR)
Incentive Program final rule (hereafter
referred to as the August 2014 final rule;
79 FR 50325). Additionally, current
regulation text at § 422.310(f)(1)(vi)
permits CMS to release MA encounter
data to third parties, including States, to
‘‘conduct evaluations and other analysis
to support the Medicare program
(including demonstrations).’’ This
proposal would expand certain
allowable use and disclosures of MA
encounter data to support the Medicaid
program, which would thereby enable
State access to comprehensive data for
all dually eligible individuals in the
State regardless of their enrollment in a
demonstration, dual eligible special
needs plan (D–SNP), or other MA plan.
Our proposal to further expand MA
encounter data sharing to include
support for the Medicaid program
would also be consistent with the goals
of the Federal Coordinated Health Care
Office, as established in statute. Section
2602 of the Patient Protection and
Affordable Care Act of 2010 (Pub. L.
111–148) (Affordable Care Act)
established the office within CMS to
better integrate benefits and improve
coordination for dually eligible
individuals, including specific goals
and responsibilities such as:
• Providing dually eligible
individuals full access to the benefits to
which such individuals are entitled
under the Medicare and Medicaid
programs.
• Improving the quality of health care
and long-term services for dually
eligible individuals.
• Improving care continuity and
ensuring safe and effective care
transitions for dually eligible
individuals.
• Improving the quality of
performance of providers of services
and suppliers under the Medicare and
Medicaid programs.
• Supporting State efforts to
coordinate and align acute care and
long-term care services for dually
eligible individuals with other items
and services furnished under the
Medicare program.
MA enrollment has grown to
approximately half of all Medicare
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beneficiaries; a trend also seen in the
enrollment of dually eligible
individuals. For example, 51 percent of
all dually eligible individuals were
enrolled in an MA plan in 2021 (up
from 12 percent in December 2006).95 96
Such individuals experience the health
care system and incur health outcomes
as individuals regardless of which
health care program pays for the service.
But currently, the States’ ability to
obtain MA encounter data for program
analysis and evaluations or program
administration for dually eligible
individuals enrolled in an MA plan is
limited to support of a MedicareMedicaid demonstration. Our current
regulation text does not specify that we
may make MA encounter data available
to States for Medicaid program
administration, or to conduct
evaluations and other analyses for the
Medicaid program, with the exception
of those evaluations and analyses used
to support demonstrations. Therefore,
previous rulemaking limits
opportunities for States to effectively
perform functions such as coordination
of care, quality measure design, and
program evaluation and analysis by
allowing them access to MA encounter
data for these activities only for those
dually eligible individuals enrolled in
Medicare-Medicaid demonstrations.
We are proposing changes to
§ 422.310(f) to improve access for States
to MA encounter data, including making
a specific exception to the timing of
sharing MA encounter data. We do not
intend for our proposals to impact the
terms and conditions governing CMS
release of MA risk adjustment data as
described in § 422.310(f)(2), in
accordance with applicable Federal
laws and CMS data sharing procedures.
As discussed in the August 2014 final
rule, CMS data sharing procedures
require each recipient of data from CMS
to sign and maintain a CMS data sharing
agreement, ‘‘which addresses privacy
and security for the data CMS discloses’’
and ‘‘contains provisions regarding
access to and storage of CMS data to
ensure that beneficiary identifiable
information is stored in a secure system
and handled according to CMS’s
security policies,’’ which encompasses
the limitations for additional disclosure
of CMS data (79 FR 50333). Such
provisions would similarly apply to
States that receive MA encounter data
under the proposed amendments to
§ 422.310(f) here.
95 2023 Medicare Trustees Report https://
www.cms.gov/oact/tr.
96 https://www.cms.gov/files/document/
managedcareenrollmenttrendsdatabrief20122021.pdf.
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78527
As stated in the August 2014 final
rule, the data described in paragraphs
(a) through (d) would include those
elements that constitute an encounter
data record, including contract, plan,
and provider identifiers, with the
exception of disaggregated payment data
(79 FR 50325). In accordance with
§ 422.310(f)(2)(iv), we aggregate
payment data to protect commercially
sensitive information.
1. Expanding and Clarifying the
Programs for Which MA Encounter Data
May Be Used for Certain Allowable
Purposes
As we stated in the Medicare
Program; Hospital Inpatient Prospective
Payment Systems for Acute Care
Hospitals and the Long-Term Care
Hospital Prospective Payment System
and Fiscal Year 2015 Rates; Quality
Reporting Requirements for Specific
Providers; Reasonable Compensation
Equivalents for Physician Services in
Excluded Teaching Hospitals; Provider
Administrative Appeals and Judicial
Review; Enforcement Provisions for
Organ Transplant Centers; and
Electronic Health Record (EHR)
Incentive Program proposed rule
(hereafter referred to as the May 2014
proposed rule; 79 FR 27978), using MA
encounter data enables us, our
contractors, and external entities to
support Medicare program evaluations,
demonstration designs, and effective
and efficient operational management of
the Medicare program, encourages
research into better ways to provide
health care, and increases transparency
in the administration of the Medicare
program (79 FR 28281 through 28282).
However, because States lack access to
MA encounter data, States’ ability to
conduct activities for dually eligible
individuals enrolled in MA plans is
limited. As Medicare is the primary
payer for dually eligible individuals,
States generally lack comprehensive
data on care provided to dually eligible
individuals enrolled in MA. Over the
years, various States have requested that
CMS share MA encounter data for
dually eligible individuals to better
coordinate care, conduct quality
improvement activities, support
program design, conduct evaluations,
and improve efficiency in the
administration of the Medicaid program.
Our current regulation text at
§ 422.310(f)(1)(vi) (evaluations and
analysis to support the Medicare
program) and (vii) (activities to support
administration of the program) specifies
that for these purposes, the encounter
data must be used for the Medicare
program. Therefore, though
§ 422.310(f)(2) permits CMS to release
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MA encounter data to States for the
purposes listed in paragraph (f)(1),
§ 422.310(f)(1)(vi) and (vii) do not
clearly permit CMS to release MA
encounter data to States to support
Medicaid program evaluations and
analysis or to support administration of
the Medicaid program.
We are proposing to add ‘‘and
Medicaid program’’ to the current MA
encounter data use purposes codified at
§ 422.310(f)(1)(vi) and (vii). These
additions would enable CMS to use the
data and release it (in accordance with
§ 422.310(f)(2) and (3)) for the purposes
of evaluation and analysis and program
administration for Medicare, Medicaid,
or Medicare and Medicaid combined
purposes. We believe that our release of
MA encounter data for these data use
purposes that support the Medicare and
Medicaid programs would generally be
to the States and would support our
responsibility to improve the quality of
health care and long-term services for
dually eligible individuals; improve
care continuity, ensuring safe and
effective care transitions for dually
eligible individuals; improve the quality
of performance of providers of services
and suppliers under the Medicare and
Medicaid programs for dually eligible
individuals; and support State efforts to
coordinate and align acute care and
long-term care services for dually
eligible individuals with other items
and services furnished under the
Medicare program.
As stated above, CMS data sharing
procedures apply to the release of MA
encounter data in accordance with
§ 422.310(f)(2) and contain provisions
regarding access to and storage of CMS
data to ensure that beneficiary
identifiable information is protected.
We make other data available to external
entities, including States, in accordance
with CMS data sharing procedures and
Federal laws, including but not limited
to the Privacy Act of 1974. We review
data requests for appropriate use
justifications, including updated or
amended use justifications for existing
data requests. We employ data sharing
agreements, such as a Data Use
Agreement and Information Exchange
Agreement, that limit external entities to
CMS-approved data uses and disclosure
of CMS data. For example, States that
request data from CMS for care
coordination and program integrity
initiatives may disclose the data to State
contractors, vendors, or other business
associates. In accordance with CMS data
sharing agreements, these State
contractors, vendors, or other business
associates must also follow the terms
and conditions for use of the CMS data,
including limiting use of the CMS-
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provided data only for approved
purposes. This would mean that, under
this proposal, a State receiving MA
encounter data for care coordination
may disclose MA encounter data to
Medicaid managed care plans to
coordinate services for enrolled dually
eligible individuals. Comments
submitted on the August 2014 final rule
cited concerns that access to MA
encounter data by competitors of the
various MA organizations that are
required to submit data could permit a
competitor to gain an advantage by
trending cost and utilization patterns
over a number of years. Given that
§ 422.310(f)(2)(iv) provides for
aggregation of dollar amounts reported
for the associated encounter to protect
commercially sensitive data and that
any release of MA encounter data to
States would comply with applicable
statutes, regulations, and processes
including those described above, we
believe that concern around potential
competitive advantage is mitigated if the
risk exists at all. As stated in the August
2014 final rule, we believe that CMS
data sharing procedures and review of
use justifications ‘‘strikes an appropriate
balance between the significant benefits
of furthering knowledge’’ and concerns
regarding the release of risk adjustment
data, including for beneficiary privacy
or commercially sensitive information
of MA plans (79 FR 50328). Consistent
with what we stated in the August 2014
final rule, CMS data sharing agreements
have enforcement mechanisms, and data
requestors acknowledge these
mechanisms. For example, penalties
under section 1106(a) of the Social
Security Act [42 U.S.C. 1306(a)],
including possible fines or
imprisonment, and criminal penalties
under the Privacy Act [5 U.S.C.
552a(i)(3)] may apply, as well as
criminal penalties may be imposed
under 18 U.S.C. 641 (79 FR 50333).
Requestors of CMS data, such as States,
are responsible for abiding by the law,
policies, and restrictions of the data
sharing agreements—which extends to
any downstream disclosures of the data
to State contractors, vendors, or other
business associates—as condition of
receiving the data. We intend to only
approve requests for MA encounter data
that have clear written data use
justifications and identify any
downstream disclosure—such as to
State contractors, vendors, or other
business associates—for each requested
purpose. We have not identified any
issues regarding competitive harm or
disadvantage in our current data sharing
programs.
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Under this proposal, we would be
able to use MA encounter data and
disclose it—subject to the other
limitations and protections specified in
§ 422.310(f) and other applicable laws
and regulations—to States to perform
evaluations and analysis, which would
include program planning for dually
eligible individuals. For example, access
to MA encounter data could support
States’ analysis of geographic trends to
create targeted community outreach and
education, including identification of
geographic areas with higher rates of
dementia, diabetes, or emergency room
visit overutilization; and evaluation of
current Medicaid initiatives, including
tracking efficacy of opioid overuse and
misuse programs by monitoring service
utilization for those with opioid
dependency, evaluating appropriate and
inappropriate use of antibiotic and
psychotropic medications, and
analyzing deaths among individuals
with opioid use disorder. Currently,
States generally only receive Medicare
FFS data from CMS under current
authorities, which results in an
incomplete assessment of the dually
eligible population. Under this
proposal, States could request MA
encounter data for all of the dually
eligible enrollees they serve and include
this growing portion of the dually
eligible population in their data analysis
and efforts to improve outcomes for
low-income older adults and people
with disabilities who are enrolled in the
Medicaid program.
We are taking this opportunity to
make a clarification related to the
existing program administration
purpose, as specified in
§ 422.310(f)(1)(vii). In the August 2014
final rule, we stated that, in addition to
use of these data for review of bid
validity and MLR, we expected there
would be additional potential uses for
these data as part of the program
administration purpose, such as the
development of quality measures (79 FR
50326). Consistent with our expectation
at that time, we are clarifying here that
care coordination would be an
allowable use for these data as part of
the purpose currently codified at
§ 422.310(f)(1)(vii)—for activities to
support the administration of the
Medicare program—which includes
activities that are not within the scope
of the other permitted uses defined at
§ 422.310(f)(1). Similar to quality
measure development, a use we
explicitly named, care coordination is
critical to ensuring that individuals
receive effective and efficient care,
especially when services may be
covered under multiple health care
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programs, as is the case for dually
eligible individuals who are enrolled in
Medicaid and an MA plan. We believe
use and release of MA encounter data to
States to support administering the
Medicaid program, including to
coordinate care and improve quality of
care for Medicaid-covered individuals,
is appropriate. For example, in
administering the Medicaid program, a
State may need MA encounter data to
coordinate care for dually eligible
individuals, which may include
identification of individuals at high risk
of institutional placement or other
undesirable outcomes based on past
service utilization; coordination of
services from the MA plan’s coverage of
an inpatient stay to Medicaid coverage
of subsequent home and communitybased services; coordination of
Medicaid-covered services in a skilled
nursing facility for a dually eligible
individual after reaching the limits of
the individual’s coverage through the
MA plan; monitoring nursing facility
quality of care, including through
tracking rates of hospitalization and
emergency room visits; and
coordination of physical health services
with behavioral health services, where
Medicaid coverage differs from the MA
plan’s coverage.
We welcome public comment on this
proposal.
2. Adding an Additional Condition
Under Which MA Encounter Data May
Be Released Prior to Reconciliation
Section 422.310(f)(3) describes the
circumstances under which we may
release MA encounter data. Specifically,
our current regulation provides that MA
encounter data will not become
available for release unless the risk
adjustment reconciliation for the
applicable payment year has been
completed or under certain emergency
preparedness or extraordinary
circumstances. Section 422.310(g)
specifies the deadlines that we use to
determine which risk adjustment data
submissions we consider when
assigning the risk adjustment factors for
payment in a given payment year. This
section also establishes a reconciliation
process to adjust payments for
additional data submitted after the end
of the MA risk adjustment data
collection year (meaning the year the
item or service was furnished to the MA
enrollee) but before the established
deadline for the payment year, which
can be no earlier than January 31 of the
year following the payment year. This
reconciliation period provides MA
organizations an opportunity to update
or submit encounter data records and
chart review records to be considered
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for risk adjustment and payment in the
applicable payment year. Section
422.310(b)(1) requires MA organizations
to submit data for all items and services
provided; therefore, MA organizations
must continue to submit encounter data
records and data corrections after the
final submission deadline if needed.
(We note that there are limitations on
which submissions after the final
reconciliation deadline may be used in
risk adjustment. See § 422.310(g).) The
timing limitation on release of MA
encounter data in our current regulation
is tied to the established deadline for
the payment year, and it results in a
data lag of at least 13 months after the
end of the MA risk adjustment data year
(that is, the year during which the
services were furnished), before CMS
may release the MA risk adjustment
data for the purposes described in
§ 422.310(f)(1).97 We believe there will
be increased utility of MA encounter
data for Medicaid programs if the data
is released before final reconciliation for
coordination of care under the allowable
purpose in § 422.310(f)(1)(vii). We
believe that the reasons and concerns
we identified when adopting the delay
in release of MA encounter data can be
sufficiently taken into account by CMS
as part of evaluating a request to use the
data for specific purposes and
determining whether to release the data.
Further, in many cases, those reasons
and concerns likely do not sufficiently
apply in the context of care
coordination to require a delay in
releasing the data as discussed further
below.
In order to improve utility of MA
encounter data for certain approved
purposes, we propose to add a new
subsection § 422.310(f)(3)(v) to allow for
MA encounter data to be released to
States for the purpose of coordinating
care for dually eligible individuals
when CMS determines that releasing the
data to a State Medicaid agency before
reconciliation is necessary and
appropriate to support activities and
uses authorized under paragraph
(f)(1)(vii). As discussed above, the
proposed amendments to
§ 422.310(f)(1)(vii) would expand the
scope of that provision to include using
the data to support administration of the
Medicaid program, and in our
discussion we clarified that
coordination of care activities are within
the scope of activities that support
administration of these health care
97 ‘‘Deadline for Submitting Risk Adjustment Data
for Use in Risk Score Calculation Runs for Payment
Years 2021, 2022, 2023, and 2024’’ HPMS memo.
https://www.cms.gov/files/document/
py20202021202220232024paymentrunnotice
508g.pdf.
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programs. We are specifying care
coordination for our proposal for release
of MA encounter data prior to
reconciliation as we believe providing
States access to this more timely data is
critical to effectively coordinating care,
is directly tied to our responsibility to
support States’ efforts to coordinate and
align care and services for dually
eligible individuals, and furthers our
goal to improve care continuity and
ensure safe and effective care transitions
for dually eligible individuals (see 42
U.S.C. 1315B) while accommodating the
concerns that led us to adopt the time
limits in § 422.310(f)(3). Together, the
proposed changes to § 422.310(f)(1)(vii)
and (f)(3)(v) would improve timeliness
of the MA encounter data we make
available to States for coordination of
care for dually eligible individuals.
As discussed above, a growing
number of dually eligible individuals
are enrolled in MA plans. To ensure that
these individuals are receiving high
quality, efficient care, it is essential that
States have access to information on
their service utilization in a timely
manner. Without timely, comprehensive
beneficiary data, which are not
currently available to States for all MA
enrollees, States cannot conduct care
coordination for dually eligible
individuals in MA. For example:
• A State looks to coordinate care
related to the COVID–19 pandemic for
individuals concurrently enrolled in
Medicaid and MA plans, such as by
identifying people who had COVIDrelated hospitalizations. In accordance
with § 422.310(f)(3), our current release
schedule of MA encounter data for
research purposes limits available MA
encounter data to between 13 and 25 or
more months after the service was
rendered.98 Therefore, with the
exception of those dually eligible
individuals enrolled in an MA plan
under a demonstration or in an MA D–
SNP, where the State can use the
contract with the plan in accordance
with § 422.107 to obtain MA encounter
data or other notifications under
§ 422.107(d)(1) from the D–SNP, States
could not access service utilization data
for MA enrollees to coordinate care for
dually eligible individuals who had a
COVID-related hospitalization in a
timely manner. Instead, the States
would need to wait for the MA
encounter data until after risk
adjustment reconciliation for the
applicable payment year has been
completed—which would be months
after a dually eligible individual
required post-hospitalization follow-up
98 https://resdac.org/cms-news/2021-preliminarymedicare-encounter-data-now-available.
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care. However, if States could access
timely MA encounter data, then
Medicaid care coordinators could follow
up after a COVID-related hospitalization
to ensure adequate care related to
mental health treatment, coordinate
approval of durable medical equipment,
or ensure physical or rehabilitation
therapy while reducing redundant visits
or delays in care to the dually eligible
individual.
• A State uses a predictive modeling
algorithm—using past service
utilization, diagnosis, and other data—
to identify people at high risk for poor
outcomes or institutional placement.
The State then targets those high-risk
individuals in the Medicaid program for
an intensive care management
intervention and helps connect such
individuals to necessary supports and
services. In this case, the timeliness of
information on service utilization (for
example, an individual discharged from
a skilled nursing facility stay could
benefit by transition to Medicaid home
and community-based services) is more
important than the completeness of the
available data (that is, whether
additional subsequent encounters may
later become available) so the State can
coordinate care and deliver the
intervention when an individual most
needs it.
We believe the two examples above
represent cases where we would
consider sharing MA encounter data
with State Medicaid agencies prior to
reconciliation as necessary and
appropriate to support coordinating care
for dually eligible individuals. States
cannot rely on MA encounter data after
final reconciliation because
coordinating services requires access to
timely data. For these activities, States
rely more on timely data about service
utilization than on complete data.
Improving access to timely MA
encounter data and ensuring Medicaid
programs can coordinate care for dually
eligible individuals supports our goal to
providing dually eligible individuals
full access to the benefits to which they
are entitled (42 U.S.C. 1315B(d)).
As discussed above, State Medicaid
agencies cannot effectively coordinate
care for individuals using data that is
more than one or two years old. We
recognize that the MA encounter data
may be subject to edits before final
reconciliation given the deadline for
submission of risk adjustment data
under § 422.310(g), which states that the
final submission deadline is a date no
earlier than January 31 of the year
following the payment year, or that data
from some MA organizations or for
some enrollees may not be available as
quickly as data from or for others.
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However, we believe that earlier release
of MA encounter data to States for the
purpose of care coordination for dually
eligible individuals would be
appropriate and, as stated above, many
of the reasons and concerns to require
a delay releasing MA encounter data
likely do not sufficiently apply in the
context of care coordination. Care
coordination activities require State
Medicaid agencies, or their contractors,
to identify and contact individuals who
have received, or are in need of, services
from their providers. Since States would
use the MA encounter data to identify
opportunities for care improvement
such as improving transitions of care or
to promote the use of underutilized
services, we do not foresee any risk to
individuals from States using data that
may be subject to change in the future.
States would be able to use the data to
identify more dually eligible individuals
who are potentially in need of
Medicaid-covered services. States are
not required to act on the data and can
address potential data concerns arising
from using MA encounter data before
final reconciliation as States have
experience using Medicare data that
may not be final for effective care
coordination. In fact, many States
already obtain timely Medicare FFS
claims with a lag between 14 days to
three months, depending on the data
file, for uses such as care coordination,
quality improvement, and program
integrity in the Medicaid program.
These Medicare FFS claims may also be
subject to change subsequent to the
States’ receipt of the data, yet we are not
aware of any problems in these use
cases caused by CMS sharing data that
is still subject to change. Because the
MA encounter data released to States
would be for care coordination
purposes, we do not anticipate any
negative impacts from any potential
subsequent changes to the encounters.
MA encounter data made available to
States prior to reconciliation would not
contain disaggregated payment
information, in accordance with
§ 422.310(f)(2)(iv). Unlike MA encounter
data used for CMS payment purposes,
the pre-reconciliation MA encounter
data would have no impact on plan
payment. Under this proposal, release of
the MA encounter data for care
coordination purposes must be
necessary and appropriation to support
administration of the Medicaid program;
we do not believe it would be
appropriate or necessary to use the MA
data released on this accelerated
schedule for payment purposes.
Coordination of care is a clear
situation where more timely MA
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encounter data is needed for effective
intervention without invoking risks that
we have cited in the past about sharing
MA risk adjustment data before final
reconciliation. The timing limits in
§ 422.310(f)(3) were adopted in the
August 2014 final rule in response to
comments expressing concern about
release of the MA risk adjustment data
(79 FR 50331 through 50332). In that
prior rulemaking, some commenters
cited concerns about release of MA
encounter data submitted in the initial
years due to concerns regarding systems
development and submission
challenges. We believe these concerns
are mitigated by the subsequent years
since the implementation of the August
2014 final rule that have resulted in
accumulation of experience submitting,
reviewing, and using MA encounter
data in accordance with § 422.310(f). In
addition, CMS maintains several checks
and edits in the encounter data system
to minimize duplicate, incomplete, or
inappropriate data stored in the
encounter data system. We reiterate that
this proposal to amend paragraph (f)(3)
would only permit the release of MA
encounter data to State Medicaid
agencies for care coordination for dually
eligible individuals.
We also noted in prior rulemaking
that our approach to reviewing requests
for MA encounter data from external
entities would incorporate the Medicare
Part A/B and Part D minimum necessary
data policy, with additional restrictions
to protect beneficiary privacy and
commercially sensitive information of
MA organizations and incorporated that
limitation into paragraph (f)(2) (79 FR
50327). Therefore, this limitation would
also apply when reviewing State
requests for MA encounter data under
the proposed expansion of
§ 422.310(f)(1)(vi) and (vii), as well as to
any State requests for MA encounter
data before the reconciliation deadline
to support coordination of care. CMS
data sharing procedures include a
review team that assesses data requests
for minimum data necessary and
appropriate use justifications for care
coordination, and we would only
approve release of MA encounter data
for any data requests where the
requestor has sufficiently demonstrated
that the request satisfies all
requirements of § 422.310(f). Other
commenters on the August 2014 final
rule expressed concerns that MA
organizations are able to delete, replace,
or correct MA encounter data before the
reconciliation deadline, which could
potentially result in inaccurate or
incomplete MA encounter data and that
incomplete or inaccurate data should
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not be used or released for the purposes
outlined in § 422.310(f). As noted in the
prior rulemaking, we consider what
disclaimers are appropriate to provide
to requestors to understand the
limitations of the MA encounter data
(79 FR 50329 through 50330).99 As
noted above, States, or their contractors,
are not required to act on the data and
have experience using Medicare FFS
claims that may not be final for effective
care coordination. We are not aware of
any care coordination issues that have
arisen as a result of our sharing more
Medicare FFS current data with States
under our current data sharing
processes. Additionally, CMS makes
available technical assistance to States
to help with State use and
understanding of Medicare data; we
intend to extend this technical
assistance to States requesting MA
encounter data to mitigate issues arising
from non-final data. We will evaluate
the potential concerns arising from
using MA encounter data before final
reconciliation when determining
whether to release MA encounter data to
States for care coordination activities for
dually eligible individuals to support
administration of the Medicare and
Medicaid programs.
Finally, we propose that these
amendments to § 422.310(f) would be
applicable upon the effective date of the
final rule if these proposals are finalized
as proposed. As outlined in section I.A.,
the majority of the proposals in this rule
are proposed to be applicable beginning
January 1, 2025. We do not believe that
delaying the applicability of these
proposed amendments beyond the
effective date of the final rule is
necessary because these proposals
address CMS’s authority to use and
share MA encounter data but do not
impose any additional or new
obligations on MA organizations.
We welcome public comment on this
proposal.
3. Solicitation of Comments on Use of
MA Encounter Data To Support
Required Medicaid Quality Reporting
In the final rule titled ‘‘Medicaid
Program and CHIP; Medicaid and
Children’s Health Insurance Program
(CHIP) Core Set Reporting,’’ which
appeared in the Federal Register on
August 31, 2023 (88 FR 60278) (‘‘August
2023 final rule’’), we established
mandatory Core Set reporting
requirements for States, as set forth in
the Bipartisan Budget Act of 2018 (Pub.
L. 115–123, enacted February 9, 2018)
99 For example, see the CCW Medicare Encounter
Data User Guide: https://www2.ccwdata.org/web/
guest/user-documentation.
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and the Substance Use-Disorder
Prevention that Promotes Opioid
Recovery and Treatment for Patients
and Communities Act (SUPPORT Act)
(Pub. L. 115–271, enacted October 24,
2018). The new Core Set reporting
requirements apply to all States with
Medicaid and CHIP programs and
include all Medicaid and CHIP
participants, including dually eligible
individuals enrolled in MA plans.
States can only report certain Child
and Adult Core Set measures by using
utilization data. For reporting related to
dually eligible individuals, this means
accessing Medicare data. For dually
eligible individuals in Medicare FFS,
we make available Medicare FFS claims
and events data to States to support,
among other purposes, quality reporting
for Child and Adult Core Set measures.
But we do not currently make available
MA encounter data to States in the same
way. Although we have not shared MA
encounter data broadly for Medicaid
quality performance and quality
improvement purposes through existing
CMS data sharing programs, States may
use their contracts with MA D–SNPs,
which are required under § 422.107, to
obtain Medicare data about the dually
eligible individuals enrolled in those
plans; this contractual ability to obtain
MA encounter data through contracts
with plans is specific to D–SNPs and
does not include all MA plans.
Therefore, we anticipate that reporting
on dually eligible individuals enrolled
in MA plans will be optional (that is,
not mandatory) for States to include in
reporting of the Child and Adult Core
Sets. As we acknowledged in the August
2023 final rule, ‘‘We recognize that
States must obtain, link, and analyze
Medicare data in order to report the
Child and Adult Core Sets of measures
for fee-for-service beneficiaries, and that
States do not have access to encounter
data for Medicare Part C (Medicare
Advantage), and we expect to phase in
required reporting of Child and Adult
Core Set measures for dually eligible
beneficiaries’’ (88 FR 60298 through
60299).
In accordance with current regulation
text at § 422.310(f)(2), States may
request MA encounter data for the
purpose described at
§ 422.310(f)(1)(iv)—to conduct quality
review and improvement activities—
which could support Medicaid Child
and Adult Core Set reporting. However,
the limitations in paragraph (f)(3) on
sharing MA encounter data before final
reconciliation would frustrate our desire
for States to use the data to support
timely Child and Adult Core Set
reporting. The August 2023 final rule
establishes a schedule through which
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78531
Core Set reporting to CMS begins in the
fall of 2024, applicable to data collected
during the 2024 reporting period.
However, as stated above, our current
release schedule of MA encounter data
in accordance with § 422.310(f)(3) limits
available MA encounter data to between
13 and 25 or more months after the
service was rendered. Therefore, in the
fall of 2024, during the 2024 Core Set
reporting period, we anticipate only
making available MA encounter data for
services furnished in the 2022 year. This
means that based on the current
limitations in paragraph (f)(3), States
would be unable to report on 2023
services received by dually eligible
individuals enrolled in an MA plan to
CMS in the fall of 2024 for the Child and
Adult Core Set measures. With over half
of dually eligible individuals enrolled in
MA plans, we believe it is essential that
State Child and Adult Core Set reporting
eventually include that population. We
are soliciting comments on making MA
encounter data available to States to
support Child and Adult Core Set
reporting as efficiently as possible while
complying with § 422.310(f) and
balancing considerations related to the
timeliness of quality reporting with
accuracy and completeness. We intend
to take such comments into account in
developing future policies and potential
additional proposed revisions to
§ 422.310.
J. Standardize the Medicare Advantage
(MA) Risk Adjustment Data Validation
(RADV) Appeals Process
In this proposed rule, we are
proposing to revise certain timing issues
in terms of when RADV medical record
review determination and payment error
calculation appeals can be requested
and adjudicated. Specifically, we are
proposing that Medicare Advantage
(MA) organizations must exhaust all
levels of appeal for medical record
review determinations before the
payment error calculation appeals
process can begin. We believe that this
clarification is necessary because RADV
payment error calculations are directly
based upon the outcomes of medical
record review determinations. We also
propose several other changes to our
regulatory appeals process to conform
with these proposed revisions.
Section 1853(a)(1)(C) of the Act
requires that CMS risk-adjust payments
made to MA organizations. Risk
adjustment strengthens the MA program
by ensuring that accurate payments are
made to MA organizations based on the
health status and demographic
characteristics of their enrolled
beneficiaries, and that MA organizations
are paid appropriately for their plan
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enrollees (that is, less for healthier
enrollees who are expected to incur
lower health care costs, and more for
less healthy enrollees who are expected
to incur higher health care costs).
Making accurate payments to MA
organizations also ensures we are
safeguarding Federal taxpayer dollars.
Contract-level RADV audits are CMS’s
main corrective action for overpayments
made to MA organizations when there is
a lack of documentation in the medical
record to support the diagnoses reported
for risk adjustment. CMS conducts
RADV audits of MA organizationsubmitted diagnosis data from a
selection of MA organizations for
specific payment years to ensure that
the diagnoses they submitted are
supported by their enrollees’ medical
records. CMS can collect the improper
payments identified during CMS and
Department of Health and Human
Services Office of Inspector General
(HHS–OIG) audits, including the
extrapolated amounts calculated by the
OIG. The RADV audit appeals process,
as outlined in 42 CFR 422.311, is
applicable to both CMS and HHS–OIG
audits and is therefore referred to as the
‘‘MA RADV audit appeals process.’’
Additional information regarding CMS’s
contract level RADV audits was
outlined in the RADV final rule, CMS–
4185–F2, published on February 1,
2023.100
1. Current MA RADV Appeals Process
CMS previously established a process
after notice and comment rulemaking
for MA organizations to appeal RADV
audit findings as outlined by provisions
at 42 CFR 422.311(c)(6) through (8).
Once review of the medical records
submitted by MA organizations to
support audited HCCs is completed and
overpayment amounts are calculated,
HHS (CMS or HHS–OIG) issues an audit
report to each audited MA organization
contract. In accordance with
§ 422.311(b)(1), this audit report
includes the following:
• Detailed enrollee-level information
relating to confirmed enrollee HCC
discrepancies.
• The contract-level RADV-payment
error estimate in dollars.
• The contract-level payment
adjustment amount to be made in
dollars.
• An approximate timeframe for the
payment adjustment.
• A description of the MA
organization’s RADV audit appeal
rights.
100 88 FR 6643; https://www.federalregister.gov/
documents/2023/02/01/2023-01942/medicare-andmedicaid-programs-policy-and-technical-changesto-the-medicare-advantage-medicare.
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The MA RADV audit appeals process
begins once MA organizations are
notified of their audit findings via a
RADV audit report. MA organizations
have 60 days from the date of issuance
of a RADV audit report to file a written
request for appeal and must follow the
Secretary’s RADV audit appeals
procedures and requirements under
§ 422.311. MA organizations may appeal
RADV medical record review
determinations and/or the MA RADV
payment error calculation and must
specify which findings the MA
organization is appealing when
requesting an appeal of a RADV audit
finding.
Under CMS’s existing RADV audit
appeals regulations under 42 CFR
422.311(c)(6) through (8), the MA RADV
administrative audit appeals process
consists of three levels: reconsideration,
hearing, and CMS Administrator review.
Below is a summary of the three levels
of appeal for background information
only. This regulation is not proposing to
revise the basic structure of these three
levels of appeal.
a. Reconsideration
Reconsideration is the first stage of
the RADV audit appeals process. When
appealing a medical record review
determination, the MA organization’s
written request must specify the audited
HCC(s) that it wishes to appeal and
provide a justification of why the
audited HCC(s) should not have been
identified as an error. When appealing
a payment error calculation, the MA
organization’s written request must
include its own RADV payment error
calculation that clearly indicates where
HHS’ payment error calculation was
erroneous, as well as additional
documentary evidence pertaining to the
calculation of the error that the MA
organization wishes the reconsideration
official to consider. For payment error
calculation appeals, a third-party who
was not involved in the initial RADV
payment error calculation reviews the
HHS and MA organization’s RADV
payment error calculations and
recalculates, as appropriate, the
payment error using the appropriate
payment error calculation method for
the relevant audit.
The reconsideration official issues a
written reconsideration decision to the
MA organization, and this decision is
considered final unless the MA
organization disagrees with the
reconsideration official’s decision and
submits a valid request for CMS hearing
officer review. A new audit report is
subsequently issued for either a medical
record review determination
reconsideration or a payment error
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calculation reconsideration only if the
reconsideration official’s decision is
considered final.
b. Hearing Officer Review
An MA organization that disagrees
with the reconsideration decision may
request a hearing officer review in
accordance with procedures and
timeframes established by CMS under
42 CFR 422.311(c)(7). If the MA
organization appeals the medical record
review reconsideration determination,
the written request for RADV hearing
must include a copy of the written
decision of the reconsideration official,
specify the audited HCC(s) that the
reconsideration official confirmed as
being in error, and explain why the MA
organization disputes the
reconsideration official’s determination.
If the MA organization appeals a RADV
payment error calculation, the written
request for RADV hearing must include
a copy of the written decision of the
reconsideration official and the MA
organization’s RADV payment error
calculation that clearly specifies where
the MA organization believes the
Secretary’s payment error calculation
was erroneous.
The hearing officer has the authority
to decide whether to uphold or overturn
the reconsideration official’s decision
and, pursuant to this decision, sends a
written determination to CMS and the
MA organization explaining the basis
for the decision. If necessary, a third
party who was not involved in the
initial RADV payment error calculation
recalculates the RADV payment error
and issues a new RADV audit report to
the MA organization. For MA
organizations appealing the RADV
payment error calculation only, a third
party not involved in the initial RADV
payment error calculation recalculates
the MA organization’s RADV payment
error and issues a new RADV audit
report to the appellant MA organization
and CMS. The hearing officer’s decision
is final unless the decision is reversed
or modified by the CMS Administrator.
c. CMS Administrator Review
Under the existing RADV audit
appeals regulation at 42 CFR
422.311(c)(8), a request for CMS
Administrator review must be made in
writing and filed with the CMS
Administrator within 60 days of receipt
of the hearing officer’s decision. After
receiving a request for review, the CMS
Administrator has the discretion to elect
to review the hearing officer’s decision
or decline to review the hearing officer’s
decision. If the CMS Administrator
elects to review the hearing decision,
the CMS Administrator then will
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acknowledge the decision to review the
hearing officer’s decision in writing and
notify CMS and the MA organization of
their right to submit comments within
15 days of the date of the notification.
The CMS Administrator renders his or
her final decision in writing to the
parties within 60 days of acknowledging
his or her decision to review the hearing
officer’s decision. The decision of the
hearing officer becomes final if the CMS
Administrator declines to review the
hearing officer’s decision or does not
render a decision within 60 days.
2. Proposed Policies
In this proposed rule, we are revising
the timing of when a medical record
review determination and a payment
error calculation appeal can be
requested and adjudicated. Specifically,
we are proposing that MA organizations
must exhaust all levels of appeal for
medical record review determinations
before beginning the payment error
calculation appeals process. We believe
that this change is necessary because
RADV payment error calculations are
based upon the outcomes of medical
record review determinations and the
current regulatory language is somewhat
ambiguous regarding this point.
Adjudicating medical record review
determination appeals prior to payment
error calculation appeals alleviates
operational concerns for CMS and
burden on MA organizations by
preventing unnecessary appeals of
payment error calculations that will be
moot if revisions must be made to
payment error calculations based on
medical record review determination
appeal decisions.
Section 422.311(c)(5)(iii) states that,
‘‘for [MA organizations] that appeal both
medical record review determination
appeal and RADV payment error
calculation appeal [,] . . . the Secretary
adjudicates the request for the RADV
payment error calculation following
conclusion of reconsideration of the MA
organization’s request for medical
record review determination appeal.’’
The regulations also state that, for cases
in which an MA organization requests
both a medical record review
determination appeal and payment error
calculation appeal, ‘‘. . . an [MA
organization’s] request for appeal of its
RADV payment error calculation will
not be adjudicated until appeals of
RADV medical record review
determinations filed by the MA
organization have been completed and
the decisions are final for that stage of
appeal’’ [emphasis added]. This
language arguably addresses both those
cases in which the final adjudication is
reached during the reconsideration
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phase, as well as those that proceed to
the second and third level of appeal. We
propose to delete § 422.311(c)(5)(ii)(C),
which requires MA organizations
requesting both a medical record review
determination appeal and payment error
calculation appeal to file their written
requests for both appeals within 60 days
of the issuance of the RADV audit report
before the reconsideration level of
administrative appeal. Instead, we
propose that MA organizations may
request only a medical record review
determination appeal or payment error
calculation appeal for purposes of
reconsideration, and not both at the
same time. We propose to amend
§ 422.311(c)(5)(iii) by providing that MA
organizations who request a medical
record review determination appeal may
only request a payment error calculation
appeal after the completion of the
medical record review determination
administrative RADV appeal process.
An MA organization may also choose
to only appeal the payment error
calculation, and therefore, no preceding
medical record review determination
appeal would occur. MA organizations
choosing to only file a payment error
calculation appeal will not be able to
file a medical record review
determination appeal after the
adjudication of payment error
calculation appeal. At
§ 422.311(c)(5)(ii)(B), we propose to
specify that MA organizations will forgo
their medical record review
determination appeal if they choose to
only file a payment error calculation
appeal, because medical record review
appeals decisions need to be final prior
to adjudicating a payment error
calculation appeal.
At § 422.311(c)(5)(iii)(A) and (B), we
propose to specify that this process is
complete when the medical record
review determination appeals process
has been exhausted through the three
levels of appeal, or when the MA
organization does not timely request a
medical record review determination
appeal at the hearing officer or CMS
Administrator review stage. At proposed
§ 422.311(c)(5)(iii)(B), we propose that
an MA organization whose medical
record review determination appeal has
been completed has 60 days from the
issuance of a revised RADV audit report
to file a written request for payment
error calculation appeal, which specifies
the issues with which the MA
organization disagrees and the reasons
for the disagreements. If, as a result of
the medical record review
determination appeals process, no
original determinations are reversed or
changed, then the original audit report
will be reissued and the MA
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organization will have 60 days from the
date of issuance to submit a payment
error calculation appeal if it so chooses.
We also propose to revise
§ 422.311(c)(6)(i)(A) to clarify that an
MA organization’s request for medical
record review determination
reconsideration must specify any and all
audited HCCs from an audit report that
the MA organization wishes to dispute.
The intent of this revision is to permit
an MA organization to submit only one
medical record review determination
reconsideration request per audited
contract, which includes all disputed
audited HCCs, given that the results of
all audited HCCs for a given audited
contract are communicated as part of a
single audit report.
We also propose to revise
§ 422.311(c)(6)(iv)(B) to clarify that the
reconsideration official’s decision is
final unless it is reversed or modified by
a final decision of the hearing officer as
defined at § 422.311(c)(7)(x).
We also propose to add
§ 422.311(c)(6)(v) to clarify that the
reconsideration official’s written
decision will not lead to the issuance of
a revised audit report until the decision
is considered final in accordance with
§ 422.311(c)(6)(iv)(B). If the
reconsideration official’s decision is
considered final in accordance with
§ 422.311(c)(6)(iv)(B), the Secretary will
recalculate the MA organization’s RADV
payment error and issue a revised RADV
audit report superseding all prior RADV
audit reports to the appellant MA
organization.
We also propose to revise
§ 422.311(c)(7)(ix) to clarify that if the
hearing officer’s decision is considered
final in accordance with
§ 422.311(c)(7)(x), the Secretary will
recalculate the MA organization’s RADV
payment error and issue a revised RADV
audit report superseding all prior RADV
audit reports for the specific MA
contract audit. Once the medical record
review determination decision of the
adjudicator is final, we believe the same
entity that issued the audit report will
be able to revise the audit report by
applying any medical record review
determination findings that may have
changed through the medical record
review determination appeal process,
and issue a revised audit report in the
most efficient and streamlined manner.
Issuing a revised audit report is a
standard process and neutrally applies
the final adjudicator’s medical record
review determination findings. This
process is consistent with other long
standing CMS appeals program, such as
the Provider Reimbursement Review
Board (PRRB), where post-adjudication
revised determinations are issued by the
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same entity (e.g., the Medicare
Administrative Contractor for PRRB
cases) that issued the original
determination.
We also propose the following to
provide clarity to the Administrator’s
level of appeal:
• To revise § 422.311(c)(8)(iii) to add
a requirement that if the CMS
Administrator does not decline to
review or does not elect to review
within 90 days of receipt of either the
MA organization or CMS’s timely
request for review (whichever is later),
the hearing officer’s decision becomes
final.
• To revise § 422.311(c)(8)(iv)(A) to
clarify that CMS and the MA
organization may submit comments
within 15 days of the date of the
issuance of the notification that the
Administrator has elected to review the
hearing decision.
• To revise § 422.311(c)(8)(v) to
clarify that the requirement of the
Administrator to render a final decision
in writing within 60 days of the
issuance of the notice acknowledging
the decision to elect to review the
hearing officer’s decision and the 60 day
time period is determined by the date of
the final decision being made by the
Administrator, not by the date it is
delivered to the parties.
• To revise § 422.311(c)(8)(vi) to
clarify the scenarios in which the
hearing officer’s decision becomes final
after a request for Administrator review
has been made.
• To add new § 422.311(c)(8)(vii) that
states once the Administrator’s decision
is considered final in accordance with
§ 422.311(c)(8)(vi), the Secretary will
recalculate the MA organization’s RADV
payment error and issue a revised RADV
audit report superseding all prior RADV
audit reports to the appellant MA
organization.
We also propose to add new
§ 422.311(c)(9) to specify what actions
related to the RADV audit appeals
process constitute final agency action.
Specifically, in cases when an MA
organization appeals a payment error
calculation subsequent to an MRRD
appeal that has completed the
administrative appeals process, the
MRRD final decision and the payment
error calculation final decision will not
be considered a final agency action until
the related payment error calculation
appeal has completed the administrative
appeals process and a final revised audit
report has been issued.
We also propose to revise § 422.311(a)
to remove the word ‘‘annually’’ for
clarity, as the Secretary may conduct
RADV audits on differing cadences
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between the CMS and HHS–OIG RADV
audits.
IV. Benefits for Medicare Advantage
and Medicare Prescription Drug Benefit
Programs
A. Definition of ‘‘Basic Benefits’’
(§ 422.2)
Section 1852(a)(1)(B)(i) of the Act
defines the term ‘‘benefits under the
original Medicare Fee-for-Service
program option’’ for purposes of the
requirement in subparagraph (a)(1)(A)
that each MA organization provide
enrollees such benefits. Section
17006(c)(1) of the 21st Century Cures
Act (Pub. L. 114–255) (hereafter referred
to as ‘‘the Cures Act’’) amended section
1852(a)(1)(B)(i) of the Act by inserting
‘‘or coverage for organ acquisitions for
kidney transplants, including as covered
under section 1881(d)’’ after ‘‘hospice
care.’’ Per section 17006(c)(3) of the
Cures Act, this amendment applies with
respect to plan years beginning on or
after January 1, 2021. Thus, effective
January 1, 2021, MA plans no longer
cover organ acquisitions for kidney
transplants, including the costs for
living donors covered by Medicare
pursuant to section 1881(d) of the Act.
In the ‘‘Medicare and Medicaid
Programs; Policy and Technical Changes
to the Medicare Advantage, Medicare
Prescription Drug Benefit, Programs of
All-Inclusive Care for the Elderly
(PACE), Medicaid Fee-For-Service, and
Medicaid Managed Care Programs for
Years 2020 and 2021,’’ final rule (84 FR
15680), hereinafter referred to as the
April 2019 final rule and the January
2021 final rule, we amended the
definition of ‘‘basic benefits’’ at
§ 422.100(c)(1) to exclude coverage for
organ acquisitions for kidney
transplants, effective beginning in 2021,
in addition to the existing exclusion for
hospice care. In the June 2020 final rule,
we also amended several regulations to
address coverage of organ acquisition
for kidney transplants for MA enrollees,
with amendments to §§ 422.258,
422.322, and 422.306. However, we
inadvertently omitted making the same
type of revision to the ‘‘basic benefits’’
definition at § 422.2. We propose to
correct the definition of basic benefits at
§ 422.2 to add the exclusion of coverage
for organ acquisitions for kidney
transplants to § 422.2.
Specifically, we propose to revise the
‘‘basic benefits’’ definition at § 422.2 to
change the phrase ‘‘all Medicarecovered benefits’’ to ‘‘Part A and Part B
benefits’’ and correct the phrase
‘‘(except hospice services)’’ to include,
beginning in 2021, organ acquisitions
for kidney transplants (which includes
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costs covered under section 1881(d) of
the Act).
This proposal is a technical change to
align the definition of basic benefits
with existing law; therefore, neither an
economic impact beyond current
operating expenses nor an associated
paperwork burden are expected.
B. Evidence as to Whether a Special
Supplemental Benefit for the
Chronically Ill Has a Reasonable
Expectation of Improving the Health or
Overall Function of an Enrollee (42 CFR
422.102(f)(3)(iii) and (iv) and (f)(4))
The Balanced Budget Act (BBA) of
2018 included new authorities
concerning supplemental benefits that
may be offered to chronically ill
enrollees in Medicare Advantage (MA)
plans. We addressed these new
supplemental benefits extensively in the
Medicare Program; Contract Year 2021
Policy and Technical Changes to the
Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, and
Medicare Cost Plan Program (hereafter
referred to as ‘‘June 2020 final rule’’) (85
FR 33796, 33800–05), where we referred
to them as Special Supplemental
Benefits for the Chronically Ill (SSBCI).
As we summarized in the June 2020
final rule, we interpreted 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
chronically ill enrollees who meet the
definition established by the statute.
Section 1852(a)(3)(D)(ii)(II) of the Act
authorizes the Secretary to waive the
uniformity requirements generally
applicable to the benefits covered by
MA plans with respect to SSBCI.
Therefore, CMS may allow MA plans to
offer SSBCI that are not uniform across
the entire population of chronically ill
enrollees in the plans but that are
tailored and covered for an individual
enrollee’s specific medical condition
and needs (83 FR 16481–82).
In addition to limiting the eligibility
of enrollees who can receive SSBCI to
chronically ill enrollees, section
1852(a)(3)(D)(ii)(I) of the Act requires
that an item or service offered as an
SSBCI have a reasonable expectation of
improving or maintaining the health or
overall function of the chronically ill
enrollee. We codified this statutory
requirement as part of the definition of
SSBCI at § 422.102(f)(1)(ii).
As we provided in a Health Plan
Management System (HPMS)
memorandum dated April 24, 2019
(‘‘2019 HPMS memo’’ hereafter), SSBCI
can be in the form of:
• Reduced cost sharing for Medicarecovered benefits;
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• Reduced cost sharing for primarily
health-related supplemental benefits;
• Additional primarily health-related
supplemental benefits; and/or
• Non-primarily health-related
supplemental benefits.
To offer an item or service as an
SSBCI to an enrollee, an MA plan must
make at least two separate
determinations with respect to that
enrollee in order to satisfy the statutory
and regulatory requirements for these
benefits. First, the MA plan must
determine that an enrollee meets the
definition of ‘‘chronically ill enrollee.’’
Section 1852(a)(3)(D)(iii) of the Act
defines ‘‘chronically ill enrollee’’ as an
individual enrolled in the MA plan who
meets all of the following: (I) has one or
more comorbid and medically complex
chronic conditions that is lifethreatening or significantly limits the
overall health or function of the
enrollee; (II) has a high risk of
hospitalization or other adverse health
outcomes; and (III) requires intensive
care coordination. Per
§ 422.102(f)(1)(i)(B), CMS may publish a
non-exhaustive list of conditions that
are medically complex chronic
conditions that are life-threatening or
significantly limit the overall health or
function of an individual. This list is
currently the same as the list of chronic
conditions for which MA organizations
may offer chronic condition special
needs plans, which can be found in
section 20.1.2 of chapter 16–B of the
Medicare Managed Care Manual. We
require, at § 422.102(f)(3)(i), the MA
plan to have written policies for making
this determination and to document
each determination that an enrollee is a
chronically ill enrollee. Documentation
of this determination must be available
to CMS upon request according to
§ 422.102(f)(3)(ii).
Second, the MA plan must determine
that the SSBCI has a reasonable
expectation of improving or maintaining
the health or overall function of the
enrollee. Per § 422.102(f)(3)(iii), the MA
plan ‘‘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.’’ We also
require the MA plan to document ‘‘each
determination that an enrollee is eligible
to receive an SSBCI and make this
information available to CMS upon
request’’ at § 422.102(f)(3)(iv).
We do not define or definitively
interpret the phrase ‘‘has a reasonable
expectation of improving or maintaining
the health or overall function of the
enrollee’’ in regulation or policy
guidance. Rather, in a Health Plan
Management System (HPMS)
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memorandum dated April 24, 2019
(‘‘2019 HPMS memo’’ hereafter), we
provided MA plans with ‘‘broad
discretion in determining what may be
considered ‘a reasonable expectation’
when choosing to offer specific items
and services as SSBCI.’’ We granted MA
plans this discretion so that they might
effectively tailor their SSBCI offerings
and the eligibility standards for those
offerings to the specific chronically ill
population upon which the plan is
focusing.
We further indicated that ‘‘CMS will
provide supporting evidence or data to
an MA organization if CMS determines
that an MA plan may not offer a specific
item or service as an SSBCI because it
does not have a reasonable expectation
of improving or maintaining the health
or overall function of a chronically ill
enrollee.’’ In other words, we placed the
burden on CMS, and not the MA plan,
to generate evidence demonstrating
whether the ‘‘reasonable expectation’’
standard—a standard that we granted
broad discretion for an MA plan to
determine—has been met when offering
items or services as SSBCI.
Supplemental benefits, including
SSBCI, are generally funded using MA
plan rebate dollars.101 When submitting
an annual bid to participate in the MA
program, an MA organization includes
in its bid a Plan Benefit Package (PBP)
and Bid Pricing Tool for each of its
plans, where the MA organization
provides information to CMS on the
premiums, cost sharing, and
supplemental benefits (including
SSBCI) it proposes to offer. Since
issuing the 2019 HPMS memo, the
number of MA plans that offer SSBCI—
and the number and scope of SSBCI
offered by an individual plan—has
significantly increased. We have
observed these trends in reviewing PBPs
from MA plans submitted in the past
few years.
Based on our internal data, 101 MA
plans offered a food and produce benefit
in contract year 2020, while 929 MA
plans are offering this as an SSBCI in
contract year 2023.102 Similarly, 88 MA
plans offered transportation for nonmedical needs as an SSBCI in contract
year 2020. In contract year 2023, 478
MA plans are offering this as an
SSBCI.103 MA plans are also continuing
101 MA plan rebates are a portion of the amount
by which the bidding benchmark or maximum MA
capitation rate for a service area exceeds the plan’s
bid; MA plans are obligated to use the MA rebates
for the purposes specified in 42 CFR 422.266:
payment of supplemental benefits (including
reductions in cost sharing) or reductions in Part B
or Part D premiums.
102 Taken from internal data.
103 Taken from internal data.
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to identify items or services as SSBCI
that were not included as examples in
the 2019 HPMS memo. When an MA
plan is offering such a benefit, it
indicates this in the PBP 104 that it
submits with its bid. The MA plan
categorizes the benefit within our PBP
submission system as an ‘‘other’’ SSBCI
(a benefit designation within the PBP
submission system) and describes the
proposed new benefit in a ‘‘free text’’
field. While 51 MA plans offered an
‘‘other’’ non-primarily health-related
supplemental benefit in contract year
2020, 440 plans are offering at least one
‘‘other’’ non-primarily health related
SSBCI in contract year 2023—and 226
plans are offering at least two.105
Through SSBCI, MA organizations
can design and implement benefits,
including non-primarily health-related
benefits, that may be able to holistically
address various needs of chronically ill
enrollees. As these benefits become a
more significant part of the MA
program, we believe it is important to
update our processes for reviewing and
approving SSBCI to manage the growth
and development of new SSBCI
offerings, as well as to ensure
compliance with the statutory
requirements at section 1852(a)(3)(D).
Additionally, section 1854(b)(1)(C) of
the Act requires that MA plans offer the
value of MA rebates back to enrollees in
the form of payment for supplemental
benefits, cost sharing reductions, or
payment of Part B or D premiums. As
an increasing share of Medicare dollars
is going toward MA rebates that plans
are using to offer SSBCI, we believe that
revising the regulation to adopt greater
review and scrutiny of these benefits is
important for CMS to maintain good
stewardship of Medicare dollars,
including the MA rebates used to pay
for these benefits, and for ensuring that
the SSBCI offered are consistent with
applicable law and those most likely to
improve or maintain the health or
overall function of chronically ill
enrollees. Therefore, we propose to
update our processes to simultaneously
ensure effective program administration
and oversight, while enabling MA
organizations to offer SSBCI and
improve health outcomes for
chronically ill enrollees.
Currently, the burden is on CMS to
review SSBCI included in an MA
organization’s bid and determine
whether sufficient evidence or data
exists to demonstrate that it has a
104 A PBP is a set of benefits for a defined MA
(or Prescription Drug Plan) service area. The PBP
is submitted by MA organizations and PDP
sponsors to CMS for benefit analysis, marketing,
and beneficiary communication purposes.
105 Taken from internal data.
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reasonable expectation of improving or
maintaining the health or overall
function of a chronically ill enrollee.
Given the growth in the quantity and
type of SSBCI offerings and given the
associated burden increase on CMS in
reviewing and approving bids that
include SSBCI, we believe that it would
be more efficient for the MA
organization, rather than CMS, to
demonstrate that the reasonable
expectation standard has been met.
When CMS provides MA
organizations with broad latitude in
offering items or services as SSBCI and
in establishing what a ‘‘reasonable
expectation’’ means for a given SSBCI,
we believe that it is appropriate for the
MA organization, rather than CMS, to
identify supporting evidence or data to
support an SSBCI and to establish
compliance with the applicable law.
We are proposing that an MA
organization that includes an item or
service as SSBCI in its bid must be able
to demonstrate through relevant
acceptable evidence that the item or
service has a reasonable expectation of
improving or maintaining the health or
overall function of a chronically ill
enrollee. As part of shifting
responsibility this way, we are
proposing, as relevant to an MA
organization that includes SSBCI in its
bid, to: (1) require the MA organization
to establish, by the date on which it
submits its bid, a bibliography of
‘‘relevant acceptable evidence’’ related
to the item or service the MA
organization would offer as an SSBCI
during the applicable coverage year; (2)
require that an MA plan follow its
written policies (that must be based on
objective criteria) for determining
eligibility for an SSBCI when making
such determinations; (3) require the MA
plan to document denials of SSBCI
eligibility rather than approvals; and (4)
codify CMS’s authority to decline to
accept a bid due to the SSBCI the MA
organization includes in its bid and to
review SSBCI offerings annually for
compliance, taking into account the
evidence available at the time. In
addition, we propose to make a
technical edit to § 422.102(f)(1)(i)(A)(2)
to correct a typographical error. We
describe each proposal in greater detail
below.
First, we propose to redesignate what
is currently § 422.102(f)(3) to
§ 422.102(f)(4), and to address, at new
§ 422.102(f)(3), new requirements for
each MA plan that includes an item or
service as SSBCI in its bid. The MA
organization must be able to
demonstrate through relevant acceptable
evidence that the item or service to be
offered as SSBCI has a reasonable
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expectation of improving or maintaining
the health or overall function of a
chronically ill enrollee and must, by the
date on which it submits its bid to CMS,
establish a bibliography of all ‘‘relevant
acceptable evidence’’ concerning the
impact that the item or service has on
the health or overall function of its
recipient. The bibliography must be
made available to CMS upon request. As
part of this proposal, an MA
organization would be required to
include, for each citation in its written
bibliography, a working hyperlink to or
a document containing the entire source
cited. This proposal would apply only
to SSBCI offered in the form of
additional primarily health-related
supplemental benefits or SSBCI offered
in the form of non-primarily healthrelated supplemental benefits. It would
not apply to an SSBCI offered in the
form of reduced cost sharing, regardless
of the benefit for which it is offered. We
also intend, at this time, that the
proposal not apply to supplemental
benefits offered under the Value-Based
Insurance Design (VBID) Model
administered by the Center for Medicare
and Medicaid Innovation (CMMI),
unless CMMI incorporates this policy
within the VBID Model.
We also propose, in new paragraph
(f)(3)(iv), that the MA organization must
make its bibliography of relevant
acceptable evidence available to CMS
upon request. CMS may request and use
this bibliography, without limitation,
during bid review to assess whether
SSBCI offerings comply with regulatory
requirements, or during the coverage
year as part of CMS’s oversight
activities. CMS does not intend, at this
time, to require MA organizations to
submit these bibliographies as a matter
of course in submitting bids.
We propose that the term ‘‘relevant
acceptable evidence’’ would include
large, randomized controlled trials or
prospective cohort studies with clear
results, published in a peer-reviewed
journal, and specifically designed to
investigate whether the item or service
(that is proposed to be covered as an
SSBCI) impacts the health or overall
function of a population, or large
systematic reviews or meta-analyses
summarizing the literature of the same.
We further propose that the MA plan
must include in its bibliography all
relevant acceptable evidence published
within the 10 years preceding the month
in which the MA plan submits its bid.
Ideally, relevant acceptable evidence
should include studies and other
investigations specific to the chronic
conditions for which the MA
organization intends to target the SSBCI,
but we are not proposing to make this
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a requirement at this time. We are
concerned that relevant acceptable
evidence applicable to many SSBCI will
already be limited, and that requiring a
bibliography be limited to only studies
concerning certain chronic conditions
would discourage the development of
new SSBCI. Similarly, to the extent
there exists sufficient relevant
acceptable evidence that the item or
service meets the reasonable expectation
standard for a sample of a population,
an MA organization may still offer an
SSBCI to enrollees with a specific
chronic condition even in the absence of
any studies addressing the connection
between an item or service and its effect
on the health or overall function of
individuals with that condition.
We propose that, in the absence of
publications that meet these standards,
‘‘relevant acceptable evidence’’ for
purposes of the MA plan’s bibliography
could include case studies, Federal
policies or reports, and internal analyses
or any other investigation of the impact
that the item or service has on the
health or overall function of its
recipient. By ‘‘bibliography,’’ we mean a
list, and not a description, of scholarly
publications or other works, as we
describe below.
In our April 2023 final rule, we
discussed what constituted sufficiently
high-quality clinical literature in the
context of an MA organization
establishing internal clinical criteria for
certain Medicare basic benefits (88 FR
22189, 22197). We believe that those
standards are also applicable for
identifying ‘‘relevant acceptable
evidence’’ in the context of supporting
whether an item or service offered as
SSBCI has a reasonable expectation of
improving or maintaining the health or
overall function of a chronically ill
enrollee. Therefore, our proposal for
§ 422.102(f)(3)(ii) largely tracks the
language in § 422.101(b)(6) describing
acceptable clinical literature for
purposes of establishing internal
coverage criteria, but with revisions to
be specific to the context of SSBCI and
the reasonable expectation standard.
Literature that CMS considers to be
‘‘relevant acceptable evidence’’ for
supporting an SSBCI offering include
large, randomized controlled trials or
cohort studies or all-or-none studies
with clear results, published in a peerreviewed journal, and specifically
designed to answer a question relevant
to the requirements for offering and
covering SSBCI and how the MA plan
will implement the coverage—such as
the impact of structural home
modifications on health or overall
function. Literature might also include
that which involves large systematic
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reviews or meta-analyses summarizing
the literature specifically related to the
subject of the SSBCI—such as meal
delivery, availability of certain food or
produce, or access to pest control—
published in a peer-reviewed journal
with clear and consistent results. Under
this proposal, an MA organization
would be required to cite all such
available evidence in its bibliography,
and not just studies that present
findings favorable to its SSBCI offering.
We also propose that, in the absence
of literature that conforms to these
standards for relevant acceptable
evidence, an MA organization would be
required to include in its bibliography
evidence that is unpublished, is a case
series or report, or derived solely from
internal analyses within the MA
organization. In this way, our proposed
policy would deviate from the standard
we established for the type of evidence
necessary to support an MA
organization’s internal coverage criteria
for Medicare basic benefits. We believe
this deviation is appropriate as there is
relatively less research into the impact
of the provision on items or services
commonly offered as SSBCI on health or
overall function of chronically ill
individuals.
We are not proposing that relevant
acceptable evidence must directly
address whether there is a reasonable
expectation of improving or maintaining
the health or overall function of a
chronically ill enrollee with a specific
chronic illness or condition (conditions
that the MA plan would have identified
in its PBP submission), but such
materials may be more persuasive than
materials that only describe the impact
of certain items and services—
particularly non-primarily healthrelated items and services—on healthier
individuals or populations. Further, our
proposal is limited to SSBCI offered as
additional primarily health-related
supplemental benefits and nonprimarily health-related supplemental
benefits. We are not proposing to
require a bibliography for SSBCI that are
exclusively cost sharing reductions for
Medicare-covered benefits or primarily
health-related supplemental benefits, so
the regulation text is limited to SSBCI
that are items or services. Although we
are not proposing to apply this new
documentation requirement to cost
sharing reductions offered as SSBCI,
that type of SSBCI must also meet the
reasonable expectation standard to be
offered as SSBCI.
We believe that this proposal would
serve our goal of ensuring that SSBCI
regulatory standards are met—
specifically, that an item or service
covered as an SSBCI has a reasonable
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expectation of improving or maintaining
the health or overall function of a
chronically ill enrollee. We expect that
rigorous research like that we describe
above might be limited, and that some
studies may not produce results
favorable to the offering of an SSBCI.
However, when there are also favorable
studies, the existence of such
unfavorable studies does not necessarily
mean that there could not be a
‘‘reasonable expectation’’ that the SSBCI
would improve or maintain the health
or overall function of a chronically ill
enrollee. And it is not our goal that
mixed results in current literature—or
the lack of rigorous research at all—
would reduce innovation in SSBCI
offerings. We wish to continue to see
MA organizations identify new ways to
deliver helpful benefits to chronically ill
enrollees that can address their social
needs while also improving or maintain
the health or overall function of these
chronically ill enrollees. Our goal is to
ensure that SSBCI innovation occurs in
a manner that is grounded to the extent
possible in research, and that MA
organizations and CMS alike are
tracking to the most current research
relevant to SSBCI offerings. We believe
this proposal would continue to
promote SSBCI innovation while
helping to ensure that when Medicare
funds are used to offer SSBCI, such
offerings meet statutory requirements.
We solicit comments on our proposed
requirement that an MA organization
that includes an item or service as
SSBCI in its bid must, by the date on
which it submits its bid to CMS,
establish in writing a bibliography of all
relevant acceptable evidence concerning
the impact that the item or service has
on the health or overall function of its
recipient. We also solicit comments on
our definition of ‘‘relevant acceptable
evidence,’’ including the specific
parameters or features of studies or
other resources that would be most
appropriate to include in our definition.
We also solicit comments on our
proposal that, for each citation in the
written bibliography, the MA
organization would be required to
include a working hyperlink to or a
document containing the entire source
cited. Additionally, we solicit
comments on whether we should apply
this requirement to all items or services
offered as SSBCI, or whether there are
certain types or categories of SSBCI for
which this requirement should not
apply.
Second, for clarity, we propose to
explicitly require at redesignated
§ 422.102(f)(4)(iii) that an MA plan
apply its written policies, which must
be based on objective criteria, that it
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establishes for determining whether an
enrollee is eligible to receive an SSBCI.
The regulation currently requires MA
organizations to 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.
While we anticipate that MA plans are
already applying their written policies
that identify the eligibility criteria when
making these determinations, we
propose to make clear that an MA plan
must apply its written policies when
making SSBCI eligibility
determinations.
We are considering whether to
exclude the policies required by current
§ 422.102(f)(3) (that is, the requirements
we are proposing to redesignate to new
paragraph (f)(4)) from the general rule
reflected in § 422.111(d) that MA plans
may change plan rules during the year
so long as notice is provided to
enrollees. We solicit comments on
whether CMS should permit changes in
SSBCI eligibility policies during the
coverage year, and, if so, the limitations
or flexibilities that CMS should
implement that would still allow CMS
to provide effective oversight over
SSBCI offerings. The ability to change
plan rules during the year does not
permit changes in benefit coverage but
would include policies like utilization
management requirements, evidentiary
standards for a specific enrollee to be
determined eligible for a particular
SSBCI, or the specific objective criteria
used by a plan as part of SSBCI
eligibility determinations.
Third, we are proposing to amend
redesignated paragraph (f)(4)(iv) to
require that an MA plan document each
instance wherein the plan determines
that an enrollee is ineligible to receive
an SSBCI. Denials of coverage when an
enrollee requests an SSBCI are
organization determinations subject to
the rules in subpart M, including the
requirements related to the timing and
content of denial notices in § 422.568.
By fully documenting denials as
required by this proposal, MA
organizations should be better placed to
address any appeals, including when an
adverse reconsideration must be sent to
the independent review entity for
review. Similarly, requiring robust
documentation of denials of SSBCI by
MA organizations will make oversight
and monitoring by CMS easier and more
productive, should CMS request
documentation.
We solicit comments on our proposal
to require an MA plan to document its
findings that a chronically ill enrollee is
ineligible, rather than eligible, for an
SSBCI.
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Fourth, we are proposing to add
§ 422.102(f)(5) to codify CMS’s authority
to decline to approve an MA
organization’s bid, if CMS determines
that the MA organization has not
demonstrated, through relevant
acceptable evidence, that an SSBCI has
a reasonable expectation of improving
or maintaining the health or overall
function of the chronically ill enrollees
that the MA organization is targeting.
We clarify that while this proposal
would establish a specific basis on
which CMS may decline to approve an
MA organization’s bid, our authority to
enforce compliance with other
regulations and to negotiate bids (see
section 1854(a) of the Act and subpart
F) would not be limited by this
provision. As described in section
1854(a)(5)(C) of the Act, CMS is not
obligated to accept any or every bid
submitted by an MA organization, and
CMS may reject bids that propose
significant increases in cost sharing or
decreases in benefits offered under the
plan. Similarly, CMS’s authority to
review benefits to ensure nondiscrimination is not limited or affected
under this proposal. This proposal is
intended to clarify and establish that
CMS’s review of bids that include
SSBCI could include specific evaluation
of SSBCI and that CMS may decline to
approve bids based on a lack of relevant
acceptable evidence in support of the
SSBCI offering the MA organization
includes in its bid.
We also propose to codify that,
regardless of whether an SSBCI offering
was approved in the past, CMS may
annually review the items or services
that an MA organization includes as
SSBCI in its bid for compliance with all
applicable requirements, considering
the relevant acceptable evidence
applicable to each item or service at the
time the bid is submitted. Under this
proposal, CMS would have clear
authority to evaluate an SSBCI included
in a bid each year based on the evidence
available at that time. CMS would not
be bound to approve a bid that contains
a certain SSBCI only because CMS
approved a bid with the same SSBCI in
the past. We believe this provision, if
finalized, would help ensure sound use
of Medicare dollars by establishing a
clear connection between an SSBCI and
the most current evidence addressing
whether there is a reasonable
expectation that the SSBCI will improve
or maintain the health or overall
function of a chronically ill enrollee.
We believe that codifying that CMS
may decline to approve a bid for an MA
organization to offer certain SSBCI is
appropriate to support CMS’s
programmatic oversight function. CMS
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already possesses the authority to
negotiate and reject bids under section
1854 of the Act, and to establish certain
minimum requirements related to SSBCI
under section 1852 of the Act. We can
rely on these bases to decline to approve
bids that include SSBCI that lack
evidence to support the MA
organization’s expectations related to
the SSBCI, but we believe it prudent to
establish clearly how our evaluation of
individual SSBCI offerings and the
evidence supporting these offerings fit
within our bid negotiation and approval
authority. We believe that SSBCI
provide a critical source of innovation,
and we wish to see MA organizations
continue to develop impactful benefits
tailored to their chronically ill enrollees.
However, we must also ensure that
benefits offered within the MA program
comply with all applicable statutory and
regulatory standards. We believe it is
critical for effective program
administration that CMS be able to
obtain, upon request, relevant
acceptable evidence from an MA
organization to support CMS’s review of
SSBCI each year in light of the
information and evidence available at
that point in time.
We solicit comment on this proposal
to codify CMS’s authority to decline to
approve an MA organization’s bid if the
MA organization fails to demonstrate,
through relevant acceptable evidence,
that an SSBCI included in the bid has
a reasonable expectation of improving
or maintaining the health or overall
function of the chronically ill enrollees
that the MA organization is targeting.
The policies proposed in this section
work together to place the burden of
showing whether an item or service
offered as SSBCI has a reasonable
expectation of improving the health or
overall function of a chronically ill
enrollee onto the MA organization.
Implementing these proposals would
change the policy set forth in the 2019
HPMS memo requiring CMS to provide
supporting evidence or data to an MA
organization if CMS determines that an
MA plan may not offer a specific item
or service as an SSBCI because it has not
met the reasonable expectation
standard. Under these proposals, the
MA organization must, in advance of
including an SSBCI in its bid, have
already conducted research on the
evidence establishing a reasonable
expectation that the item or service
would improve or maintain the health
or overall function of the recipient of
the item or service. By the time the MA
organization submits its bid, it must be
able to show CMS, upon request, the
relevant applicable evidence that
supports the reasonable expectation that
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the item or service would improve or
maintain the health or overall function
of the chronically ill enrollees it is
targeting. We expect that MA plans are
already proactively conducting similar
research and establishing written
policies for implementing SSBCI based
on this research when designing them.
Additionally, MA plans may seek
guidance from CMS regarding SSBCI
items or services not defined in the PBP
or in previous CMS guidance prior to
bid submission. As such, we believe this
proposal, if implemented, would create
efficiency while imposing relatively
little burden on MA plans.
In addition, under this proposal, MA
plans would be required to document
and submit to CMS upon request each
determination that an enrollee is not
eligible to receive an SSBCI. We believe
that requiring an MA organization to
support its SSBCI offerings with a
written bibliography of relevant
acceptable evidence and an MA plan to
document denials of SSBCI work
together to ensure that SSBCI are being
implemented in an evidence-based,
non-discriminatory, and fair manner.
The evidence base established by an MA
organization could serve to inform an
MA plan’s objective criteria for
determining eligibility. By requiring an
MA plan to document instances of
SSBCI denials, we believe this proposal
would improve the experience of MA
plans, enrollees, and CMS in managing
and oversight of appeals of such denials.
Further, it would help ensure that MA
plans are not denying access to SSBCI
based on factors that are biased or
discriminatory or unrelated to the basis
on which the SSBCI are reasonably
expected to improve or maintain the
health or overall function of the
chronically ill enrollees. For example,
researchers have identified that certain
algorithms that have been used to
decide who gets access to additional
services can have clear racial bias, when
factors such as expected future cost or
expected future utilization are
incorporated into the algorithm.106 By
codifying CMS’ authority to decline to
approve a bid that includes an SSBCI
not supported by evidence, this
proposal also serves to ensure
appropriate program administration and
oversight.
Finally, we propose to make a
technical edit to § 422.102(f)(1)(i)(A)(2)
to correct a typographical error. In our
June 2020 final rule, we noted that
section 1852(a)(3)(D)(ii) of the Act, as
106 See, e.g., Ziad Obermeyer et al., Dissecting
racial bias in an algorithm used to manage the
health of populations. Science 366, 447–453 (2019).
DOI:10.1126/science.aax2342.
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amended, defines a chronically ill
enrollee as an individual who, among
other requirements, ‘‘[h]as a high risk of
hospitalization or other adverse health
outcomes[.]’’ We then indicated that
‘‘we proposed to codify this definition
of a chronically ill enrollee’’ at
§ 422.102(f)(1)(i). However, our
regulation at § 422.102(f)(1)(i)(A)(2)
currently reads: ‘‘Has a high risk of
hospitalization of other adverse
outcomes[.]’’ We propose to substitute
‘‘or’’ for the second ‘‘of’’ in this
provision, such that it aligns with the
statutory language that we intended to
codify in our regulation.
ddrumheller on DSK120RN23PROD with PROPOSALS2
C. Mid-Year Notice of Unused
Supplemental Benefits (§§ 422.111(l)
and 422.2267(e)(42))
Per CMS regulations at § 422.101, MA
organizations are permitted to offer
mandatory supplemental benefits,
optional supplemental benefits, and
special supplemental benefits for the
chronically ill (SSBCI). When
submitting an annual bid to participate
in the MA program, an MA organization
includes a Plan Benefit Package (PBP)
and Bid Pricing Tool (BPT) for each of
its plans where the MA organization
provides information to CMS on the
premiums, cost sharing, and
supplemental benefits (including
SSBCI) it proposes to offer. The number
of supplemental benefit offerings has
risen significantly in recent years, as
observed through trends identified in
CMS’s annual PBP reviews. In 2023,
roughly $61 billion was directed
towards supplemental benefits in MA.
At the same time, CMS has received
reports that MA organizations have
observed low utilization of these
benefits by their enrollees, and it is
unclear whether plans are actively
encouraging utilization of these benefits
by their enrollees, which could be an
important part of a plan’s overall care
coordination efforts.
CMS remains concerned that
utilization of these benefits is low and
has taken multiple steps to obtain more
complete data in this area. For example,
in the May 2022 final rule, we finalized
expanded Medical Loss Ratio (MLR)
reporting requirements, requiring MA
organizations to report expenditures on
popular supplemental benefit categories
such as dental, vision, hearing,
transportation, and the fitness benefit
(87 FR 27704, 27826–28).107 In addition,
in March 2023, as a part of our Part C
reporting requirements, we announced
107 Available at https://www.federalregister.gov/
documents/2022/05/09/2022-09375/medicareprogram-contract-year-2023-policy-and-technicalchanges-to-the-medicare-advantage-and.
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our intent to collect data to better
understand the utilization of
supplemental benefits, which if
finalized, would include requiring MA
plans to report utilization and cost data
for all supplemental benefit offerings
(88 FR 15726). Currently, there is no
specific requirement for MA
organizations, beyond more general care
coordination requirements, to conduct
outreach to enrollees to encourage
utilization of supplemental benefits.
CMS understands that projected
supplemental benefit utilization, that is,
the extent to which an MA organization
expects a particular supplemental
benefit to be accessed during a plan
year, is estimated by an MA
organization in part by the type and
extent of outreach conducted for the
benefit.108 We are concerned that
beneficiaries may make enrollment
decisions based on the allure of
supplemental benefits that are
extensively marketed by a given MA
plan during the annual election period
(AEP) only to not fully utilize, or utilize
at all, those supplemental benefits
during the plan year. This
underutilization may be due to a lack of
effort by the plan to help the beneficiary
access the benefits or a lack of easy
ability to know what benefits have not
been accessed and are still available to
the enrollee throughout the year. Such
underutilization of supplemental
benefits may nullify any potential
health value offered by these extra
benefits.
Additionally, section 1854(b)(1)(C)
requires that MA plans offer the value
of MA rebates back to enrollees in the
form of payment for supplemental
benefits, cost sharing reductions, or
payment of Part B or D premiums.
Therefore, CMS has an interest in
ensuring that MA rebates are provided
to enrollees in a way that they can
benefit from the value of these rebate
dollars. For example, analysis indicates
that while supplemental dental benefits
are one of the most widely offered
supplemental benefits in MA plans,
enrollees in these plans are no more
likely to access these services than
Traditional Medicare enrollees.109
As discussed, MA organizations are
given the choice of how to provide MA
rebates to their enrollees. Organizations
108 U.S. Government Accountability Office (GAO).
‘‘MEDICARE ADVANTAGE Plans Generally Offered
Some Supplemental Benefits, but CMS Has Limited
Data on Utilization.’’ Report to Congressional
Committee, 31 Jan. 2023, p. 20, www.gao.gov/
products/gao-23-105527.
109 https://www.cms.gov/research-statistics-dataand-systems/research/mcbs/data-briefs/dentalcoverage-status-and-utilization-preventive-dentalservices-medicare-beneficiaries-poster.
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78539
may, instead of offering supplemental
benefits in the form of covering
additional items and services, use rebate
dollars to further reduce Part B and Part
D premiums, reduce cost sharing for
basic benefits compared to cost sharing
in Traditional Medicare, and reduce
cost sharing in other ways, such as
reducing maximum out-of-pocket
(MOOP) amounts.
Over the last several years, CMS has
observed upticks in (1) the number and
variety of supplemental benefits offered
by MA plans, (2) plan marketing
activities by MA organizations, and (3)
overall MA enrollment; we presume that
an enrollee’s plan choice is influenced,
at least in part, by the supplemental
benefits an MA plan offers because the
absence or presence of a particular
supplemental benefit represents a
distinguishable and easily understood
difference between one plan and
another. We are also concerned that
some MA plans may be using these
supplemental benefits primarily as
marketing tools to steer enrollment
towards their plan and are not taking
steps to ensure that their enrollees are
using the benefits being offered or
tracking if these benefits are improving
health or quality of care outcomes or
addressing social determinants of
health. We believe targeted
communications specific to the
utilization of supplemental benefits may
further ensure that covered benefits
(including those that are heavily
marketed) are accessed and used by
plan enrollees during the plan year.
This outreach, in conjunction with the
improved collection of utilization data
for these supplemental benefits through
MLR and our proposed collection
through Part C reporting, should help
inform whether future rulemaking is
warranted.
Finally, CMS is also working to
achieve policy goals that advance health
equity across its programs and pursue a
comprehensive approach to advancing
health equity for all, including those
who have been historically underserved,
marginalized, and adversely affected by
persistent poverty and inequality.
Several studies have pointed to
disparities in health care utilization. For
example, a Kaiser Family Foundation
(KFF) study 110 found that there are
significant racial and ethnic disparities
in utilization of care among individuals
with health insurance. Additionally,
underserved populations tend to have a
disproportionate prevalence of unmet
social determinants of health needs,
110 https://www.kff.org/report-section/racial-andethnic-disparities-in-access-to-and-utilization-ofcare-among-insured-adults-issue-brief/.
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which can adversely affect health. We
believe that the ability to offer
supplemental benefits provides MA
plans the unique opportunity to use
Trust Fund dollars (in the form of MA
rebates) to fill in coverage gaps in
Traditional Medicare, by offering
additional health care benefits or SSBCI
that address unmet social determinants
of health needs, and as such, all eligible
MA enrollees should benefit from these
offerings. Targeted outreach specific to
the utilization of supplemental benefits
may also serve to further ensure more
equitable utilization of these benefits.
The establishment of a minimum
requirement for targeted outreach with
respect to supplemental benefits that
have not been accessed by enrollees
would standardize a process to ensure
all enrollees served under MA are aware
of and utilizing, as appropriate, the
supplemental benefits available to them.
Section 1852(c)(1) of the Act requires, in
part, that MA organizations disclose
detailed descriptions of plan provisions,
including supplemental benefits, in a
clear, accurate, and standardized form
to each enrollee of a plan at the time of
enrollment and at least annually
thereafter. We propose to use our
authority to establish standards under
Part C in section 1856(b)(1) of the Act
to ensure adequate notice is provided to
enrollees regarding supplemental
benefits coverage. This proposal will
further implement the disclosure
requirement in section 1852(c)(1)(F) of
the Act. Specifically, we propose that
MA organizations must provide a model
notification to enrollees of supplemental
benefits they have not yet accessed. We
propose to meet this goal by adding new
provisions at §§ 422.111(l) and
422.2267(e)(42) to establish this new
disclosure requirement and the details
of the required notice, respectively.
This proposed requirement would
ensure that a minimum outreach effort
is conducted by MA organizations to
inform enrollees of supplemental
benefits available under their plan that
the enrollee has not yet accessed. We
propose that, beginning January 1, 2026,
MA organizations must mail a mid-year
notice annually, but not sooner than
June 30 and not later than July 31 of the
plan year, to each enrollee with
information pertaining to each
supplemental benefit available during
that plan year that the enrollee has not
begun to use. We understand that there
may be a lag between the time when a
benefit is accessed and when a claim is
processed, so we would require that the
information used to identify recipients
of this notice be as up to date as possible
at the time of mailing. MA organizations
are not required to include
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supplemental benefits that have been
accessed, but are not yet exhausted, in
this proposed mid-year notice.
Understanding that not all Medicare
beneficiaries enroll in an MA plan
during the AEP, we are specifically
seeking comment on how CMS should
address the timing of the notice for
beneficiaries that have an enrollment
effective date after January 1. One
possible approach we are considering is
to require the notice to be sent six
months after the effective date of the
enrollment for the first year of
enrollment, and then for subsequent
years, revert to mailing the notice
between the proposed delivery dates of
June 30 and July 31. Another option
CMS is considering is to not require the
notice to be mailed for the first year of
enrollment for those beneficiaries with
an effective date of May 1 or later, as
they would be receiving their Evidence
of Coverage (EOC) at around this same
time but will not have had significant
time in which to access these benefits.
Those enrollees who would be exempt
from the mailing, based on their
enrollment effective date, would then
receive the notice (if applicable because
one or more supplemental benefits have
not been accessed by the enrollee)
between June 30 and July 31 in
subsequent enrollment years.
For each covered mandatory
supplemental benefit and optional
supplemental benefit (if the enrollee has
elected) the enrollee is eligible for, but
has not accessed, the MA organization
must list in the notice the information
about each such benefit that appears in
EOC. For SSBCI, MA organizations must
include an explanation of the SSBCI
covered under the plan (including
eligibility criteria and limitations and
scope of the covered items and services)
and must also provide point-of-contact
information (which can be the customer
service line or a separate dedicated
line), with trained staff that enrollees
can contact to inquire about or begin the
SSBCI eligibility determination process
and to address any other questions the
enrollee may have about the availability
of SSBCI under their plan. When an
enrollee has been determined by the
plan to be eligible for one or more
specific SSBCI but has not accessed the
SSBCI benefit by June 30 of the plan
year, the notice must also include a
description of the SSBCI to which the
enrollee is entitled and must describe
any limitations on the benefit. Note the
proposals at section VI.A of this
proposed rule that, if finalized, would
require specific SSBCI disclaimers for
marketing and communications
materials that discuss the limitations of
the SSBCI benefit being offered; we also
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propose that this mid-year notice must
include the SSBCI disclaimer to ensure
that the necessary information provided
in the disclaimer is also provided to the
enrollee in the notice.
Furthermore, we are proposing that
each notice must include the scope of
the supplemental benefit(s), applicable
cost sharing, instructions on how to
access the benefit(s), applicable
information on the use of network
providers for each available benefit, list
the benefits consistent with the format
of the EOC, and a toll-free customer
service number and, as required, a
corresponding TTY number to call if
additional help is needed. We solicit
comments on the required content of the
mid-year notice.
We request comment on our proposal
to require MA plans to provide enrollees
with mid-year notification of covered
mandatory and optional supplemental
benefits (if elected) that have not been
at least partially accessed by that
enrollee, particularly the appropriate
timing (if any) of the notice for MA
enrollees who enroll in the plan midyear.
D. Annual Health Equity Analysis of
Utilization Management Policies and
Procedures
In recent years, CMS has received
feedback from interested parties,
including people with Medicare, patient
groups, consumer advocates, and
providers that utilization management
(UM) practices in Medicare Advantage
(MA), especially the use of prior
authorization, can sometimes create a
barrier for patients in accessing
medically necessary care. Further, some
research has indicated that the use of
prior authorization may
disproportionately impact individuals
who have been historically underserved,
marginalized, and adversely affected by
persistent poverty and inequality,111
due to several factors, including; the
administrative burden associated with
processing prior authorization requests
(for example, providers and
administrative staff serving historically
underserved populations, in particular,
may not have the time or resources to
complete the prior authorization
process, including navigating the
appeals process 112), a reduction in
medication adherence, and overall
worse medical outcomes due to delayed
or denied care. Research has also shown
111 https://www.hmpgloballearningnetwork.com/
site/frmc/commentary/addressing-healthinequities-prior-authorization; and https://www
.ncbi.nlm.nih.gov/pmc/articles/PMC10024078/.
112 https://abcardio.org/wp-content/uploads/2019/
03/AB-20190227-PA-White-Paper-Survey-Resultsfinal.pdf.
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that dual eligibility for Medicare and
Medicaid is one of the most influential
predictors of poor health outcomes, and
that disability is also an important risk
factor linked to health outcomes.113
On January 20, 2021, President Biden
issued Executive Order 13985:
‘‘Advancing Racial Equity and Support
for Underserved Communities Through
the Federal Government’’ (E.O.
13985).114 E.O. 13985 describes the
Administration’s policy goals to
advance equity across Federal programs
and directs Federal agencies to pursue
a comprehensive approach to advancing
equity for all, including those who have
been historically underserved,
marginalized, and adversely affected by
persistent poverty and inequality.
Consistent with this Executive order,
CMS announced ‘‘Advance Equity’’ as
the first pillar of its 2022 Strategic
Plan.115 This pillar emphasizes the
importance of advancing health equity
by addressing the health disparities that
impact our health care system. CMS
defines health equity as ‘‘the attainment
of the highest level of health for all
people, where everyone has a fair and
just opportunity to attain their optimal
health regardless of race, ethnicity,
disability, sexual orientation, gender
identity, socioeconomic status,
geography, preferred language, or other
factors that affect access to care and
health outcomes.’’ 116
The April 2023 final rule 117 included
several policy changes to advance
health equity, as well as changes to
address concerns from interested parties
about the use of utilization management
policies and procedures, including prior
authorization, by MA plans. CMS
understands that utilization
management is an important means to
coordinate care, reduce inappropriate
utilization, and promote cost-efficient
care. The April 2023 final rule adopted
several important guardrails to ensure
that utilization management policies
and procedures are used, and associated
113 https://www.aspe.hhs.gov/sites/default/files/
migrated_legacy_files/171041/
ASPESESRTCfull.pdf?_
ga=2.49530854.1703779054.1662938643470268562.1638986031.
114 86 FR 7009 (January 25, 2021); https://
www.federalregister.gov/d/2022-26956/p-227.
115 87 FR 79479 fn. 7 (December 27, 2022);
https://www.federalregister.gov/d/2022-26956/p228.
116 87 FR 79479 fn. 8 (December 27, 2022);
https://www.federalregister.gov/d/2022-26956/p229.
117 ‘‘Medicare Program; Contract Year 2024 Policy
and Technical Changes to the Medicare Advantage
Program, Medicare Prescription Drug Benefit
Program, Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the Elderly’’ final
rule, which appeared in the Federal Register on
April 12, 2023 (88 FR 22120).
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coverage decisions are made, in ways
that ensure timely and appropriate
access to covered items and services for
people enrolled in MA plans. CMS also
continues to work to identify regulatory
actions that can help support CMS’s
goal to advance health equity and
improve access to covered benefits for
enrollees.
Authority for MA organizations to use
utilization management policies and
procedures regarding basic benefits is
subject to the mandate in section
1852(a)(1) of the Act that MA plans
cover Medicare Part A and Part B
benefits (subject to specific, limited
statutory exclusions) and, thus, to
CMS’s authority under section 1856(b)
of the Act to adopt standards to carry
out the MA statutory provisions. In
addition, the MA statute and MA
contracts cover both the basic and
supplemental benefits covered under
MA plans, so additional contract terms
added by CMS pursuant to section
1857(e)(1) of the Act may also address
supplemental benefits. Additionally, per
section 1852(b) of the Act and
§ 422.100(f)(2), plan designs and
benefits may not discriminate against
beneficiaries, promote discrimination,
discourage enrollment, encourage
disenrollment, steer subsets of Medicare
beneficiaries to particular MA plans, or
inhibit access to services. These
requirements apply to both basic and
supplemental benefits. We consider
utilization management policies and
procedures to be part of the plan benefit
design, and therefore they cannot be
used to discriminate or direct enrollees
away from certain types of services.
In the April 2023 final rule, CMS
finalized a new regulation at § 422.137,
which requires all MA organizations
that use UM policies and procedures to
establish a Utilization Management
Committee to review and approve all
UM policies and procedures at least
annually and ensure consistency with
Traditional Medicare’s national and
local coverage decisions and relevant
Medicare statutes and regulations. Per
§ 422.137, an MA plan may not use any
UM policies and procedures for basic or
supplemental benefits on or after
January 1, 2024, unless those policies
and procedures have been reviewed and
approved by the UM committee. While
this requirement will ensure that all UM
policies and procedures are kept up to
date, we believe that reviewing and
analyzing these policies from a health
equity perspective is an important
beneficiary protection. In addition, such
an analysis may assist in ensuring that
MA plan designs do not deny, limit, or
condition the coverage or provision of
benefits on a prohibited basis (such as
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78541
a disability) and are not likely to
substantially discourage enrollment by
certain MA eligible individuals with the
organization. For these reasons, we
propose to add health equity-related
requirements to § 422.137. First, we
propose at § 422.137(c)(5) to require that
beginning January 1, 2025, the UM
committee must include at least one
member with expertise in health equity.
We are proposing that health equity
expertise includes educational degrees
or credentials with an emphasis on
health equity, experience conducting
studies identifying disparities amongst
different population groups, experience
leading organization-wide policies,
programs, or services to achieve health
equity, or experience leading advocacy
efforts to achieve health equity. Since
there is no universally accepted
definition of expertise in health equity,
we referred to materials from the
Council on Linkages Between Academia
and Public Health Practice 118 and the
National Board of Public Health
Examiners,119 to describe ‘‘expertise in
health equity’’ in the context of MA and
prior authorization.
We also propose to add a requirement
at § 422.137(d)(6) that the UM
committee must conduct an annual
health equity analysis of the use of prior
authorization. We propose that the
member of the UM committee, who has
health equity expertise, as required at
the proposed § 422.137(c)(5), must
approve the final report of the analysis
before it is posted on the plan’s publicly
available website. The proposed
analysis would examine the impact of
prior authorization at the plan level, on
enrollees with one or more of the
following social risk factors (SRF): (1)
receipt of the low-income subsidy or
being dually eligible for Medicare and
Medicaid (LIS/DE); or (2) having a
disability. Disability status is
determined using the variable original
reason for entitlement code (OREC) for
Medicare using the information from the
Social Security Administration and
Railroad Retirement Board record
systems. CMS chose these SRFs because
they mirror the SRFs that will be used
to measure the Heath Equity Index
reward for the 2027 Star Ratings (see
§ 422.166(f)(3)), and we believe it is
important to align expectations and
metrics across the program. Moreover,
CMS is requiring this analysis to take
place at the MA plan level because the
relevant information regarding enrollees
with the specified SRFs is available at
118 https://www.phf.org/resourcestools/
Documents/Core_Competencies_for_Public_Health_
Professionals_2021October.pdf.
119 https://www.nbphe.org/cph-content-outline/.
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the plan level, and we believe this level
of analysis is important to discern the
actual impact of the use of utilization
management on enrollees that may be
particularly subject to health disparities.
To gain a deeper understanding of the
impact of prior authorization practices
on enrollees with the specified SRFs,
the proposed analysis must compare
metrics related to the use of prior
authorization for enrollees with the
specified SRFs to enrollees without the
specified SRFs. This will allow the MA
plan and CMS to begin to identify
whether the use of prior authorization
causes any persistent disparities among
enrollees with the specified SRFs. The
proposed analysis must use the
following metrics, calculated for
enrollees with the specified SRFS, and
for enrollees without the specified SRFs,
from the prior contract year, to conduct
the analysis:
• The percentage of standard prior
authorization requests that were
approved, aggregated for all items and
services.
• The percentage of standard prior
authorization requests that were denied,
aggregated for all items and services.
• The percentage of standard prior
authorization requests that were
approved after appeal, aggregated for all
items and services.
• The percentage of prior
authorization requests for which the
timeframe for review was extended, and
the request was approved, aggregated for
all items and services.
• The percentage of expedited prior
authorization requests that were
approved, aggregated for all items and
services.
• The percentage of expedited prior
authorization requests that were denied,
aggregated for all items and services.
• The average and median time that
elapsed between the submission of a
request and a determination by the MA
plan, for standard prior authorizations,
aggregated for all items and services.
• The average and median time that
elapsed between the submission of a
request and a decision by the MA plan
for expedited prior authorizations,
aggregated for all items and services.
We propose to add at § 422.137(d)(7)
that by July 1, 2025, and annually
thereafter, the health equity analysis be
posted on the plan’s publicly available
website in a prominent manner and
clearly identified in the footer of the
website. We propose that the health
equity analysis must be easily accessible
to the general public, without barriers,
including but not limited to ensuring
the information is available: free of
charge; without having to establish a
user account or password; without
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having to submit personal identifying
information (PII); in a machine-readable
format with the data contained within
that file being digitally searchable and
downloadable from a link in the footer
of the plan’s publicly available website,
and include a .txt file in the root
directory of the website domain that
includes a direct link to the machinereadable file, in a format described by
CMS (which CMS will provide in
guidance), to establish and maintain
automated access. We believe that by
making this information more easily
accessible to automated searches and
data pulls, it will help third parties
develop tools and researchers conduct
studies that further aid the public in
understanding the information and
capturing it in a meaningful way across
MA plans.
Finally, we welcome comment on this
proposal and seek comment on the
following:
• Additional populations CMS
should consider including in the health
equity analysis, including but not
limited to: Members of racial and ethnic
communities, members of the lesbian,
gay, bisexual, transgender, and queer
(LGBTQ+) community; individuals with
limited English proficiency; members of
rural communities; and persons
otherwise adversely affected by
persistent poverty or inequality.
• If there should be further definition
for what constitutes ‘‘expertise in health
equity,’’ and if so, what other
qualifications to include in a definition
of ‘‘expertise in health equity.’’
• The proposed requirements for
publicly posting the results on the
plan’s website under § 422.137(d)(7) to
ensure the data will be easily accessible
to both the public and researchers.
• Alternatives to the July 1, 2025,
deadline for the initial analysis to be
posted to the plan’s publicly available
website.
• CMS is considering adding an
additional requirement that the UM
Committee submit to CMS the link to
the analysis report. This would allow
CMS to post every link in one
centralized location. We believe this
would increase accessibility and
transparency.
In addition, we request comment on
any specific items or services, or groups
of items or services, subject to prior
authorization that CMS should consider
also disaggregating in the analysis to
consider for future rulemaking. If
further disaggregation of a group of
items or services is requested, CMS is
soliciting comment on what specific
items or services would be included
within the group. For example, if CMS
should consider disaggregating a group
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of items or services related to behavioral
health treatment in the health equity
analysis, what items or services should
CMS consider a part of behavioral
health treatment.
V. Enrollment and Appeals
A. Revise Initial Coverage Election
Period Timeframe To Coordinate With
A/B Enrollment (§ 422.62)
Section 4001 of the Balanced Budget
Act of 1997 (Pub. L. 105–33) added
sections 1851 through 1859 to the Social
Security Act (the Act) establishing Part
C of the Medicare program known
originally as ‘‘Medicare+Choice’’ (M+C)
and later as Medicare Advantage (MA).
As enacted, section 1851(e) of the Act
establishes specific parameters in which
elections can be made and/or changed
during enrollment and disenrollment
periods under the MA program.
Specifically, section 1851(e)(1) of the
Act requires that the Secretary specify
an initial coverage election period
(ICEP) during which an individual who
first becomes entitled to Part A benefits
and enrolled in Part B may elect an MA
plan. The statute further stipulates that
if an individual elects an MA plan
during that period, coverage under the
plan will become effective as of the first
day on which the individual may
receive that coverage. Consistent with
this section of the Act, in the Medicare
Program; Establishment of the
Medicare+Choice Program interim final
rule with comment period which
appeared in the Federal Register on
June 26, 1998, (herein referred to as the
June 1998 interim final rule), CMS
codified this policy at § 422.62(a)(1) (63
FR 35072).
In order for an individual to have
coverage under an MA plan, effective as
of the first day on which the individual
may receive such coverage, the
individual must elect an MA plan before
he or she is actually entitled to Part A
and enrolled in Part B coverage.
Therefore, in the June 1998 interim final
rule CMS codified the ICEP to begin 3
months prior to the month the
individual is first entitled to both Part
A and enrolled in Part B and ends the
last day of the month preceding the
month of entitlement (63 FR 35072).
Section 102 of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub.
L. 108–173) revised section 1851(e)(1) of
the Act to provide for an ICEP for MA
that ends on the later of, the day it
would end under pre-MMA rules as
described above, or the last day of an
individual’s Medicare Part B initial
enrollment period (IEP). This approach
extended an individual’s ICEP which
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helped to ensure that an individual who
uses their IEP to enroll in Medicare Part
A and B has the opportunity to elect an
MA or MA prescription drug (MA–PD)
plan following their first entitlement to
Part A and enrollment in Part B.
Consistent with the revised provisions
of section 1851(e)(1) of the Act, CMS
codified this policy at § 422.62(a)(1) in
the Medicare Program; Establishment of
the Medicare Advantage Program final
rule which appeared in the Federal
Register on January 28, 2005 (70 FR
4717).
As described in § 422.50(a)(1),
eligibility for MA or MA–PD enrollment
generally requires that an individual
first have Medicare Parts A and B and
meet all other eligibility requirements to
do so. The ICEP is the period during
which an individual newly eligible for
MA may make an initial enrollment
request to enroll in an MA or MA–PD
plan. Currently, once an individual first
has both Parts A and B, their ICEP
begins 3 months immediately before the
individual’s first entitlement to
Medicare Part A and enrollment in Part
B and ends on the later of:
• The last day of the month preceding
entitlement to Part A and enrollment in
Part B, or;
• The last day of the individual’s Part
B IEP.
Individuals who want to enroll in
premium-Part A, Part B, or both, must
submit a timely enrollment request
during their IEP, the General Enrollment
Period (GEP), or an existing special
enrollment period (SEP) for which they
are eligible. Eligible individuals may
choose to enroll in both Part A and B
during their first opportunity, that is,
during their IEP. These individuals have
an ICEP as described in
§ 422.62(a)(1)(ii), that is, they can
choose to enroll in an MA plan (with or
without drug coverage) at the time of, or
after, they have both Part A and B, up
until the last day of their IEP. However,
not all individuals enroll in both Part A
and B during their IEP. Other
individuals, such as those who are
working past age 65, may not have both
Part A and B for the first time until after
their IEP. These individuals may only
have Part A and/or B for the first time
when they use an SEP or a future GEP
to enroll. To note, prior to January 1,
2023, individuals who enrolled in Part
A and/or Part B during the GEP had a
universal effective date of July 1st.
These individuals had an ICEP as
described in § 462.22(a)(1)(i), that is, the
ICEP started April 1st and ended June
30th. Although these individuals had to
decide whether to enroll in an MA or
MA–PD plan prior to their July 1st
effective date, they did have time to
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consider their options, as the GEP is
January 1st–March 31st annually, and
their enrollment in Part B, (and Part A
if applicable), was not effective until
July 1st. However, the Consolidated
Appropriations Act, 2021, (CAA) (Pub.
L. 116–260), revised sections
1838(a)(2)(D)(ii) and 1838(a)(3)(B)(ii) of
the Act to provide that for individuals
who enroll during the GEP in a month
beginning on or after January 1, 2023,
their entitlement would begin with the
first day of the month following the
month in which they enroll. For
example, if an individual has Part A, but
enrolls in Part B in March, during the
GEP, they would first have both Part A
and Part B effective April 1st. Although
this provides for an earlier Medicare
effective date, the individual’s ICEP
would occur prior to that Medicare
effective date, that is, as described in
§ 422.62(a)(1)(i) above, and they no
longer have that additional time to
consider their options.
Currently, the individuals described
above have an ICEP as described in
§ 422.62(a)(1)(i) and can only enroll in
an MA plan (with or without drug
coverage) prior to the effective date of
their Part A and B coverage. For
example, an individual’s 65th birthday
is April 20, 2022, and they are eligible
for Medicare Part A and Part B
beginning April 1, 2022. They have
premium-free Part A; however, the
individual is still working, and has
employer health insurance, so they
decide not to enroll in Part B during
their IEP. The individual retires in April
2023, and enrolls in Part B effective May
1, 2023 (using a Part B SEP). The
individual’s ICEP would be February 1st
through April 30, 2023. These
individuals need to decide if they want
to receive their Medicare coverage
through an MA plan prior to the
effective date of their enrollment in both
Part A and B. In this example, the
individual would have to enroll in an
MA plan using the ICEP by April 30,
2023.
Section 422.62(a)(1) was intended to
provide beneficiaries who enroll in both
Part A and Part B for the first time with
the opportunity to elect an MA plan at
the time that both their Part A and B
coverage were effective. However, in
practice, individuals described above,
who do not enroll in Part B during their
IEP, do not have an opportunity to elect
to receive their coverage through an MA
plan after their Part A and B coverage
goes into effect. When an individual
enrolls in both Part A and B for the first
time using an SEP or the GEP, they have
to determine, prior to the start of their
coverage, if they want to receive their
coverage through Original Medicare or
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78543
an MA plan prior to the effective date
of their Part A and B coverage. If they
do not use their ICEP to enroll in an MA
plan prior to when their Part A and B
coverage becomes effective, they lose
the opportunity to enroll in an MA plan
to receive their Medicare coverage and
will generally have to wait until the
next enrollment period that is available
to them to choose an MA plan.
To provide more flexibility, we are
proposing to revise the end date for the
ICEP for those who cannot use their
ICEP during their IEP. That is, we are
proposing in § 422.62(a)(1)(i) that an
individual would have 2 months after
the month in which they are first
entitled to Part A and enrolled in Part
B to use their ICEP. Under proposed
§ 422.62(a)(1)(i), the individual’s ICEP
would begin 3 months prior to the
month the individual is first entitled to
Part A and enrolled in Part B and would
end on the last day of the second month
after the month in which the individual
is first entitled to Part A and enrolled in
Part B. Using the example above, we are
proposing that the individual’s ICEP
would be February 1st through June 30,
2023, instead of February 1st to April
30th. As described in § 422.68(a)(1), if
an election is made prior to the month
of entitlement in both Part A and Part
B, the MA election would be effective as
of the first date of the month that the
individual is entitled to both Part A and
Part B.
We believe that extending the
timeframe for the ICEP under
§ 422.62(a)(1)(i) would provide
beneficiaries that are new to Medicare
additional time to decide if they want to
receive their coverage through an MA
plan. We believe that extending this
timeframe would help those new to
Medicare to explore their options and
select coverage that best suits their
needs and reduce the number of
instances where an individual
inadvertently missed their ICEP and has
to wait until the next open enrollment
period to enroll in MA or MA–PD plan.
This proposal also supports President
Biden’s April 5, 2022 Executive Order
on Continuing to Strengthen Americans’
Access to Affordable, Quality Health
Coverage,120 which, among other things,
requires agencies to examine policies or
practices that make it easier for all
consumers to enroll in and retain
coverage, understand their coverage
options and select appropriate coverage,
and also examine policies or practices
120 87 FR 20689 (April 8, 2022); https://
www.whitehouse.gov/briefing-room/presidentialactions/2022/04/05/executive-order-on-continuingto-strengthen-americans-access-to-affordablequality-health-coverage/.
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that strengthen benefits and improve
access to health care providers.
This proposed change in the ICEP
timeframe aligns with the SEP
timeframe that we have established in
§ 422.62(b)(10), for individuals to enroll
in an MA or MA–PD plan when their
Medicare entitlement determination is
made for a retroactive effective date, and
the individual has not been provided
the opportunity to elect an MA or MA–
PD plan during their ICEP. It also aligns
with the timeframe we have established
in § 422.62(b)(26), effective January 1,
2024, for an individual to enroll in an
MA plan when they enroll in Part A
and/or Part B using an exceptional
condition SEP, as described in §§ 406.27
and 407.23.
This proposal would extend the
timeframe of an existing enrollment
period and would not result in a new or
additional paperwork burden since MA
organizations are currently assessing
applicants’ eligibility for election
periods as part of existing enrollment
processes. All burden impacts of these
provisions have already been accounted
for under OMB control number 0938–
1378 (CMS–10718). Similarly, we do not
believe the proposed changes would
have any impact to the Medicare Trust
Fund.
B. Enhance Enrollees’ Right To Appeal
an MA Plan’s Decision To Terminate
Coverage for Non-Hospital Provider
Services (§ 422.626)
Medicare Advantage (MA) enrollees
have the right to a fast-track appeal by
an Independent Review Entity (IRE)
when their covered skilled nursing
facility (SNF), home health, or
comprehensive outpatient rehabilitation
facility (CORF) services are being
terminated. The regulations for these
reviews at the request of an MA enrollee
are located at 42 CFR 422.624 and
422.626. Section 422.624 requires these
providers of services to deliver a
standardized written notice to the
enrollee of the MA organization’s
decision to terminate the provider’s
services for the enrollee. This notice,
called the Notice of Medicare NonCoverage (NOMNC), must be furnished
to the enrollee before services from the
providers are terminated. The NOMNC
informs enrollees of their right to a fasttrack appeal of the termination of these
provider services and how to appeal to
the IRE. CMS currently contracts with
certain Quality Improvement
Organizations (QIOs) that have contracts
under Title XI, Part B and section
1862(g) of the Act to perform as the IRE
for these specific reviews. The NOMNC
is subject to the Paperwork Reduction
Act (PRA) process and approval by the
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Office of Management and Budget
(OMB). There is a parallel appeal
process in effect for Medicare
beneficiaries in Original Medicare (42
CFR 405.1200 and 405.1202).
Presently, if an MA enrollee misses
the deadline to appeal as stated on the
NOMNC, the appeal is considered
untimely, and the enrollee loses their
right to a fast-track appeal to the QIO.
Enrollees may, instead, request an
expedited reconsideration by their MA
plan, as described in § 422.584. The QIO
is unable to accept untimely requests
from MA enrollees but does perform
appeals for untimely requests from
Medicare beneficiaries in Original
Medicare as described at
§ 405.1202(b)(4).
Further, MA enrollees forfeit their
right to appeal to the QIO if they leave
a facility or otherwise end services from
one of these providers before the
termination date listed on the NOMNC,
even if their appeal requests to the QIO
are timely. (The MA enrollee retains the
right to appeal to their MA plan in such
cases because the decision to terminate
the services is an appealable
organization determination per
§ 422.566(b)(3).) Beneficiaries in
Original Medicare retain their right to
appeal to the QIO, regardless of whether
they end services before the termination
date on the NOMNC.
This proposed rule would modify the
existing regulations regarding fast-track
appeals for enrollees when they
untimely request an appeal to the QIO,
or still wish to appeal after they end
services on or before the planned
termination date. The proposed changes
would bring the MA program further
into alignment with Original Medicare
regulations and procedures for the
parallel appeals process. Finally, these
changes were recommended by
interested parties in comments to a
previous rulemaking (CMS–4201–P,
February 27, 2022).
Specifically, the proposed changes
would (1) require the QIO, instead of the
MA plan, to review untimely fast-track
appeals of an MA plan’s decision to
terminate services in an HHA, CORF, or
SNF; and (2) allow enrollees the right to
appeal the decision to terminate
services after leaving an SNF or
otherwise ending covered care before
the planned termination date. The
proposed changes are modeled after the
parallel process in effect for Original
Medicare at 42 CFR 405.1200 through
405.1202.
To implement these changes, we are
proposing to revise § 422.626(a)(2) to
specify that if an enrollee makes an
untimely request for a fast-track appeal,
the QIO will accept the request and
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perform the appeal. We would also
specify that the IRE decision timeframe
in § 422.626(d)(5) and the financial
liability provision in § 422.626(b) would
not apply. The provision for untimely
appeal requests by enrollees in
proposed § 422.626(a)(2) closely parallel
422 CFR 405.1202(b)(4) which
establishes that the QIO will review
untimely appeals of terminations of
certain provider services from
beneficiaries in Original Medicare.
Secondly, we propose removing the
provision at § 422.626(a)(3) that
prevents enrollees from appealing to the
QIO if they end their covered services
on or before the date on their
termination notice, even in instances of
timely requests for fast-track appeals.
Removal of this provision preserves the
appeal rights of MA enrollees who
receive a termination notice, regardless
of whether they decide to leave a
provider or stop receiving their services.
This proposed expedited coverage
appeals process would afford enrollees
in MA plans access to similar
procedures for fast-track appeals as for
beneficiaries in Original Medicare in the
parallel process. Untimely enrollee fasttrack appeals would be absorbed into
the existing process for timely appeals
at § 422.626, and thus, would not
necessitate additional changes to the
existing fast-track process. The burden
on MA plans would be minimal and
would only require that MA plans
provide notices as required at
§ 422.626(d)(1) for these appeals.
Further MA plans would no longer have
to perform the untimely appeals as
currently required at § 422.626(a)(2).
Beneficiary advocacy organizations, in
comments to previous rulemakings on
this topic, supported changes that
would afford enrollees more time to
appeal and afford access to IRE appeals
even for untimely requests.
The burden of conducting these
reviews is currently approved under
OMB collection 0938–0953. The
proposed changes would require that
untimely fast-track appeals would be
performed by the QIO, rather than the
enrollee’s health plan; thus, any burden
related to this proposal would result in
a shift in fast-track appeals from health
plans to QIOs.
C. Amendments to Part C and Part D
Reporting Requirements (§§ 422.516 and
423.514)
CMS has authority under sections
1857(e)(1) and 1860D–12(b)(3)(D) of the
Act to require MA organizations and
Part D plan sponsors to provide CMS
‘‘with such information . . . as the
Secretary may find necessary and
appropriate.’’ CMS also has authority, in
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section 1856(b) of the Act, to establish
standards to carry out the MA program.
Likewise, existing CMS regulations
cover a broad range of topics and data
to be submitted to CMS. Under these
authorities, CMS established reporting
requirements at §§ 422.516(a)
(Validation of Part C reporting
requirements) and 423.514(a)
(Validation of Part D reporting
requirements), respectively. Pursuant to
§§ 422.516(a) and 423.514(a), each MA
organization and Part D sponsor must
have an effective procedure to develop,
compile, evaluate, and report
information to CMS at the times and in
the manner that CMS requires. In
addition, §§ 422.504(f)(2) and
423.505(f)(2) require MA organizations
and Part D plan sponsors, respectively,
to submit to CMS all information that is
necessary for CMS ‘‘to administer and
evaluate’’ the MA and Part D programs
and to facilitate informed enrollment
decisions by beneficiaries. Part D
sponsors are also required to report all
data elements included in all its drug
claims by § 422.505(f)(3). Sections
422.504(f)(2), 422.516(a), 423.505(f)(2),
and 423.514(a) each list general topics
of information and data to be provided
to CMS, including benefits, enrollee
costs, quality and performance, cost of
operations, information demonstrating
that the plan is fiscally sound, patterns
of utilization, information about
beneficiary appeals and grievances, and
information regarding actions, reviews,
findings, or other similar actions by
States, other regulatory bodies, or any
other certifying or accrediting
organization.
For many years, CMS has used this
authority to collect retrospective
information from MA organizations and
Part D sponsors according to the Parts
C and D Reporting Requirements that
we issue each year, which can be
accessed on CMS’s website.121 In
addition to the data elements, reporting
frequency and timelines, and levels of
reporting found in the Reporting
Requirements information collection
documents, CMS also issues Technical
Specifications, which supplement the
Reporting Requirements and serve to
further clarify data elements and outline
CMS’s planned data analyses. The
reporting timelines and required levels
of reporting may vary by reporting
section. While many of the current data
elements are collected in aggregate at
121 Part C Reporting Requirements are at https://
www.cms.gov/medicare/health-plans/
healthplansgeninfo/reportingrequirements and Part
D Reporting Requirements are at https://
www.cms.gov/medicare/prescription-drugcoverage/prescriptiondrugcovcontra/rxcontracting_
reportingoversight.
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the contract level, such as grievances,
enrollment/disenrollment, rewards and
incentives, and payments to providers,
the collection of more granular data is
also supported by the regulations. CMS
has the ability to collect more granular
data, per the Part C and D Reporting
Requirements as set forth in
§§ 422.516(a) and 423.514(a), or to
collect more timely data with greater
frequency or closer in real-time than we
have historically done. We propose
revisions to update §§ 422.516(a) and
423.514(a). Section 422.516 currently
reads, ‘‘Each MA organization must
have an effective procedure to develop,
compile, evaluate, and report to CMS, to
its enrollees, and to the general public,
at the times and in the manner that CMS
requires, and while safeguarding the
confidentiality of the doctor-patient
relationship, statistics and other
information.’’ We propose to strike the
term ‘‘statistics,’’ as well as the words
‘‘and other,’’ with the understanding
that the broader term ‘‘information’’
which is already at § 422.516(a),
includes statistics, Part C data, and
information on plan administration. In a
conforming proposal to amend
§ 423.514(a), we propose to strike the
term ‘‘statistics’’ and add ‘‘information.’’
CMS does not interpret these
regulations to limit data collection to
statistical or aggregated data and we are
using this rulemaking as an opportunity
to ensure that we are clear and
consistent with our interpretation of
these rules.
Additionally, we propose to amend
§§ 422.516(a)(2) and 423.514(a)(2) to
make an affirmative change regarding
CMS’s collection of information related
to what occurs from beginning to end
when beneficiaries seek to get coverage
from their health and drug plans for
specific services. In other words, under
the existing requirements CMS has the
ability to collect information related to
all plan activities regarding adjudicating
requests for coverage and plan
procedures related to making service
utilization decisions, and we aim to
make this more transparent through this
proposal. This could include, for
example, information on pharmacy
rejections, initial determinations,
decision rationales, and plan level
appeals. Both §§ 422.516(a)(2) and
423.514(a)(2) currently require plans to
report ‘‘The patterns of utilization of
services.’’ We propose to amend both
sections to read, ‘‘The procedures
related to and utilization of its services
and items’’ to be clear that these
regulations authorize reporting and data
collection about MA and Part D plan
procedures related to coverage,
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utilization in the aggregate, and
beneficiary-level utilization, including
the steps beneficiaries may need to take
to access covered benefits. Such
information will ensure that CMS may
better understand under what
circumstances plans choose whether to
provide or pay for a service or item.
CMS is not proposing to change
specific current data collection efforts
through this rulemaking. Any future
information collection would be
addressed through the Office of
Management and Budget (OMB)
Paperwork Reduction Act (PRA)
process, which would provide advance
notice to interested parties and provides
both a 60- and 30-day public comment
period on drafts of the proposed
collection.
We do not believe the proposed
changes to §§ 422.516(a) and 423.514(a)
have either paperwork burden or impact
on the Medicare Trust Fund at this time.
These proposed changes allow CMS, in
the future, to add new burden to plans
in collection efforts; however, any such
new burden associated with a new data
collection would be estimated through
the PRA process.
D. Amendments To Establish
Consistency in Part C and Part D
Timeframes for Filing an Appeal Based
on Receipt of the Written Decision
(§§ 422.582, 422.584, 422.633, 423.582,
423.584, and 423.600)
Based on general feedback CMS has
received from interested parties
regarding a variance in the regulatory
timeframe for beneficiaries to file an
appeal with an MA organization or Part
D plan sponsor, we are proposing to
amend the Parts C and D regulations at
§§ 422.582(b), 422.584(b), 422.633(d)(1),
423.582(b), 423.584(b), and 423.600(a)
with respect to how long an enrollee has
to file an appeal with a plan or the Part
D Independent Review Entity (IRE).
These proposed amendments aim to
ensure consistency with the regulations
at §§ 422.602(b)(2), 423.2002(d),
422.608, and 423.2102(a)(3), applicable
to Administrative Law Judge (ALJ) and
Medicare Appeals Council (Council)
reviews, that either state or crossreference the Medicare FFS regulations
at 42 CFR part 405 that prescribe that
the date of receipt of the notice of
decision or dismissal is presumed to be
5 calendar days after the date of the
notice, unless there is evidence to the
contrary. These proposals would also
apply to integrated organization
determinations and reconsiderations. In
addition, because cost plans are
required, by §§ 417.600 and 417.840, to
comply with the MA appeal regulations,
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these proposed changes will also apply
to cost plan appeals.
Pursuant to our authority under
section 1856(b) and 1860D–12 of the Act
to adopt standards to carry out the Part
C and Part D programs and in order to
implement sections 1852(g)(2) and
1860D–4(g) and (h) of the Act regarding
coverage decisions and appeals, CMS
established procedures and minimum
standards for an enrollee to file an
appeal regarding benefits with an MA
organization, Part D plan sponsor, and
IREs. These requirements are codified in
regulation at 42 CFR parts 422 and 423,
subpart M. See also section 1876(c)(5) of
the Act regarding cost plans’ obligations
to have appeal processes.
Specifically, section 1852(g)(2)(A) of
the Act requires that an MA
organization shall provide for
reconsideration of a determination upon
request by the enrollee involved. The
reconsideration shall be made no later
than 60 days after the date of the receipt
of the request for reconsideration.
Section 1860D–4(g)(1) of the Act
requires that a Part D plan sponsor shall
meet the requirements of paragraph
(2)(A) of section 1852(g) with respect to
providing for reconsideration of a
determination upon request by the
enrollee involved.
While section 1852 of the Act does
not specify the timeframe in which an
enrollee must request an appeal of an
unfavorable organization determination,
integrated organization determination or
coverage determination, the timeframe
for filing an appeal in the Part C and
Part D programs is established in
regulations. Sections 422.582(b),
422.633(d)(1), and 423.582(b) state that
an appeal must be filed within 60
calendar days from the date of the
notice issued as a result of the
organization determination, integrated
organization determination, coverage
determination, or at-risk determination.
Plans are permitted to extend this filing
deadline for good cause.
We continue to believe that a 60
calendar day filing timeframe strikes an
appropriate balance between due
process rights and the goal of
administrative finality in the
administrative appeals process.
However, to establish consistency with
the regulations applicable to ALJ and
Council reviews with respect to receipt
of the notice of decision or dismissal
and how that relates to the timeframe
for requesting an appeal, we are
proposing to account for a presumption
that it will generally take 5 calendar
days for a notice to be received by an
enrollee or other appropriate party.
Therefore, we are proposing to revise
§§ 422.582(b), 422.633(d)(1)(i),
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423.582(b), and 423.600(a) to state that
a request for a Part C reconsideration,
Part D redetermination, Part D at-risk
redeterminations and Part D IRE
reconsiderations must be filed within 60
calendar days after receipt of the written
determination notice. The proposal also
includes adding new §§ 422.582(b)(1),
422.633(d)(1)(i), and 423.582(b)(1),
which would provide that the date of
receipt of the organization
determination, integrated organization
determination, coverage determination,
or at-risk determination is presumed to
be 5 calendar days after the date of the
written organization determination,
integrated organization determination,
coverage determination or at-risk
determination, unless there is evidence
to the contrary. Based on CMS’s
experience with audits and other similar
review of plan documents, we realize
that it is standard practice that the date
of the written decision notice is the date
the plan sends the notice. The
presumption that the notice is received
5 calendar days after the date of the
decision is a long-standing policy with
respect to IRE appeals and has been
codified in regulation at
§§ 422.602(b)(2), 423.2002(d), and
423.2102(a)(3) regarding hearings before
an ALJ and Council; further, § 422.608
regarding MA appeals to the Medicare
Appeals Council provides that the
regulations under part 405 regarding
Council review apply to such MA
appeals, which would include the
provision at § 405.1102(a)(2) that
applies the same 5 day rule. To ensure
consistency throughout the
administrative appeals process, we
believe it is appropriate and practical to
adopt this approach for plan and Part D
IRE appeals in §§ 422.582(b),
422.633(d)(1), 423.582(b), 423.584, and
423.600(a).
In addition to the aforementioned
proposals related to when an
organization determination, integrated
organization determination, coverage
determination, or at-risk determination
is presumed to be received by an
enrollee of other appropriate party, we
are also proposing to add language to
§§ 422.582, 422.633, 423.582, and
423.600(a) that specifies when an appeal
is considered filed with a plan and the
Part D IRE. Specifically, we are
proposing to add new §§ 422.582(b)(2),
422.633(d)(1)(ii), 423.582(b)(2), and
423.600(a) to provide that for purposes
of meeting the 60 calendar day filing
deadline, the appeal request is
considered filed on the date it is
received by the plan, plan-delegated
entity or Part D IRE specified in the
written organization determination,
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integrated organization determination,
coverage determination, at-risk
determination, or redetermination. The
inclusion of when a request is
considered filed would codify what
currently exists in CMS’s sub-regulatory
guidance and the Part D IRE procedures
manual. CMS’s sub-regulatory guidance
indicates that a standard request is
considered filed when any unit in the
plan or delegated entity receives the
request. An expedited request is
considered filed when it is received by
the department responsible for
processing it. Pursuant to existing
manual guidance, plan material should
clearly state where requests should be
sent, and plan policy and procedures
should clearly indicate how to route
requests that are received in an incorrect
location to the correct location as
expeditiously as possible.
These proposed revisions related to
when a notice is presumed to have been
received would ensure that the time to
request an appeal is not truncated by the
time it takes for a coverage decision
notice to reach an enrollee by mail or
other delivery method. If these
proposals are finalized, corresponding
changes would be made to the Part C
and Part D standardized denial notices
so that enrollees are accurately informed
of the timeframe for requesting an
appeal.
We are also proposing clarifications to
§§ 422.584(b) and 423.584(b) to
explicitly state the timeframe in which
an enrollee must file an expedited plan
appeal for it to be timely. The current
text of §§ 422.584 and 423.584 does not
include the 60-calendar day timeframe
for filing an expedited appeal request,
but CMS manual guidance for Part C
and Part D appeals has long reflected
this 60-calendar day timeframe. We also
note that this timeframe for filing an
appeal is consistent with the current
regulations at §§ 422.582(b) and
423.582(b) for filing a request for a
standard appeal. Neither sections 1852
and 1860D–4 of the Act, nor §§ 422.584
and 423.584 specify the timeframe in
which an enrollee must request an
expedited appeal of an unfavorable
organization determination, coverage
determination or at-risk determination
in the Part C and Part D programs. This
provision would codify existing
guidance. We are certain that plans
already comply as this long-standing
policy is reflected in CMS’s subregulatory guidance 122 and
122 https://www.cms.gov/medicare/appeals-andgrievances/mmcag/downloads/parts-c-and-denrollee-grievances-organization-coveragedeterminations-and-appeals-guidance.pdf.
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standardized denial notices 123 that
explain an enrollee’s right to appeal.
Additionally, we have not received any
complaints on this matter. In proposing
new §§ 422.584(b)(3) and (4) and
423.584(b)(3) and (4), we also propose to
add the procedure and timeframe for
filing expedited organization
determinations and coverage
determinations consistent with
proposed requirements at
§§ 422.582(b)(1) and (2) and
423.582(b)(1) and (2).
If finalized, we believe these
proposals would enhance consistency in
the administrative appeals process and
provide greater clarity on the timeframe
for requesting an appeal and when an
appeal request is considered received by
the plan. Theoretically, the proposed
amendments may result in a small
increase in the number of appeals from
allowing 65 versus 60 days to appeal an
organization determination, integrated
organization determination, coverage
determination or at-risk determination.
However, we believe, based on the low
level of dismissals at the plan level due
to untimely filing, that most enrollees
who wish to appeal a denial do so
immediately, thereby mitigating the
impact of 5 additional days for a plan
to accept an appeal request if this
proposal is finalized. Consequently, we
are not associating impact to the
Medicare Trust Fund. We solicit
interested party input on the accuracy of
this assumption.
E. Authorized Representatives for Parts
C/D Elections (§§ 422.60 and 423.32)
Section 1851(c)(1) of the Act gives the
Secretary the authority to establish a
process through which MA elections,
that is, enrollments and disenrollments,
are made and changed. This authority
includes establishing the form and
manner in which elections are made.
Section 1860D–1(b)(1)(A) of the Act
gives the Secretary the authority to
establish a process for enrollment,
disenrollment, termination, and change
of enrollments in Part D prescription
drug plans. Likewise, section 1860D–
1(b)(1)(B)(ii) of the Act directs CMS to
use rules similar to those established in
the MA context pursuant to 1851(c) for
purposes of establishing rules for
enrollment, disenrollment, termination,
and change of enrollment with an MA–
PD plan.
Consistent with these sections of the
Act, Parts C and D regulations set forth
our election processes under §§ 422.60
and 423.32. These enrollment processes
require that Part C/D eligible
123 https://www.cms.gov/medicare/medicaregeneral-information/bni/madenialnotices.
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individuals wishing to make an election
must file an appropriate enrollment
form, or other approved mechanism,
with the plan. The regulations also
provide information for plans on the
process for accepting election requests,
notice that must be provided, and other
ways in which the plan may receive an
election on behalf of the beneficiary.
Though the term ‘‘authorized
representative’’ is not used in the
context of the statutory provisions
within the Act governing MA and Part
D enrollment and eligibility (for
example, sections 1851 and 1860D–1),
‘‘authorized representative’’—and other
similar terms—are used in other
contexts throughout the Act. Section
1866(f)(3) of the Act defines the term
‘‘advance directive,’’ deferring to
applicable State law to recognize
written instructions such as a living will
or durable power of attorney for health
care. Section 1862(b)(2)(B)(vii)(IV) of the
Act recognizes that an individual may
be represented by an ‘‘authorized
representative’’ in secondary payer
disputes. Section 1864(a) of the Act
allows a patient’s ‘‘legal representative’’
to stand in the place of the patient and
give consent regarding use of the
patient’s medical records.
In the June 1998 interim final rule
that first established the M+C program,
now the MA program (63 FR 34985), we
acknowledged in Part C enrollment
regulations at § 422.60(c) that there are
situations where an individual may
assist a beneficiary in completing an
enrollment request and required the
individual to indicate their relationship
to the beneficiary. In the ‘‘Medicare
Program; Medicare Prescription Drug
Benefit’’ final rule which appeared in
the Federal Register on January 28,
2005 (70 FR 4194), we first recognized
in § 423.32(b) that an authorized
representative may assist a beneficiary
in completing an enrollment request,
and required authorized representatives
to indicate that they provided
assistance. In response to public
comments about the term ‘‘authorized
representative’’ in that rule, we
indicated that CMS would recognize
and rely on State laws that authorize a
person to effect an enrollment on behalf
of a Medicare beneficiary for purposes
of this provision. We also stated that the
authorized representative would
constitute the ‘‘individual’’ for purposes
of making the enrollment or
disenrollment request.
Historically, we have provided the
definition and policies related to
authorized representatives in our sub-
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regulatory manuals.124 We are now
proposing to add new paragraphs
§§ 422.60(h) and 423.32(h) to codify our
longstanding guidance on authorized
representatives making Parts C and D
elections on behalf of beneficiaries.
Current regulation in § 423.32(b)(i)
acknowledges that an ‘‘authorized
representative’’ may assist a beneficiary
in completing an enrollment form, but
it does not define who an ‘‘authorized
representative’’ is. A similar term,
‘‘representative,’’ is currently defined
under §§ 422.561 and 423.560; however,
that definition is used only in the
appeals context and applies only to
subpart M of the MA and Part D
regulations. Therefore, we are defining
the term ‘‘authorized representative’’ for
subpart B (eligibility, election, and
enrollment).
Our proposal defers to the law of the
State in which the beneficiary resides to
determine who is a legal representative.
Deference to State law on these matters
is consistent with other similar practices
within CMS, including in the MA
appeals definition of ‘‘representative’’
(§ 422.561) and Medicaid’s definition of
‘‘authorized representative’’ (§§ 435.923;
438.402), as well as in the HIPAA
privacy regulations’ description of
‘‘personal representative’’ (45 CFR
164.502(g)).
For those with State legal authority to
act and make health care decisions on
behalf of a beneficiary, our proposal
would codify at paragraph (h)(1) of
§§ 422.60 and 423.32 that authorized
representatives will constitute the
‘‘beneficiary’’ or the ‘‘enrollee’’ for the
purposes of making an election,
meaning that CMS, MA organizations,
and Part D sponsors will consider the
authorized representative to be the
beneficiary/enrollee during the election
process. Any mention of beneficiary/
enrollee in our enrollment and
eligibility regulations would be
considered to also include ‘‘authorized
representative,’’ where applicable. Our
proposal at paragraph (h)(2) of §§ 422.60
and 423.32 would clarify that
authorized representatives under State
law may include court-appointed legal
guardians, durable powers of attorney
for health care decisions and State
surrogate consent laws as examples of
those State law concepts that allow the
authorized representative to make
health care decisions on behalf of the
individual. This is not a complete list;
we would defer to applicable State law
granting authority to act and make
124 This guidance can be found in chapter 2,
sections 10 and 40.2.1 of the Medicare Managed
Care Manual and chapter 3, sections 10 and 40.2.1
of the Prescription Drug Benefit Manual.
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health care decisions on behalf of the
beneficiary.
Codifying this longstanding guidance
provides plans, beneficiaries and their
caregivers, and other interested parties
clarity and transparency on the
requirements when those purporting to
be the representatives of the beneficiary
attempt to make election decisions on
their behalf. We have not received
negative public feedback on this
longstanding policy. However, we have
recently answered questions on plan
procedures when dealing with
authorized representatives. We are
proposing to codify this longstanding
guidance in order to clarify our policy
regarding the role of authorized
representatives in the MA and Part D
enrollment process, including the
applicability of State law in this context.
This proposal represents the
codification of longstanding MA and
Part D sub-regulatory guidance. Based
on questions from plans and
beneficiaries related to current
guidance, we conclude that the
guidance has been previously
implemented and is currently being
followed by plans. Therefore, there is no
additional paperwork burden associated
with codifying this longstanding subregulatory policy, and there is also no
impact to the Medicare Trust Fund. All
information impacts related to the
current process for determining a
beneficiary’s eligibility for an election
period and processing election requests
have already been accounted for under
OMB control numbers 0938–0753
(CMS–R–267), 0938–1378 (CMS–10718),
and 0938–0964 (CMS–10141).
F. Open Enrollment Period for
Institutionalized Individuals (OEPI) End
Date (§ 422.62(a)(4))
Section 1851(e) of the Act establishes
the coverage election periods for making
or changing elections in the
Medicare+Choice (M+C), later known as
Medicare Advantage (MA), program.
Section 501(b) of the Balanced Budget
Refinement Act of 1999 (BBRA) (Pub. L.
106–113) amended section 1851(e)(2) of
the Act by adding a new subparagraph
(D), which provides for continuous open
enrollment for institutionalized
individuals after 2001. CMS published a
final rule with comment period (65 FR
40317) in June 2000 implementing
section 1851(e)(2)(D) by establishing a
new continuous open enrollment period
for institutionalized individuals (OEPI)
at then § 422.62(a)(6). In subsequent
rulemaking (83 FR 16722), the OEPI
regulations were further updated to
reflect conforming changes related to
implementation of Title II of The
Medicare Prescription Drug,
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Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108–173) (70 FR
4717) and to redesignate this provision
from § 422.62(a)(6) through (4).
As noted above, the OEPI is
continuous. Individuals may use the
OEPI to enroll in, change, or disenroll
from a plan. Individuals are eligible for
the OEPI if they move into, reside in, or
move out of an institution.
Longstanding sub-regulatory guidance
has stated that the OEPI ends 2 months
after an individual moves out of an
institution, but this has not been
articulated in regulations.125
To provide transparency and stability
for plans, beneficiaries and their
caregivers, and other interested parties
about this aspect of MA enrollment, we
propose to codify current sub-regulatory
guidance that defines when the OEPI
ends. Specifically, we propose to codify
at new § 422.62(a)(4)(ii) that the OEPI
ends on the last day of the second
month after the month the individual
ceases to reside in one of the long-term
care facility settings described in the
definition of ‘‘institutionalized’’ at
§ 422.2.
This proposal would define when the
OEPI ends and would not result in a
new or additional paperwork burden
since MA organizations are currently
implementing the policy related to the
OEPI end date as part of existing
enrollment processes. All burden
impacts related to an applicant’s
eligibility for an election period have
already been accounted for under OMB
control number 0938–0753 (CMS–R–
267). Similarly, we do not believe the
proposed changes would have any
impact to the Medicare Trust Fund.
G. Beneficiary Choice of C/D Effective
Date if Eligible for More Than One
Election Period (§§ 422.68 and 423.40)
Section 1851(f) of the Act establishes
the effective dates of elections and
changes of elections for MA plans. In
the June 1998 interim final rule, we
specified the effective dates for elections
and changes of elections of M+C (now
MA) plan coverage made during various
specified enrollment periods (63 FR
34968). The effective date requirements
for the initial coverage election period
(ICEP), annual election period (AEP),
MA open enrollment period (MA–OEP),
open enrollment period for
institutionalized individuals (OEPI),
and special election periods (SEP) are
codified in regulation at § 422.68. For
Part D plans, section 1860D–
1(b)(1)(B)(iv) of the Act directs us to
establish similar rules for effective dates
125 This guidance can be found in chapter 2,
section 30.3 of the Medicare Managed Care Manual.
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of elections and changes of elections to
those provided under the MA program
statute at section 1851(f). In the January
2005 Part D final rule, we specified the
effective dates for elections and changes
of elections of Part D coverage made
during various specified enrollment
periods (70 FR 4193). The effective date
requirements for the initial enrollment
period (IEP) for Part D, AEP, and SEPs
are codified in regulation at § 423.40.
Existing regulations at §§ 422.68 and
423.40 do not address what the MA
organization or Part D plan sponsor
should do when a beneficiary is eligible
for more than one election period, thus
resulting in more than one possible
effective date for their election choice.
For example, the beneficiary is eligible
to make a change in their election
choice during the MA–OEP, but they are
also eligible for an SEP due to changes
in the individual’s circumstances.
Current sub-regulatory guidance
provides that the MA organization or
Part D plan sponsor determine the
proper effective date based on the
election period for which the
beneficiary is eligible before the
enrollment or disenrollment may be
transmitted to CMS.126 Because the
election period determines the effective
date of the election in most instances,
with the exception of some SEPs or
when election periods overlap,
beneficiaries may not request their
election effective date. The MA
organization or Part D plan sponsor
determines the effective date once the
election period is identified. If a
beneficiary is eligible for more than one
election period, which results in more
than one possible effective date, CMS’s
sub-regulatory guidance 127 directs the
MA organization or Part D plan sponsor
to allow the beneficiary to choose the
election period that results in the
desired effective date. To determine the
beneficiary’s choice of election period,
MA organizations and Part D plan
sponsors are instructed to attempt to
contact the beneficiary, and to
document their attempt(s). However,
sub-regulatory guidance 128 states that
this does not apply to beneficiary
requests for enrollment into an
employer or union group health plan
(EGHP) using the group enrollment
126 This guidance can be found in chapter 2,
section 30.6 and 30.7 of the Medicare Managed Care
Manual and chapter 3, section 30.4 and 30.5 of the
Prescription Drug Benefit Manual.
127 This guidance can be found in chapter 2,
section 30.6 of the Medicare Managed Care Manual
and chapter 3, section 30.4 of the Prescription Drug
Benefit Manual.
128 This guidance can be found in chapter 2,
section 30.6 of the Medicare Managed Care Manual
and chapter 3, section 30.4 of the Prescription Drug
Benefit Manual.
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mechanism. Beneficiaries who make an
election via the employer or union
election process will be assigned an
effective date according to the SEP
EGHP, unless the beneficiary requests a
different effective date that is allowed
by one of the other election periods for
which they are eligible.
Because a beneficiary must be entitled
to Medicare Part A and enrolled in
Medicare Part B in order to be eligible
to receive coverage under a MA or MA–
PD plan, CMS’s sub-regulatory
guidance 129 explains that if one of the
election periods for which the
beneficiary is eligible is the ICEP, the
beneficiary may not choose an effective
date any earlier than the month of
entitlement to Part A and enrollment in
Part B. Likewise, because a beneficiary
must be entitled to Part A or enrolled in
Part B in order to be eligible for
coverage under a Part D plan, subregulatory guidance explains that if one
of the election periods for which the
beneficiary is eligible is the Part D IEP,
the beneficiary may not choose an
effective date any earlier than the month
of entitlement to Part A and/or
enrollment in Part B.130
Furthermore, sub-regulatory
guidance 131 provides that if a
beneficiary is eligible for more than one
election period and does not choose
which election period to use, and the
MA organization or Part D plan sponsor
is unable to contact the beneficiary, the
MA organization or Part D plan sponsor
assigns an election period for the
beneficiary using the following ranking
of election periods (1 = Highest, 5 =
Lowest): (1) ICEP/Part D IEP, (2) MA–
OEP, (3) SEP, (4) AEP, and (5) OEPI. The
election period with the highest rank
generally determines the effective date
of enrollment. In addition, if an MA
organization or Part D sponsor receives
a disenrollment request when more than
one election period applies, the plan is
instructed to allow the beneficiary to
choose which election period to use. If
the beneficiary does not make a choice,
then the plan is directed to assign the
election period that results in the
earliest disenrollment.
To provide transparency and stability
about the MA and Part D program for
plans, beneficiaries, and other interested
parties, we are proposing at new
129 This guidance on effective dates of elections
is currently outlined in section 30.6 of chapter 2 of
the Medicare Managed Care Manual.
130 This guidance on effective dates of elections
is currently outlined in section 30.4 of chapter 3 of
the Medicare Prescription Drug Benefit Manual.
131 This guidance can be found in sections 30.6
and 30.7 of chapter 2 of the Medicare Managed Care
Manual and sections 30.4 and 30.5 of chapter 3 of
the Medicare Prescription Drug Benefit Manual.
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§§ 422.68(g) and 423.40(f) that if the MA
organization or Part D plan sponsor
receives an enrollment or disenrollment
request, determines the beneficiary is
eligible for more than one election
period and the election periods allow
for more than one effective date, the MA
organization or Part D plan sponsor
must allow the beneficiary to choose the
election period that results in the
desired effective date. We also propose
at §§ 422.68(g)(1) and 423.40(f)(1) that
the MA organization or Part D plan
sponsor must attempt to contact the
beneficiary, and must document its
attempt(s), to determine the
beneficiary’s choice. The plan may
contact the beneficiary by phone, in
writing, or any other communication
mechanism. Plans would annotate the
outcome of the contact(s) and retain the
record as part of the individual’s
enrollment or disenrollment request. In
addition, we propose at §§ 422.68(g)(2)
and 423.40(f)(2) to require that the MA
organization or Part D plan sponsor
must use the proposed ranking of
election periods to assign an election
period if the beneficiary does not make
a choice. With the exception of the SEP
EGHP noted earlier, if a beneficiary is
simultaneously eligible for more than
one SEP and they do not make a choice,
and the MA organization or PDP
sponsor is unable to obtain the
beneficiary’s desired enrollment
effective date, the MA organization or
PDP sponsor should assign the SEP that
results in an effective date of the first of
the month after the enrollment request
is received by the plan. Finally, we
propose at §§ 422.68(g)(3) and
423.40(f)(3) to require that if the MA
organization or Part D plan sponsor is
unable to obtain the beneficiary’s
desired disenrollment effective date,
they must assign an election period that
results in the earliest disenrollment.
This proposal represents the
codification of longstanding MA and
Part D sub-regulatory guidance. Based
on infrequent complaints and questions
from plans and beneficiaries related to
current guidance, we conclude that the
guidance has been previously
implemented and is currently being
followed by plans. There is no
additional paperwork burden associated
with codifying this longstanding subregulatory policy, and there is also no
impact to the Medicare Trust Fund. All
information impacts related to the
current process for determining a
beneficiary’s eligibility for an election
period and processing election requests
have already been accounted for under
OMB control number 0938–0753 (CMS–
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R–267) for Part C and 0938–0964 (CMS–
10141) for Part D.
VI. Medicare Advantage/Part C and
Part D Prescription Drug Plan
Marketing and Communications
A. Marketing and Communications
Requirements for Special Supplemental
Benefits for the Chronically Ill (SSBCI)
(§ 422.2267)
Section 1851(h) and (j) of the Act
provide a structural framework for how
MA organizations may market to
beneficiaries and direct CMS to set
standards related to the review of
marketing materials and establish
limitations on marketing activities, as
part of the standards for carrying out the
MA program under section 1856(b) of
the Act. In the Medicare and Medicaid
Programs; Contract Year 2022 Policy
and Technical Changes to the Medicare
Advantage Program, Medicare
Prescription Drug Benefit Program,
Medicaid Program, Medicare Cost Plan
Program, and Programs of All-Inclusive
Care for the Elderly final rule
(hereinafter referred to as the January
2021 final rule), CMS used this statutory
authority to codify guidance from the
Medicare Communications & Marketing
Guidelines (MCMG) into subpart V of
part 422. Several commenters in that
prior rulemaking urged CMS to add
specific provisions in the marketing and
communications regulations regarding
how MA organizations may market
SSBCI described in § 422.102(f). In
response, CMS established a new
requirement for a disclaimer to be used
when SSBCI are mentioned. The SSBCI
disclaimer was originally codified at
§ 422.2267(e)(32), and it currently
appears at paragraph (e)(34). Currently,
that regulation requires MA
organizations to: (i) convey that the
benefits mentioned are a part of special
supplemental benefits, (ii) convey that
not all members will qualify for these
benefits; and (iii) include the model
content in the material copy which
mentions SSBCI benefits. Section
422.2267(e)(34) does not explicitly state
that it applies to both marketing and
communications materials, but our subregulatory guidance is clear that it
applies whenever SSBCI are mentioned;
the disclaimer is required regardless of
whether the material that mentions the
benefits is a marketing or
communications material. The purpose
of the SSBCI disclaimer is to ensure that
beneficiaries are aware that SSBCI are
not available to all plan enrollees and
that the eligibility for these benefits is
limited by section 1852(a)(3)(D) of the
Act and § 422.102(f). Ensuring a clear
statement of these limitations in a
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disclaimer guards against beneficiary
confusion or misunderstanding of the
scope of SSBCI, and thus lessens the
chance that a beneficiary will enroll in
a certain plan believing they can access
that plan’s SSBCI for which they may
not ultimately be eligible.
Per the January 2021 final rule, MA
organizations were required to comply
with the new SSBCI disclaimer
requirement beginning January 1, 2022.
Since MA organizations have had over
a year to implement their use of the
SSBCI disclaimer, we are taking an
opportunity to reevaluate the
requirement at § 422.2267(e)(34),
considering our observation of its actual
implementation.
MA organizations market SSBCI by
advertising various benefits, including
coverage of groceries, pest control,
prepared meals, household items,
gasoline, utility bills, auto repair, pet
supplies or grooming, and more.
Although some of these benefits may be
available under a given plan, the
enrollee must meet the criteria
established to receive a particular
SSBCI. In many instances, MA
organizations have been found to use
marketing to potentially misrepresent
the benefit offered, oftentimes not
presenting a clear picture of the benefit
and limits on eligibility. In a May 2022
letter sent to Congress, the National
Association of Insurance Commissioners
(NAIC) detailed its findings from
surveys with State departments of
insurance, showing ‘‘an increase in
complaints from seniors about
confusing, misleading and potentially
deceptive advertising and marketing of
these plans.’’ 132 Additionally, as
discussed in prior rulemaking, CMS has
seen an increase in complaints related
to marketing, with more than twice as
many complaints related to marketing in
2021 compared to 2020.133 As
evidenced by complaints CMS has
received, some of the current marketing
of SSBCI has the potential to give
beneficiaries the wrong impression by
leading them to believe they can
automatically receive all SSBCI
available by enrolling in the plan.
CMS has seen multiple examples of
such misleading SSBCI advertisements
among MA organizations. We have seen
132 https://content.naic.org/sites/default/files/
State%20MA%20Marketing%20Authority%20
Senate%20Letter%20.pdf.
133 See Medicare Program; Contract Year 2023
Policy and Technical Changes to the Medicare
Advantage and Medicare Prescription Drug Benefit
Programs; Policy and Regulatory Revisions in
Response to the COVID–19 Public Health
Emergency; Additional Policy and Regulatory
Revisions in Response to the COVID–19 Public
Health Emergency final rule (87 FR 27704, May 9,
2022).
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ads (for example, online, billboards,
television) in which the MA
organization presents an extensive list
of benefits that are available, with this
list being displayed prominently in
large font and the SSBCI disclaimer
appearing in very small font at the end
of the ad. Often the disclaimer is brief,
merely stating that the enrollee must
have one of the identified chronic
conditions in order to receive the
benefit and that eligibility will be
determined after enrollment, with no
other information provided. A
beneficiary reading such an ad could
easily miss the small-size disclaimer at
the end because their attention is
immediately drawn to the long,
attractive list of appealing benefits
prominently displayed in large, bold
font. This type of SSBCI marketing is
potentially misleading because, at face
value, it might appear to a beneficiary
that if they enroll in the advertised plan,
they can receive all the highlighted
benefits, without any question as to the
beneficiary’s eligibility, what an
eligibility determination entails, or
when eligibility is assessed.
Based on our findings, we propose to
expand the current required SSBCI
disclaimer to include more specific
requirements, with the intention of
increasing transparency for beneficiaries
and decreasing misleading advertising
by MA organizations. Our proposed
expansion of the SSBCI disclaimer
would clarify what must occur for an
enrollee to be eligible for the SSBCI.
That is, per § 422.102(f), the enrollee
must first have the required chronic
condition(s), then they must meet the
definition of a ‘‘chronically ill enrollee’’
at § 422.102(f)(1)(i)(A), and finally the
MA organization must determine that
the enrollee is eligible to receive a
particular SSBCI under the plan’s
coverage criteria. An MA organization
designs and limits its SSBCI to target
specific chronic conditions. An enrollee
might meet the definition of
‘‘chronically ill enrollee’’ but
nonetheless be ineligible for the MA
organization’s advertised SSBCI because
they do not have the specific chronic
condition(s) required for the particular
SSBCI being advertised. Taking these
important SSBCI eligibility
requirements into account, our proposal
amends the required SSBCI disclaimer
content to clearly communicate the
eligibility parameters to beneficiaries
without misleading them. Specifically,
at § 422.2267(e)(34), we are proposing
three key changes to the regulation and
two clarifications.
First, we are proposing to redesignate
current paragraph (e)(34)(ii) as
paragraph (e)(34)(iii) and add a new
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paragraph (e)(34)(ii), in which we
propose to require MA organizations
offering SSBCI to list, in their SSBCI
disclaimer, the chronic condition or
conditions the enrollee must have to be
eligible for the SSBCI offered by the MA
organization. Per § 422.102(f)(1)(i)(A), a
‘‘chronically ill enrollee’’ must have one
or more comorbid and medically
complex chronic conditions to be
eligible for SSBCI. (See section IV.B. of
this proposed rule for a more detailed
discussion of the definition of
‘‘chronically ill enrollee’’ and eligibility
for SSBCI as part of our proposal to
strengthen the requirements for how
determinations are made that a
particular item or service may be offered
as SSBCI and eligibility determinations
for SSBCI.) We are proposing that if the
number of condition(s) is five or fewer,
then the SSBCI disclaimer must list all
condition(s), and if the number of
conditions is more than five, then the
SSBCI disclaimer must list the top five
conditions, as determined by the MA
organization. For this top five list, we
are proposing it is the MA
organization’s discretion as to which
five conditions to include. In making
this determination, an MA organization
might consider factors such as which
conditions are more common or less
obscure among the enrollee population
the MA organization intends to serve.
We believe that five is a reasonable
number of conditions for the MA
organization to list, so that a beneficiary
may have an idea of the types of
conditions that may be considered for
eligibility for the SSBCI, without listing
so many conditions that a beneficiary
ignores the information.
Second, we propose to revise newly
redesignated paragraph (e)(34)(iii).
Section 422.2267(e)(34)(ii) currently
requires that MA organizations that offer
SSBCI convey that not all members will
qualify. We are proposing to expand this
provision to require that the MA
organization must convey in its SSBCI
disclaimer that even if the enrollee has
a listed chronic condition, the enrollee
may not receive the benefit because
coverage of the item or service depends
on the enrollee being a ‘‘chronically ill
enrollee’’ as defined in
§ 422.102(f)(1)(i)(A) and on the MA
organization’s coverage criteria for a
specific SSBCI item or service required
by § 422.102(f)(4). Section 1852(a)(3)(D)
of the Act and § 422.102(f) provide that
SSBCI are a permissible category of MA
supplemental benefits only for a
‘‘chronically ill enrollee,’’ as that term is
specifically defined, and the item or
service must have a reasonable
expectation of improving or maintaining
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the health or overall function of the
chronically ill enrollee. In other words,
just because an enrollee has one of the
conditions listed in the SSBCI
disclaimer, it does not automatically
mean that they are eligible to receive the
relevant SSBCI, as other criteria will
also need to be met. In addition, a
particular item or service must meet the
requirements in § 422.102(f)(1)(ii) to be
offered as an SSBCI. Likewise, if the
requirements we are proposing to add to
§ 422.102(f) for the item or service to be
covered as an SSBCI are finalized, an
MA organization would also need to
meet those requirements to offer SSBCI
(see section IV.B. of this proposed rule).
Determinations on whether an MA
organization may offer coverage of a
particular item or service as an SSBCI
will generally be made before an MA
organization begins marketing or
communicating the benefits, therefore,
we are not including those requirements
from the proposal in section IV.B. of this
proposed rule in the proposed
expansion of the SSBCI disclaimer. Our
proposed newly redesignated
§ 422.2267(e)(34)(iii) refers to the
eligibility requirements and MA
organization responsibilities in
§ 422.102(f) because we expect the MA
organization to use this information in
developing their SSBCI disclaimer to
clearly convey that not all enrollees
with the required condition(s) will be
eligible to receive the SSBCI. Per
§ 422.102(f) currently and with the
revisions proposed in section IV.B. of
this proposed rule, MA organizations
offering SSBCI must have written
policies based on objective criteria for
determining a chronically ill enrollee’s
eligibility to receive a particular SSBCI.
The SSBCI disclaimer is model
content, so each MA organization may
tailor their disclaimer’s language to
convey that, in addition to having an
eligible chronic condition, the enrollee
must also meet other eligibility
requirements (that is, the definition of a
‘‘chronically ill enrollee’’ and the
coverage criteria of the MA organization
for a specific SSBCI item or service) in
order to receive the SSBCI. MA
organizations would not need to
specifically detail the additional
eligibility requirements (such as the
coverage criteria) in the disclaimer, but
rather convey that coverage is
dependent on additional factors, not
only on the fact that the enrollee has an
eligible chronic condition. For example,
an MA organization might use the
following language in its SSBCI
disclaimer: ‘‘Eligibility for this benefit
cannot be guaranteed based solely on
your condition. All applicable eligibility
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requirements must be met before the
benefit is provided. For details, please
contact us.’’ We are providing this
language as an example, as the SSBCI
disclaimer is model content. Therefore,
in developing their SSBCI disclaimer,
MA organizations may deviate from the
model so long as they accurately convey
the required information and follow
CMS’s specified order of content, if
specified (§ 422.2267(c)). Currently,
§ 422.2267(e)(34) does not specify the
order of content for the SSBCI
disclaimer, and we are not proposing to
add such a requirement; however, MA
organizations must accurately convey
the required information listed in the
proposed regulatory text at
§ 422.2267(e)(34)(i) through (iii) in their
SSBCI disclaimer. In addition, the
disclaimer as drafted by the MA
organization must be clear, accurate,
and comply with all applicable rules on
marketing, communications, and the
standards for required materials and
content at § 422.2267(a).
Third, at new proposed paragraph
(e)(34)(iv), we are proposing specific
formatting requirements for MA
organizations’ SSBCI disclaimers in ads,
related to font and reading pace. These
proposed formatting requirements
would apply to SSBCI disclaimers in
any type of ad, whether marketing or
communications. For print ads, we
reiterate our existing requirement under
paragraph (a)(1) that MA organizations
must display the disclaimer in 12-point
font, Times New Roman or equivalent.
For television, online, social media,
radio, or other-voice-based ads, we
propose that MA organizations must
either: (1) read the disclaimer at the
same pace as the organization does for
the phone number or other contact
information mentioned in the ad, or (2)
display the disclaimer in the same font
size as the phone number or other
contact information mentioned in the
ad. For outdoor advertising (ODA)—
which is defined in § 422.2260 and
includes billboards—we propose that
MA organizations must display the
disclaimer in the same font size as the
phone number or other contact
information appearing on the billboard
or other ODA. The specific font and
reading pace requirements for the SSBCI
disclaimer in ads would appear at new
proposed paragraphs (e)(34)(iv)(A) and
(B).
Finally, in revisiting the requirement
at § 422.2267(e)(34), we believe
additional clarification of current
requirements is appropriate. In the
introductory language at paragraph
(e)(34), we propose a minor addition to
clarify that the SSBCI disclaimer must
be used by MA organizations who offer
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78551
CMS-approved SSBCI (as specified in
§ 422.102(f)). Also, current paragraph
(e)(34)(iii) (requiring the MA
organization to include the SSBCI
disclaimer in the material copy which
mentions SSBCI benefits) would be
revised and moved to new proposed
paragraph (e)(34)(v). In this newly
redesignated paragraph (e)(34)(v), we
propose to clarify that MA organizations
must include the SSBCI disclaimer in
all marketing and communications
materials that mention SSBCI. We also
propose a slight adjustment in this
paragraph to delete the redundant word
‘‘benefits’’ after ‘‘SSBCI.’’
In summary, this proposal would
expand upon the current SSBCI
disclaimer requirements at
§ 422.2267(e)(34) in several important
ways. Requiring a more robust
disclaimer with specific conditions
listed would provide beneficiaries with
more information to determine whether
a particular plan with SSBCI is
appropriate for their needs. We believe
the revised disclaimer would diminish
the ambiguity of when SSBCI are
covered, thus reducing the potential for
misleading information or misleading
advertising. Our goal is to ensure that
beneficiaries enrolling in MA choose a
plan that best meets their health care
needs. Transparency and precision in
marketing and communications to
current and potential enrollees is of
utmost importance in this proposal.
We are not scoring this provision in
the COI section since we believe all
burden impacts of this provision have
already been accounted for under OMB
control number 0938–1051 (CMS–
10260). In addition, this provision is not
expected to have any economic impact
on the Medicare Trust Fund. We
welcome comment on our proposed
amendments to § 422.2267(e)(34), and
we thank commenters in advance for
their feedback.
B. Agent Broker Compensation
Pursuant to section 1851(j)(2)(D) of
the Act, the Secretary has a statutory
obligation to establish guidelines to
ensure that the use of agent and broker
compensation creates incentives for
agents and brokers to enroll individuals
in the Medicare Advantage (MA) plan
that is intended to best meet
beneficiaries’ health care needs. In
September 2008, CMS published the
‘‘Medicare Program; Revisions to the
Medicare Advantage and Prescription
Drug Benefit Programs’’ interim final
rule (73 FR 54226, 54237), our first
regulation to establish requirements for
agent and broker compensation, which
included certain limitations on agent
and broker compensation and other
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safeguards. In that rulemaking, we noted
that these reforms addressed concerns
that the previously permitted
compensation structure resulted in
financial incentives for agents to only
market and enroll beneficiaries in some
plan products and not others due to
larger commissions. These incentives
potentially resulted in beneficiaries
being directed towards plans that were
not best suited to their needs.
In that interim final rule, we noted
that depending on the circumstances,
agent and broker relationships can be
problematic under the Federal antikickback statute if they involve, by way
of example only, compensation in
excess of fair market value,
compensation structures tied to the
health status of the beneficiary (for
example, cherry-picking), or
compensation that varies based on the
attainment of certain enrollment targets.
These and other fraud and abuse risks
exist among the current agent and
broker relationships. We note that the
HHS Office of the Inspector General
(OIG) advisory opinion process is
available to parties seeking OIG’s
opinion as to the legality of a particular
arrangement. Information about this
process remains available on the OIG’s
website at https://oig.hhs.gov/
compliance/advisory-opinions/process/.
In subsequent years, agents and
brokers have become an integral part of
the industry, helping millions of
Medicare beneficiaries to learn about
and enroll in Medicare, MA plans, and
PDPs by providing expert guidance on
plan options in their local area, while
assisting with everything from
comparing costs and coverage to
applying for financial assistance. CMS
has also adopted updates to the agent
and broker compensation requirements.
It has become apparent that shifts in the
MA industry and resulting changes in
contract terms offered to agents and
brokers for enrollment-related services
and expenses, warrant further action to
ensure CMS is complying with its
statutory requirement to ensure
compensation paid to agents and
brokers incentivizes them to enroll
individuals in the MA plan that is
intended to best meet their health care
needs.
CMS has observed that the MA
marketplace, nationwide, has become
increasingly consolidated among a few
large national parent organizations,
which presumably have greater capital
to expend on sales, marketing, and other
incentives and bonus payments to
agents and brokers than smaller market
MA plans. This provides a greater
opportunity for these larger
organizations, either directly or through
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third parties, to use financial incentives
outside and potentially in violation of
the compensation cap set by CMS to
encourage agents and brokers to enroll
individuals in their plan over a
competitor’s plans. For example, CMS
has seen web-based advertisements for
agents and brokers to work with or sell
particular plans where the agents and
brokers are offered bonuses and perks
(such as golf parties, trips, and extra
cash) in exchange for enrollments.
These payments, while being presented
to the agents and brokers as innocuous
bonuses or incentives, are implemented
in such a way that allows the plan
sponsor, in most cases, to credibly
account for these anti-competitive
payments as ‘‘administrative’’ rather
than ‘‘compensation,’’ and these
payments are therefore not limited by
the regulatory limits on compensation.
CMS has also received complaints
from a host of different organizations,
including State partners, beneficiary
advocacy organizations, and MA plans.
A common thread to the complaints is
that agents and brokers are being paid,
typically through various purported
administrative and other add-on
payments, amounts that cumulatively
exceed the maximum compensation
allowed under the current regulations.
Moreover, CMS has observed that such
payments have created an environment,
not dissimilar to what prompted CMS to
engage in the original agent and broker
compensation requirements in 2008,
where the amounts being paid for
activities that do not fall under the
umbrella of ‘‘compensation,’’ are rapidly
increasing. The result is that agents and
brokers are presented with a new suite
of questionable financial incentives that
are likely to influence which MA plan
an agent encourages a beneficiary to
select during enrollment.
We believe these financial incentives
are contributing to behaviors that are
driving an increase in MA marketing
complaints received by CMS in recent
years. As was discussed in our most
recent Medicare Program Contract Year
2023 Rule, based on the most recent
data available at that time, in 2021, CMS
received more than twice the number of
beneficiary complaints related to
marketing of MA plans compared to
2020, and for some states those numbers
were much higher (87 FR 27704, 27704–
27902). These complaints are typically
filed by enrollees or their caregivers
with CMS through 1–800–Medicare or
CMS regional offices, and generally
allege that a beneficiary was encouraged
or pressured to join an MA plan, and
that once enrolled, the plan was not
what the enrollee expected or what was
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explained to them when they spoke to
an agent or broker.
In the Contract Year 2024 Policy and
Technical Changes to the Medicare
Advantage Program, Medicare
Prescription Drug Benefit Program,
Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the
Elderly final rule (88 FR 22234–22256),
which appeared in the Federal Register
on April 12, 2023, we discussed at
length the rapidly increasing use of
various marketing activities that
typically result in beneficiaries being
connected with agents and brokers to be
enrolled in MA plans. Based on a
number of complaints CMS reviewed, as
well as audio recordings of sale calls, it
appears that the increased marketing of
1–800 numbers to facilitate enrollment
in Medicare Advantage plans through
national television advertisements
combined with the subsequent actions
of agents and brokers when beneficiaries
responded to those ads resulted in
beneficiary confusion. In some
instances, through listening to the call
recording, CMS observed that when
beneficiaries reached an agent or broker
in response to these television ads, the
beneficiary was often pressured by the
agent or broker to continue with a plan
enrollment even though the beneficiary
was clearly confused.
At the same time, these types of
complaints have escalated at a pace that
mirrors the growth of administrative or
add-on payments, which we contend are
being misused as a means to
compensate over and above the CMS-set
compensation limits on payment to
agents and brokers. We also note that
such payments appear to have no
regional correlation, that is, they are
generated across the country.134 CMS is
concerned that when the value of
administrative payments offered to
agents and brokers reaches the levels
that CMS has observed in recent years,
these payments may distort the process
that agents and brokers are expected to
engage in when they assist beneficiaries
in weighing the merits of different
available plans. This distortion
disadvantages beneficiaries who enroll
in a plan based on the recommendation
or encouragement of an agent or broker
who may be influenced by how much or
what kind of administrative payment
the agent or broker expects to receive,
rather than enrolling the beneficiary in
a plan that is intended to best meet the
beneficiary’s health care needs.
Consequently, the rise in MA
marketing complaints noted above
134 https://www.cms.gov/medicare/enrollmentrenewal/managed-care-eligibility-enrollment/agentbroker-compensation.
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suggests that agents and brokers are
being influenced to engage in high
pressure tactics, which may in turn
cause beneficiary confusion about their
enrollment choices, to meet enrollment
targets or earn ‘‘administrative
payments’’ in excess of their
compensation payment. Although
CMS’s existing regulations already
prohibit plans, and by extension their
agents and brokers, from engaging in
misleading or confusing
communications with current or
potential enrollees, additional
limitations on payments to agents and
brokers may be necessary to adequately
address the rise in MA marketing
complaints described here.
Additionally, while the proposals
described in this proposed rule are
focused on payments and compensation
made to agents and brokers, CMS is also
concerned about how payments from
MA plans to third party marketing
organizations (TPMOs) may further
influence or obscure the activities of
agent and brokers. In particular, CMS is
interested in the effect of payments
made to Field Marketing Organizations
(FMOs), which is a type of TPMO that
employs agents and brokers to complete
MA enrollment activities and may also
conduct additional marketing activities
on behalf of MA plans, such as lead
generating and advertising. In fact, at
the time of our first agent and broker
compensation regulation, CMS
expressed concern about amounts paid
to FMOs for services that do not
necessarily relate directly to
enrollments completed by the agent or
broker who deals directly with the
beneficiary (73 FR 54239). Some
examples of such services are training,
material development, customer service,
direct mail, and agent recruitment.
As we noted in the preamble to the
two interim final rules published in
2008 (73 FR 67406 and 73 FR 54226),
all parties should be mindful that their
compensation arrangements, including
arrangements with FMOs and other
similar type entities, must comply with
the fraud and abuse laws, including the
Federal anti-kickback statute. Beginning
as early as 2010, an OIG report indicated
that ‘‘plan sponsors may have created
financial incentives that could lead
FMOs to encourage sales agents to
enroll Medicare beneficiaries in plans
that do not meet their health care needs.
Because FMOs, like sales agents, may
influence Medicare beneficiaries’
enrollment in MA plans, CMS should
issue additional regulations more
clearly defining how and how much
FMOs should be paid for their
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services.’’ 135 In the time since CMS first
began to regulate agent and broker
compensation, we have seen the FMO
landscape change from mostly small
regionally-based companies to a largely
consolidated group of large national
private equity-backed or publicly-traded
companies.
We have also observed that, similar to
the additional payments made to agents
and brokers, there has been a steep
increase in administrative payments
made to FMOs by MA organizations.
Likewise, CMS is concerned that these
quick increases in fees have resulted in
a ‘‘bidding war’’ among plans to secure
anti-competitive contract terms with
FMOs and their affiliated agents and
brokers. If left unaddressed, such
bidding wars will continue to escalate
with anti-competitive results, as
smaller, local or regional plans that are
unable to pay exorbitant fees to FMOs
risk losing enrollees to larger, national
plans who can. In addition to comments
on our proposals here to help us
develop additional regulatory action, we
specifically request comments regarding
how CMS can further ensure that
payments made by MA plans to FMOs
do not undercut the intended outcome
of the agent and broker compensation
proposals included in this proposed
rule.
Finally, in addition to the undue
influence that perks, add-on payments,
volume bonuses and other financial
incentives paid by MA organizations to
FMOs may have on agents and brokers,
they also create a situation where there
is an unlevel playing field among plans.
Larger, national plans are more able to
shoulder the added costs being paid as
compared to smaller, more locally based
MA plans. Furthermore, we have
received reports that some larger FMOs
are more likely to contract with national
plans, negatively impacting
competition. On July 9, 2021, President
Biden issued Executive Order (E.O.)
14036: ‘‘Promoting Competition in the
American Economy’’ (hereinafter
referred to as E.O. 14036). E.O. 14036
describes the Administration’s policy
goals to promote a fair, open,
competitive marketplace, and directs
the U.S. Department of Health and
Human Services to consider policies
that ensure Americans can choose
health insurance plans that meet their
needs and compare plan offerings,
furthering competition and consumer
choice. The proposed regulatory
changes included here also aim to deter
135 Levinson, Daniel R, BENEFICIARIES REMAIN
VULNERABLE TO SALES AGENTS’ MARKETING
OF MEDICARE ADVANTAGE PLANS (March
2010); https://oig.hhs.gov/oei/reports/oei-05-0900070.pdf.
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78553
anti-competitive practices engaged in by
MA organizations, agents, brokers, and
TPMOs that prevent beneficiaries from
exercising fully informed choice and
limit competition in the Medicare plan
marketplace among Traditional
Medicare, MA plans, and Medigap
plans.
In this proposed rule we are focusing
on current payment structures among
MA organizations, agents, brokers, and
TMPOs, specifically FMOs, that may
incentivize agents or brokers to
emphasize or prioritize one plan over
another, irrespective of the beneficiary’s
needs, leading to enrollment in a plan
that does not best fit the beneficiary’s
needs and a distortion of the
competitive process.
As noted above, section 1851(j)(2)(D)
and 1851(h)(4)(D) of the Social Security
Act directs the Secretary to set limits on
compensation rates to ‘‘ensure that the
use of compensation creates incentives
for agents and brokers to enroll
individuals in the Medicare Advantage
plan that is intended to best meet their
health care needs,’’ and that the
Secretary ‘‘shall only permit a Medicare
Advantage organization (and the agents,
brokers, and other third parties
representing such organization) to
conduct the activities described in
subsection (j)(2) in accordance with the
limitations established under such
subsection.’’
Our regulations at § 422.2274 set out
limitations regarding various types of
payments and compensation that may
be paid to agents, brokers, and third
parties who represent MA organizations.
Each of these limitations is intended to
better align the professional incentives
of the agents and brokers with the
interests of the Medicare beneficiaries
they serve. Our regulations specify
maximum compensation amounts that
may be paid to agents and brokers for
initial enrollment and renewals. The
regulations also allow for payment to
agents and brokers for administrative
costs such as training and operational
overhead, as long as the payments are at
or below the value of those services in
the marketplace. The maximum
compensation for initial and renewal
enrollments and the requirement that
administrative payments reflect fair
market value for actual administrative
services are intended to ensure
incentives for agents and brokers to help
enroll beneficiaries into MA plans that
best meet their health care needs.
However, while CMS has
affirmatively stated the types of
allowable payment arrangements and
the parameters for those payments in
regulations at § 422.2274, some recent
studies suggest that MA plans offer
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additional or alternative incentives to
agents and brokers, often through third
parties such as FMOs, to prioritize
enrollment into some plans over others
These incentives are both explicit (in
the form of higher payments
purportedly for administrative services)
and implicit (such as in the case of
passing on leads, as discussed
below).136
As previously mentioned, we believe
payments categorized by MA
organizations as ‘‘administrative
expenses,’’ paid by MA organizations to
agents and brokers, have significantly
outpaced the market rates for similar
services provided in non-MA markets,
such as Traditional Medicare with
Medigap. This is based on information
shared by insurance associations and
focus groups and published in research
articles by groups such as the
Commonwealth Fund, which found that
‘‘most brokers and agents in the focus
groups recalled receiving higher
commissions [total payments, including
commission and administrative
payments]—sometimes much higher—
for enrolling people in Medicare
Advantage plans compared to
Medigap.’’ 137
Similarly, some MA organizations are
paying for things such as travel or
operational overhead on a ‘‘per
enrollment’’ basis, resulting in instances
where an agent or broker may be paid
multiple times for the same, one-time
expense, if the agent incurring the
expense happened to enroll more than
one beneficiary into the plan making the
payment. For example, an agent could
be reimbursed for the cost of traveling
to an event where that agent enrolls a
beneficiary into an MA plan; if the cost
of travel is paid on a ‘‘per enrollment’’
basis, the agent would be reimbursed
the price of the trip multiplied by the
number of enrollments the agent
facilitated while at that event. In this
scenario, whichever MA organization
reimburses for travel at the highest rates
would effectively be offering a higher
commission per enrollee. This would
inherently create a conflict of interest
for the agent. As the Secretary must
‘‘ensure that the use of compensation
creates incentives for agents and brokers
to enroll individuals in the Medicare
136 The Commonwealth Fund, The Challenges of
Choosing Medicare Coverage: Views from Insurance
Brokers and Agents (Feb. 28, 2023); https://
www.commonwealthfund.org/publications/2023/
feb/challenges-choosing-medicare-coverage-viewsinsurance-brokers-agents.
137 The Commonwealth Fund, The Challenges of
Choosing Medicare Coverage: Views from Insurance
Brokers and Agents (Feb. 28, 2023); https://
www.commonwealthfund.org/publications/2023/
feb/challenges-choosing-medicare-coverage-viewsinsurance-brokers-agents.
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Advantage plan that is intended to best
meet their health care needs,’’ we
believe this type of conflict must be
addressed.
We are also concerned that other
activities undertaken by a TPMO, as a
part of their business relationships with
MA organizations, may influence the
plan choices offered or how plan
choices are presented by the agent or
broker to a prospective enrollee. For
example, we have learned of
arrangements where an entity, such as
an FMO, provides an MA organization
with both marketing and brokering
services. As part of the arrangement, the
MA organization pays the FMO for leads
generated by the FMO and then the
leads are given directly to the FMO’s
agents instead of to the MA organization
itself (or the MA organization’s other
contracted agents and brokers). When
the FMO’s agents then contact the
individual and enroll the individual
into an MA plan, the MA organization
pays the agent or the FMO the
enrollment compensation described in
§ 422.2267(d), separate and apart from
any referral fee paid to the FMO.
While MA organizations that are
engaged in these types of arrangements
(such as paying FMOs for lead
generating activities and marketing,
then giving the leads to the FMO’s
agents and then paying compensation
for that same enrollment) might argue
that they are not intended to influence
an agent or broker in determining which
plan ‘‘best meets the health care needs
of a beneficiary,’’ we believe it is likely
that these arrangements are having this
effect. We believe that current contracts
in place between FMOs and MA plans
can trickle down to influence agents and
brokers in enrolling more beneficiaries
into those plans that also provide the
agents and brokers with leads,
regardless of the appropriateness of the
plan is for the individual enrollees. In
fact, FMOs could leverage these leads as
a form of additional compensation by
‘‘rewarding’’ agents who enroll
beneficiaries into a specific plan with
additional leads. Therefore, CMS is
required under section 1851(j)(2)(D) of
the Social Security Act to establish
guidelines that will bring the incentives
for agents and brokers to enroll
individuals in an MA plan that is
intended to best meet their health care
needs, in accordance with the statute.
In this rule we are proposing to: (1)
generally prohibit contract terms
between MA organizations and agents,
brokers, or other TMPOs that may
interfere with the agent’s or broker’s
ability to objectively assess and
recommend the plan which best fits a
beneficiary’s health care needs; (2) set a
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single agent and broker compensation
rate for all plans, while revising the
scope of what is considered
‘‘compensation;’’ and (3) eliminate the
regulatory framework which currently
allows for separate payment to agents
and brokers for administrative services.
We are also proposing to make
conforming edits to the agent broker
compensation rules at § 423.2274.
1. Limitation on Contract Terms
We propose to add at
§ 422.2274(c)(13) that, beginning in
contract year 2025, MA organizations
must ensure that no provision of a
contract with an agent, broker, or TPMO
has the direct or indirect effect of
creating an incentive that would
reasonably be expected to inhibit an
agent’s or broker’s ability to objectively
assess and recommend which plan best
meets the health care needs of a
beneficiary.
Examples of the anti-competitive
contract terms we intend to prohibit
would include, for instance, those that
specify renewal or other terms of a
plan’s contract with an agent broker or
FMO contingent upon preferentially
higher rates of enrollment; that make an
MA organizations contract with an FMO
or reimbursement rates for marketing
activities contingent upon agents and
brokers employed by the FMO meeting
specified enrollment quotas; terms that
provide for bonuses or additional
payments from an MA organizations to
an FMO with the explicit or implicit
understanding that the money be passed
on to agents or brokers based on
enrollment volume in plans sponsored
by that MA organizations; for an FMO
to provide an agent or broker leads or
other incentives based on previously
enrolling beneficiaries into specific
plans for a reason other than what best
meets their health care needs.
We believe this proposal gives plans
further direction as to the types of
incentives and outcomes that must be
avoided without being overly
prescriptive as to how the plans should
structure these arrangements.
We seek comment on this proposal.
2. Compensation Rates
Under current regulations,
compensation for agents and brokers
(described at § 422.2274(d)(2) and
excluding administrative payments as
described in § 422.2274(e)) may be paid
at a rate determined by the MA
organization but may not exceed caps
that CMS calculates each year, based on
Fair Market Value (FMV) as specified at
§ 422.2274(a). For example, the CY2023
national agent/broker FMV
compensation caps are $601 for each
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MA initial enrollment, $301 for a MA
renewal enrollment, $92 for each Part D
initial enrollment, and $46 for a Part D
renewal enrollment.
We have learned that overall
payments to agents and brokers can vary
significantly depending on which plan
an individual enrolls in. We are
concerned that the lack of a uniform
compensation standard across plans can
encourage the types of arrangements
that provide strong financial incentives
for agents and brokers to favor some
plans over others and that these
incentives could result in beneficiaries
enrolling in plans that do not best fit
their needs. To eliminate this potential
for bias and ensure that CMS’s
regulations governing agent and broker
compensation ensure that agents and
brokers are incented to enroll
individuals in the MA plan that is
intended to best meet their health care
needs, we are proposing to amend our
regulations to require that all payments
to agents or brokers that are tied to
enrollment, related to an enrollment in
an MA plan or product, or are for
services conducted as part of the
relationship associated with the
enrollment into an MA plan or product
must be included under compensation,
as defined at § 422.2274(a), including
payments for activities previously
excluded under paragraph (ii) of the
definition of compensation at
§ 422.2274(a), and are regulated by the
compensation requirements of
§ 422.2274(d)(1) through (3). We are also
proposing to make conforming
amendments to the regulations at
§ 422.2274(e)(2) to clarify that all
administrative payments are included in
the calculation of enrollment-based
compensation; this proposal is further
discussed at section VI.B.3. of this
proposed rule.
Further, we are proposing to change
the caps on compensation payments
that are currently provided in
§ 422.2274 to set rates that would be
paid by all plans across the board.
Under this proposal, agents and brokers
would be paid the same amount either
from the MA plan directly or by an
FMO. We note that the proposal does
not extend to payments for referrals as
described at § 422.2274(f); we believe
the cap set on referral payments is
sufficient to avoid the harms described
above, and that a referral payment is
often made in lieu of a compensation
payment, and so it does not provide the
same incentives as compensation
payments.
We believe that this approach would
level the playing field for all plans
represented by an agent or broker and
promote competition. In addition, by
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explicitly saying that compensation
extends to additional activities as a part
of the relationship between the agent
and the beneficiary, we reinforce CMS’s
longstanding understanding that the
initial and renewal compensation
amounts are based on the fact that
additional work may be done by an
agent or broker throughout the plan
year, including fielding follow-up
questions from the beneficiary or
collecting additional information from
them would enhance a beneficiary’s
ability to get the most out of their plan.
MA organizations are currently
required, under § 422.2274(c)(5), to
report to CMS on an annual basis the
specific rates and range of rates they
will be paying independent agents and
brokers. We propose to remove the
reporting requirement at
§ 422.2274(c)(5), as all agents and
brokers would be paid the same
compensation rate in a given year under
our proposal.
We seek comment on this proposal.
3. Administrative Payments
As discussed above, CMS is proposing
that all payments to an agent or broker
relating to the initial enrollment,
renewal, or services related to a plan
product would be included in the
definition of compensation. For
consistency with that proposed policy,
we are also proposing to remove the
separate regulatory authority regarding
‘‘administrative payments’’ currently at
§ 422.2274(e)(1), and to amend
§ 422.2274(e)(2) to clarify that the
portion of an agent’s compensation for
an enrollment may be calculated and
updated independently We believe this
step is necessary to ensure that MA
organizations cannot utilize the existing
regulatory framework allowing for
separate payment for administrative
services to effectively circumvent the
FMV caps on agent and broker
compensation.
For instance, we understand that
many plans are paying agents and
brokers for conducting health risk
assessments (HRAs) and categorize
these HRAs as an ‘‘administrative
service.’’ We understand the fair market
value of these services, when provided
by non-medical staff, to be
approximately $12.50 per hour and the
time required to complete an HRA is
intended to be no more than twenty
minutes.138 However, we have been
made aware of instances of an agent or
broker enrolling a beneficiary into a
138 CDC, Interim Guidance for Health Risk
Assessments and their Modes of Provision for
Medicare Beneficiaries; https://www.cms.gov/files/
document/healthriskassessmentscdcfinalpdf.
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78555
plan, asking the enrollee to complete
one of these short assessments, and then
being compensated at rates of up to
$125 per HRA.139 Compensation at
these levels is not consistent with
market value. Moreover, a study funded
by the CDC to provide guidance for best
practices ‘‘recommend that HRAs be
tied closely with clinician practice and
be collected electronically and
incorporated into electronic/patient
health records [. . .] agents/brokers lack
the necessary health care knowledge,
information technology capabilities, and
provider relationships to link HRAs in
the recommended way.’’ 140 For this
reason, we believe that the HRAs
completed by agents and brokers do not
have the same value as those performed
and interpreted by health care providers
or in a health care setting.
Similarly, according to recent market
surveys and information gleaned from
oversight activities, payments
purportedly for training and testing and
other administrative tasks for agents and
brokers selling some MA plans seem to
significantly outpace payments for
similar activities made by other MA
plans, as well as payments for similar
activities undertaken by insurance
agents and brokers in other industries.
The higher overall cost as compared to
other industries, combined with the
otherwise inexplicable difference in
payments for administrative activities
for some MA organizations compared to
others, further points to the payment for
these administrative activities being
used as a mechanism to effectively pay
agents and brokers enrollment
compensation amounts in excess of the
limits specified at § 422.2274(a) and (d).
By eliminating separate payment for
administrative services, CMS expects
that this proposal would eliminate a
significant method which some plans
may have used to circumvent the
regulatory limits on enrollment
compensation. Furthermore, we believe
ensuring a fixed payment rate for agents
will result in compensation greater than
what is currently provided through
typical contractual arrangements with
FMOs, as there would no longer be a
139 https://4239296.fs1.hubspotusercontentna1.net/hubfs/4239296/2023%20Plan%20Year
%20Docs/2023%20HRA%20Instructions/
Cigna%202023%20HRA%20Details.pdf.
140 The Commonwealth Fund, The Challenges of
Choosing Medicare Coverage: Views from Insurance
Brokers and Agents (Feb. 28, 2023); https://
www.commonwealthfund.org/publications/2023/
feb/challenges-choosing-medicare-coverage-viewsinsurance-brokers-agents;cf. Guidance on
Development of Health Risk Assessment as Part of
the Annual Wellness Visit for Medicare
Beneficiaries—(section 4103 of the Patient
Protection and Affordable Care Act) https://
www.cdc.gov/policy/paeo/hra/hraawvguidance
reportfinal.pdf.
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range of compensation rates at which
the MA organizations could pay for
agents and brokers’ services. While our
proposal would prohibit separate
administrative payments, as described
below, we propose to adjust the FMV for
compensation to take into account costs
for certain appropriate administrative
activities.
We recognize that this approach could
have some drawbacks, particularly as
this policy would, in effect, leave agents
and brokers unable to directly recoup
administrative costs such as overhead or
lead purchasing from its compensation
from Medicare health and drug plans,
unless the agent has a certain volume of
business. For instance, the cost of a
customer relationship management
(CRM) system (the software used to
connect and log calls to potential
enrollees) is about $50 per month. This
expense would require at least one
enrollment commission per year to
cover these costs, whereas it is currently
permissible for an MA organization to
pay for these costs directly, leaving the
entire commission as income for the
agent or broker. However, given the high
volume of enrollees that use an agent or
broker for enrollment services, we do
not believe there to be a large risk of
agents or brokers failing to cross that
initial threshold to recoup their
administrative costs.
We considered an alternate policy
proposal wherein we would maintain
our current definitions of compensation
and administrative payments but would
remove the option for a plan to make
administrative payments based on
enrollment, as currently codified at
§ 422.2274(e)(2). We considered instead
requiring that administrative payments
be made a maximum of one time per
administrative cost, per agent or broker.
We considered the argument that these
expenses, such as payments for training
and testing, or nonmonetary
compensation such as leads, should be
paid at their FMV and not as a factor of
overall enrollment because the value of
such administrative tasks is usually a
fixed rate, regardless of how many
enrollments are ultimately generated by
the agent or broker engaged in these
administrative tasks.
We also considered whether, under
this alternative policy approach, it
would be best to require that each
administrative expense be reimbursed at
the same rate by each contracting MA
organization as a means of encouraging
agents and brokers to represent multiple
plans at any given time. However, this
alternative policy would, of necessity,
be comparatively prescriptive and could
present challenges for all parties as it
relates to the tracking these expenses.
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We believe our proposal to include all
payments to an agent or broker under
the definition of compensation is likely
to reduce the ability of plans and/or
TPMOs to circumvent the maximum
compensation rates defined by CMS via
the annual FMV determination.
We seek comment on this proposal.
We are also proposing to increase the
compensation rate described at
§ 422.2274(a) to add certain appropriate
administrative costs. In particular, we
believe that the administrative cost of
the licensing and training and testing
requirements at § 422.2274(b), and the
recording requirements at
§ 422.2274(g)(2)(ii), may warrant an
increase in the rate of compensation
given the significant and predictable
cost of these mandatory activities.141
Based on our fair market value analysis,
we believe these activities would
warrant increasing the base
compensation rate by $31,142 and be
updated annually as part of the
scheduled compensation rate update
described at § 422.2274(a). Therefore,
we propose to add, beginning in 2025,
that FMV will be increased by $31 to
account for administrative payments
included under the compensation rate,
and to be updated annually in
compliance with the requirements for
FMV updates.
We believe it is necessary to increase
the rate for compensation by $31, based
on the estimated costs for training,
testing, and call recording that would
need to be covered by this single
enrollment-based payment. We are
proposing to begin with a one-time $31
increase, including various localityspecific adjustments, with annual FMV
updates to this amount as described by
the regulation, including ‘‘adding the
current year FMV and the product of the
current year FMV and MA Growth
Percentage for aged and disabled
beneficiaries.’’ We note that we are not
proposing a proportionate increase to
compensation for renewals and we
considered this in determining the
amount by which we are proposing to
increase the rate for compensation for
enrollments.
We seek comment on our proposal to
increase the rate for compensation to
account for necessary administrative
costs that would be incorporated into
this rate under our previous proposal.
Specifically, CMS is requesting
comment on the administrative costs
141 https://www.cms.gov/medicare/enrollmentrenewal/managed-care-eligibility-enrollment/agentbroker-compenstation.
142 Our calculations arriving at this number are
further discussed in the COI in section X.B.10 titled
ICRs Regarding Agent Broker Compensation
(§ 422.2274).
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that should be considered, and how else
we might determine their value, as we
consider the future of the compensation
structure.
4. Agent Broker Compensation for Part
D Plans
Finally, we also are proposing to
apply each of the proposals described
above to the sale of PDP plans by agents
and brokers, as codified at § 423.2274.
Pursuant to sections 1851(j)(2)(D) and
1860D–4(l) of the Act, the Secretary has
a statutory obligation to establish
guidelines to ensure that the use of
agent and broker compensation creates
incentives for agents and brokers to
enroll individuals in the Medicare
Advantage (MA) and Part D prescription
drug plans that are intended to best
meet beneficiaries’ health care needs.
Because the same agents and brokers
are often licensed to sell both MA plans
and PDPs, we believe it is necessary
under our statutory authority to apply
the same compensation rules to the sale
of both MA plans and PDPs in order to
ensure that both plan types are being
held to the same standards and are on
a ‘level playing field’ when it comes to
incentives faced by agents and brokers.
This includes increasing the FMV rate
compensation rate by $31.
We also believe it is necessary to
extend these regulations to the sale of
PDPs to avoid shifting the incentives
discussed at length above, such as the
incentive for agents to favor one plan
over another based upon bonuses or
other payments that are not currently
accounted for under the definition of
‘‘compensation.’’ If conforming changes
are not made to the sale of PDP plans,
the PDP plans may have an unfair
advantage in that they have the
opportunity to offer additional
payments and perks to FMOs and
agents, while MA plan sponsors are
limited by the policies proposed above.
Therefore, for the same reasons
discussed above regarding proposed
changes to § 422.2274, we propose to
make conforming amendments to
§ 423.2274.
We seek comment on this proposal,
and specifically whether and to what
extend modifications to these proposals
should be made to account for
differences between MA and Part D plan
types.
VII. Medicare Advantage/Part C and
Part D Prescription Drug Plan Quality
Rating System
A. Introduction
CMS develops and publicly posts a 5star rating system for Medicare
Advantage (MA)/Part C and Part D plans
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as part of its responsibility to
disseminate comparative information,
including information about quality, to
beneficiaries under sections 1851(d) and
1860D–1(c) of the Act and based on the
collection of different types of quality
data under section 1852(e) of the Act.
The Part C and Part D Star Ratings
system is used to determine quality
bonus payment (QBP) ratings for MA
plans under section 1853(o) of the Act
and the amount of MA beneficiary
rebates under section 1854(b) of the Act.
Cost plans under section 1876 of the Act
are also included in the MA and Part D
Star Ratings system, as codified at
§ 417.472(k). We use multiple data
sources to measure quality and
performance of contracts, such as CMS
administrative data, surveys of
enrollees, information provided directly
from health and drug plans, and data
collected by CMS contractors. Various
regulations, including §§ 417.472(j) and
(k), 422.152(b), 423.153(c), and 423.156,
require plans to report on quality
improvement and quality assurance and
to provide data which help beneficiaries
compare plans. The methodology for the
Star Ratings system for the MA and Part
D programs is codified at §§ 422.160
through 422.166 and 423.180 through
423.186, respectively, and we have
specified the measures used in setting
Star Ratings through rulemaking. In
addition, the cost plan regulation at
§ 417.472(k) requires cost contracts to be
subject to the parts 422 and 423
Medicare Advantage and Part D
Prescription Drug Program Quality
Rating System. (83 FR 16526–27) As a
result, the proposals here would apply
to the quality ratings for MA plans, cost
plans, and Part D plans. We generally
use ‘‘Part C’’ to refer to the quality
measures and ratings system that
applies to MA plans and cost plans.
We have continued to identify
enhancements to the Star Ratings
program to ensure it is aligned with the
CMS Quality Strategy as that Strategy
evolves over time. To support the CMS
National Quality Strategy, CMS is
moving towards a building-block
approach to streamline quality measures
across CMS quality and value-based
care programs. Across our programs,
where applicable, we are considering
including the Universal Foundation 143
of quality measures, which is a set of
measures that are aligned across CMS
programs. CMS is committed to aligning
a set of measures across all our quality
and value-based care programs and
ensuring we measure quality across the
entire care continuum in a way that
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promotes the best, safest, and most
equitable care for all individuals.
Improving alignment of measures across
Federal programs and with private
payers will reduce provider burden
while also improving the effectiveness
and comparability of measures. The
Universal Foundation of quality
measures will focus provider attention,
reduce burden, identify disparities in
care, prioritize development of
interoperable, digital quality measures,
allow for cross-comparisons across
programs, and help identify
measurement gaps. The Universal
Foundation is a building block to which
programs will add additional aligned or
program-specific measures. The set of
measures will evolve over time to meet
the needs of individuals served across
CMS programs. We have submitted the
Initiation and Engagement of Substance
Use Disorder Treatment (IET) measure
(Part C) (a Universal Foundation
measure) to the 2023 Measures under
Consideration process for review by the
Measures Application Partnership prior
to proposing use of that measure in the
Star Ratings system through future
rulemaking to align with the Universal
Foundation. We also note that,
beginning with measurement year 2023,
Part C contracts are beginning to report
to CMS additional measures that are
part of the Universal Foundation, such
as Adult Immunization Status,
Depression Screening and Follow-Up
for Adolescents and Adults, and Social
Need Screening and Intervention, for
the display page. We have previously
solicited feedback regarding potentially
proposing these measures as Star
Ratings in the future through both the
Advance Notice of Methodological
Changes for Calendar Year (CY) 2023 for
Medicare Advantage (MA) Capitation
Rates and Part C and Part D Payment
Policies and the Advance Notice of
Methodological Changes for Calendar
Year (CY) 2024 for Medicare Advantage
(MA) Capitation Rates and Part C and
Part D Payment Policies. We intend to
submit these measures to the Measures
Under Consideration process for review
by the Measures Application
Partnership in the future and propose
them through future rulemaking as
additional Star Ratings measures. The
remaining measures that are part of the
Universal Foundation are already part of
the current Part C and D Star Ratings
program.
In this proposed rule, we are also
proposing to update the Medication
Therapy Management (MTM) Program
Completion Rate for Comprehensive
Medication Review (CMR) measure (Part
D).
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We are also proposing the following
methodological enhancements,
clarifications, and operational updates:
• Revise the process for identifying
data completeness issues and
calculating scaled reductions for the
Part C appeals measures.
• Update how the CAI and HEI
reward are calculated in the case of
contract consolidations.
• Revise an aspect of the QBP appeals
process.
• Add that a sponsor may request
CMS review of its contract’s
administrative claims data used for the
Part D Patient Safety measures no later
than the annual deadline set by CMS for
the applicable Star Ratings year.
Unless otherwise stated, proposed
changes would apply (that is, data
would be collected and performance
measured) for the 2025 measurement
period and the 2027 Star Ratings.
B. Adding, Updating, and Removing
Measures (§§ 422.164 and 423.184)
The regulations at §§ 422.164 and
423.184 specify the criteria and
procedures for adding, updating, and
removing measures for the Star Ratings
program. In the ‘‘Medicare Program;
Contract Year 2019 Policy and
Technical Changes to the Medicare
Advantage, Medicare Cost Plan,
Medicare Fee-for-Service, the Medicare
Prescription Drug Benefit Programs, and
the PACE Program’’ final rule which
appeared in the Federal Register on
April 16, 2018 (83 FR 16532)
(hereinafter referred to as the April 2018
final rule), we stated we are committed
to continuing to improve the Part C and
Part D Star Ratings system and
anticipated that over time measures
would be added, updated, and removed.
We also specified at §§ 422.164(d) and
423.184(d) rules for measure updates
based on whether they are substantive
or non-substantive. The regulations, at
paragraph (d)(1), list examples of nonsubstantive updates. See also 83 FR
16534–37. Due to the regular updates
and revisions made to measures, CMS
does not codify a list in regulation text
of the measures (and their
specifications) adopted for the Part C
and Part D Star Ratings program. CMS
lists the measures used for the Star
Ratings each year in the Medicare Part
C & D Star Ratings Technical Notes or
similar guidance issued with
publication of the Star Ratings. In this
rule, CMS is proposing a measure
change to the Star Ratings program and
an updated methodology for calculating
scaled reductions of the Part C appeals
measures for performance periods
beginning on or after January 1, 2025,
unless noted otherwise.
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We are committed to continuing to
improve the Part C and Part D Star
Ratings system by focusing on
improving clinical and other health
outcomes. Consistent with
§§ 422.164(c)(1) and 423.184(c)(1), we
continue to review measures that are
nationally endorsed and in alignment
with the private sector. For example, we
regularly review measures developed by
NCQA and PQA.
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1. Proposed Measure Update
a. Medication Therapy Management
(MTM) Program Completion Rate for
Comprehensive Medication Review
(CMR) (Part D)
Section 1860D–4(c)(2) of the Act
requires all Part D sponsors to have an
MTM program designed to assure, with
respect to targeted beneficiaries, that
covered Part D drugs are appropriately
used to optimize therapeutic outcomes
through improved medication use, and
to reduce the risk of adverse events,
including adverse drug interactions.
Section 1860D–4(c)(2)(A)(ii) of the Act
requires Part D sponsors to target those
Part D enrollees who have multiple
chronic diseases, are taking multiple
Part D drugs, and are likely to meet a
cost threshold for covered Part D drugs
established by the Secretary. CMS
codified the MTM targeting criteria at
§ 423.153(d)(2).
CMS also uses the MTM Program
Completion Rate for CMR Star Rating
measure, which is defined as the
percent of MTM program enrollees who
received a CMR during the reporting
period. The Part D MTM Program
Completion Rate for CMR measure
shows how many members in a plan’s
MTM program had an assessment from
their plan by a pharmacist or other
health professional to help them manage
their medications. As part of the
completion of a CMR, a Part D enrollee
receives a written summary of the
discussion in CMS’s Standardized
Format, including an action plan that
recommends what the member can do to
better understand and use their
medications.144
In the December 27, 2022 proposed
rule, ‘‘Medicare Program; Contract Year
2024 Policy and Technical Changes to
the Medicare Advantage Program,
Medicare Prescription Drug Benefit
Program, Medicare Cost Plan Program,
Medicare Parts A, B, C, and D
Overpayment Provisions of the
Affordable Care Act and Programs of
144 The Medicare Part C & D Star Ratings
Technical Notes provide details on existing
measures and are available at: https://www.cms.gov/
medicare/prescription-drug-coverage/
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All-Inclusive Care for the Elderly;
Health Information Technology
Standards and Implementation
Specifications’’ (87 FR 79452), hereafter
referred to as the December 2022
proposed rule, CMS proposed changes
to the MTM program targeting criteria,
including: (1) requiring plan sponsors to
target all core chronic diseases
identified by CMS, codifying the current
9 core chronic diseases 145 in regulation,
and adding HIV/AIDS for a total of 10
core chronic diseases; (2) lowering the
maximum number of covered Part D
drugs a sponsor may require from 8 to
5 drugs and requiring sponsors to
include all Part D maintenance drugs in
their targeting criteria; and (3) revising
the methodology for calculating the cost
threshold ($4,935 in 2023) to be
commensurate with the average annual
cost of 5 generic drugs ($1,004 in 2020).
We estimated that the proposed changes
would increase the number and
percentage of Part D enrollees eligible
for MTM from 4.5 million (9 percent) to
11.4 million (23 percent).
As noted in the April 12, 2023 final
rule, ‘‘Medicare Program; Contract Year
2024 Policy and Technical Changes to
the Medicare Advantage Program,
Medicare Prescription Drug Benefit
Program, Medicare Cost Plan Program,
and Programs of All-Inclusive Care for
the Elderly’’ (88 FR 22120), hereafter
referred to as the April 2023 final rule,
we did not address comments received
on the provisions of the proposed rule
that were not finalized in that rule, such
as the proposed MTM program targeting
criteria changes, and stated that they
would be addressed at a later time, in
a subsequent rulemaking document, as
appropriate. If those proposed changes
were to be finalized, the number of Part
D enrollees eligible for MTM programs
would increase, and the denominator of
the MTM Program Completion Rate for
CMR Measure would expand
accordingly; therefore such changes in
the targeting criteria would be
substantive updates to the Star Rating
measure per § 423.184(d)(2).
Specifically, these proposed changes to
the targeting criteria would not update
the actual measure specifications but
would meaningfully impact the number
of Part D enrollees eligible for MTM
services from 9 percent to an estimated
145 The current core chronic diseases are
diabetes*, hypertension*, dyslipidemia*, chronic
congestive heart failure*, Alzheimer’s disease, end
stage renal disease (ESRD), respiratory disease
(including asthma*, chronic obstructive pulmonary
disease (COPD), and other chronic lung disorders),
bone disease-arthritis (osteoporosis, osteoarthritis,
and rheumatoid arthritis), and mental health
(including depression, schizophrenia, bipolar
disorder, and other chronic/disabling mental health
conditions). Enumerated in statute (*).
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23 percent and, thus, substantially
increase the number of enrollees
included in the denominator of the
MTM Program Completion Rate for
CMR Measure, if finalized.
Accordingly, if the changes to
eligibility for the MTM program in the
December 2022 proposed rule
(described above) are finalized in a
future rule, in this proposed rule CMS
proposes to move the MTM Program
Completion Rate for CMR Star Rating
measure to a display measure for at least
2 years due to substantive measure
updates. For example, if such MTM
program eligibility changes are finalized
for CY 2025, our proposal in this rule
would move the measure to the display
page for at least 2 years prior to using
the updated measure to calculate and
assign Star Ratings. There would be no
legacy measure to calculate while the
updated measure using the same
measure specifications is on the display
page because the MTM-eligible
denominator population would have
meaningfully increased due to changes
in the program requirements. Therefore,
the measure would be removed from the
Star Ratings entirely for the 2025 and
2026 measurement years and would
return to the Star Ratings program no
earlier than the 2027 measurement year
for the 2029 Star Ratings. CMS does not
anticipate any additional burden
associated with the measure update, as
burden tied to the changes in the MTM
eligibility criteria is already considered
in estimates for the December 2022
proposed rule.
If the changes to eligibility for MTM
programs described above and in the
December 2022 proposed rule are not
finalized, CMS would not make any
substantive changes to the MTM
Program Completion Rate for CMR
measure—that is, we would also not
finalize the proposal in this rule to
update the Star Rating measure.
Table GB1 summarizes the updated
MTM Program Completion Rate for
CMR measure addressed in this
proposed rule. The measure description
listed in this table is a high-level
description. The annual Star Ratings
measure specifications supporting
document, Medicare Part C & D Star
Ratings Technical Notes, provides
detailed specifications for each measure.
Detailed specifications include, where
appropriate, more specific identification
of a measure’s: (1) numerator, (2)
denominator, (3) calculation, (4)
timeframe, (5) case-mix adjustment, and
(6) exclusions. The Technical Notes
document is updated annually. The
annual Star Ratings are produced in the
fall of the prior year. For example, the
2027 Stars Ratings are produced in the
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fall of 2026. If a measurement period is
listed as ‘‘the calendar year 2 years prior
to the Star Ratings year’’ and the Star
Ratings year is 2027, the measurement
period is referencing the January 1,
2025, to December 31, 2025, period.
TABLE GBl. SUMMARY OF PROPOSED REVISED INDIVIDUAL STAR RATING
MEASURE FOR PERFORMANCE PERIODS BEGINNING ON OR AFTER JANUARY
1,2025
Measure
Measure Description
Domain
Measure
Data Source
Category and
CMITID
Measurement
Period
Weight
Statistical
Reporting
Method for
Requirements
Assigning
(Contract
StarRatinll
Tune)
Clustering
MA-PD and
PDP
Part D Measure
Medication
Therapy
Management
(MTM) Program
Completion Rate
for Comprehensive
Medication Review
(CMR)*
The percent of
MTM program
enrollees, 18 years
or older, who
received a CMR
during the reporting
period.
Drug Safety
and Accuracy
of Drug
Pricing
Process Measure
Weight of!
PartDPlan
Reporting
Requirements
The calendar
year 2 years prior
to the Star
Ratings year
00454-01-CPARTD
C. Data Integrity (§§ 422.164(g) and
423.184(g))
We currently have rules specified at
§§ 422.164(g) and 423.184(g) to reduce a
measure rating when CMS determines
that a contract’s measure data are
incomplete, inaccurate, or biased. For
the Part C appeals measures, we have
statistical criteria to reduce a contract’s
appeals measures for missing
Independent Review Entity (IRE) data.
Specifically, these criteria allow us to
use scaled reductions for the appeals
measures to account for the degree to
which the data are missing. See 83 FR
16562–16564. The data underlying a
measure score and Star Rating must be
complete, accurate, and unbiased for
them to be useful for the purposes we
have codified at §§ 422.160(b) and
423.180(b). In the April 2018 final rule
(83 FR 16562), CMS codified at
§§ 422.164(g)(1)(iii) and 423.184(g)(1)(ii)
a policy to make scaled reductions to
the Part C and D appeals measures’ Star
Ratings when the relevant IRE data are
not complete based on the Timeliness
Monitoring Project (TMP) or audit
information. As provided under
§ 423.184(e)(1)(ii), we removed the two
Part D appeals measures (Appeals AutoForward and Appeals Upheld)
beginning with the 2020 measurement
year and 2022 Star Ratings in the 2020
Rate Announcement 146 due to low
statistical reliability; thus, the scaled
reductions are no longer applicable to
the Part D appeals measures. However,
we made no changes to the scaled
reductions used with the Part C appeals
measures, Plan Makes Timely Decisions
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about Appeals and Reviewing Appeals
Decisions, because there were no similar
statistical reliability issues with those
measures. Therefore, these two Part C
measures continue to be subject to the
scaled reductions authorized at
§ 422.164(g)(1)(iii) based on TMP or
audit information.
Because the Part D appeals measures
are no longer part of the Star Ratings, we
are proposing to remove and reserve the
paragraphs at §§ 422.164(g)(1)(iii)(B),
(F), and (I) and 423.184(g)(1)(ii).
Paragraphs (g)(1)(iii)(B), (F), and (I) of
§ 422.164 all address how the error rate
on the TMP for the Part D appeals
measures had been used in calculating
scaled reductions for MA–PDs that are
measured on both Part C and Part D
appeals. Currently, § 423.184(g)(1)(ii)
addresses the scaled reductions for Part
D appeals measures based on the TMP.
Given the removal of the Part D appeals
measures from the Star Ratings, these
provisions are moot. We propose to
reserve the relevant paragraphs to avoid
the risk that redesignating the remaining
paragraphs would cause unintended
consequences with any existing
references to these provisions.
The completeness of the IRE data is
critical to support fair and accurate
measurement of the two Part C appeals
measures. Since the 2019 Star Ratings
we have used data from the TMP, which
uses the Part C audit protocols for
collecting Organization Determinations,
Appeals and Grievances (ODAG)
universes, to determine whether the IRE
data used to calculate the Part C appeals
measures are complete. As described at
§ 422.164(g)(1)(iii), we use scaled
reductions to account for the degree to
which the IRE data are missing. The
current regulations describe how scaled
reductions are based on the TMP.
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However, due to a change in the Part C
audit protocols for collecting universes
of ODAG data, we are proposing to
modify, and in one case reserve,
paragraphs (g)(1)(iii) introductory text,
(g)(1)(iii)(A)(1) and (2), (g)(1)(iii)(H) and
(J), (g)(1)(iii)(K)(2), and (g)(1)(iii)(O) to
change how we address reductions in
the Star Ratings for Part C appeals
measures using different data. We are
proposing to revise the introductory
language in § 422.164(g)(1)(iii) to
remove references to the timeliness
monitoring study and audits and replace
them with references to data from MA
organizations, the IRE or CMS
administrative sources. In addition, our
proposed revisions to this paragraph
include minor grammatical changes to
the verb tense. We are also proposing to
modify § 422.164(g)(1)(iii)(A) to use data
from MA organizations, the IRE, or CMS
administrative sources to determine the
completeness of the data at the IRE for
the Part C appeals measures starting
with the 2025 measurement year and
the 2027 Star Ratings. Currently, data
collected through § 422.516(a) could be
used to confirm the completeness of the
IRE data; however, data collected from
MA organizations through other
mechanisms in addition to data from the
IRE or CMS administrative sources
could be used in the future. The
proposed amendment to
§ 422.164(g)(1)(iii)(A) is not intended to
limit the data CMS uses to conduct
analyses of the completeness of the IRE
data in order to adapt to changing
information submissions that could be
reliably used for the same purpose in
the future. The revisions proposed for
the other paragraphs provide for a new
calculation to implement scaled
reductions for the Part C appeals
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measures for specific data integrity
issues.
Part C contracts are required to send
partially favorable (partially adverse)
and unfavorable (adverse) decisions to
the IRE within applicable timeframes as
specified at § 422.590(a) through (e). In
order for the existing Part C appeals
measures (Plan Makes Timely Decisions
about Appeals and Reviewing Appeals
Decisions) to accurately reflect plan
performances in those areas, the appeals
must be sent to the IRE because the data
source for these measures is based on
the data that have been submitted to the
IRE. Currently, through the Part C
Reporting Requirements as set forth at
§ 422.516(a), CMS collects information
at the contract level from MA
organizations about the number of
partially favorable reconsiderations (that
is, the number of partially favorable
claims and the number of partially
favorable service requests by enrollees/
representatives and non-contract
providers) and unfavorable
reconsiderations (that is, the number of
partially favorable claims and the
number of partially favorable service
requests by enrollees/representatives
and non-contract providers) over a
calendar year.147 These data are subject
to data validation requirements, in
accordance with specifications
developed by CMS, under § 422.516(g),
to confirm that they are reliable, valid,
complete, and comparable. CMS would
use this information to determine the
total number of cases that should have
been sent to the IRE over the
measurement year (that is, number of
partially favorable reconsiderations +
number of unfavorable reconsiderations)
to compare to information from the IRE
about submissions received from each
MA organization. In the future, CMS
may use detailed beneficiary-level data
collected on the number of partially
favorable reconsiderations and the
number of unfavorable reconsiderations
if such more detailed information is
collected under CMS’s statutory and
regulatory authority to require reporting
and data submission from MA
organizations (such as the reporting
requirements in §§ 422.504(f)(2) and/or
422.516(a)).
To determine if a contract may be
subject to a potential reduction for the
Part C appeals measures’ Star Ratings,
CMS is proposing to compare the total
number of appeals received by the IRE,
including all appeals regardless of their
disposition (for example, including
appeals that are dismissed for reasons
other than the plan’s agreement to cover
the disputed services and withdrawn
appeals), to the total number of appeals
that were supposed to go to the IRE. The
total number of appeals that were
supposed to be sent to the IRE would be
based on the sum of the number of
partially favorable reconsiderations and
the number of unfavorable
reconsiderations from the Part C
Reporting Requirements during the
measurement year (January 1 to
December 31st). We propose to modify
the calculation of the error rate at
§ 422.164(g)(1)(iii)(H) by taking 1 minus
the quotient of the total number of cases
received by the IRE and the total
number of cases that were supposed to
be sent to the IRE (Equation 1). The total
number of appeals that were supposed
to be sent to the IRE in Equation 2
would be calculated from the data
described in the proposed revisions to
§ 422.164(g)(1)(iii)(A):
Equation (1)
Part C Calculated Error Rate= 1 _ _____T_o_ta_l_n_u_m_b_e_r_o__f_c_as_e_s_r_ec_e_iv_e_d_b___y_t_h_e_IR_E_ _ _ __
Total number of cases that should have been forwarded to the IRE
Equation (2)
We propose to remove and reserve
§ 422.164(g)(1)(iii)(J) because we intend
to calculate the Part C error rate based
on 12 months rather than a projected
number of cases not forwarded to the
IRE in a 3-month period as has
historically been done with the TMP
data. Currently, a contract is subject to
a possible reduction due to lack of IRE
data completeness if the calculated error
rate is 20 percent or more and the
projected number of cases not
forwarded to the IRE is at least 10 in a
3-month period as described at
§ 422.164(g)(1)(iii)(K). We are proposing
to modify § 422.164(g)(1)(iii)(K)(2) so
that the number of cases not forwarded
to the IRE is at least 10 for the
measurement year (that is, total number
of cases that should have been
forwarded to the IRE minus the total
number of cases received by the IRE is
at least 10 for the measurement year).
The requirement for a minimum number
of cases is needed to address statistical
concerns with precision and small
numbers. If a contract meets only one of
the conditions specified in paragraph
(K), the contract would not be subject to
reductions for IRE data completeness
issues.
We are proposing at
§ 422.164(g)(1)(iii)(O) that the two Part C
appeals measure Star Ratings be
reduced to 1 star if CMS does not have
accurate, complete, and unbiased data
to validate the completeness of the Part
C appeals measures. For example, the
data collected in the Part C Reporting
Requirements go through a data
validation process (§ 422.516(a)). CMS
has developed and implemented data
validation standards to ensure that data
reported by sponsoring organizations
pursuant to § 422.516 satisfy the
regulatory obligation. If these data are
used to validate the completeness of the
IRE data used to calculate the Part C
appeals measures, we would reduce the
two Part C appeals measure Star Ratings
to 1 star if a contract fails data
validation of the applicable Part C
Reporting Requirements sections for
reconsiderations by not scoring at least
95 percent or is not compliant with data
validation standards (which includes
sub-standards as applicable), since we
cannot confirm the data used for the
Part C appeals measures.
We also propose to update
§ 422.164(g)(1)(iii)(A)(2) to change the
data source in the case of contract
consolidations so that the data
147 Elements E through L in Subsection #4 on
page 15 at https://www.cms.gov/files/document/
cy2023-part--technical-specifications-222023.pdf
are currently used to identify favorable and
partially favorable reconsiderations.
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= Number of partially favorable reconsiderations
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described in paragraph (g)(1)(iii)(A)(1)
are combined for consumed and
surviving contracts for the first year
after consolidation. In addition, we
propose to delete the phrase ‘‘For
contract consolidations approved on or
after January 1, 2022’’ as unnecessary.
We are not proposing to update the
steps currently described at
§ 422.164(g)(1)(iii)(C) through (E) and
(G), (g)(1)(iii)(K)(1), and (g)(1)(iii)(L)
through (N) to determine whether a
scaled reduction should be applied to
the two Part C appeals measures. We
welcome feedback on this updated
approach for making scaled reductions
proposed at § 422.164(g)(1)(iii)
introductory text, (g)(1)(iii)(A)(1) and
(2), (g)(1)(iii)(H), (g)(1)(iii)(K)(2), and
(g)(1)(iii)(O), the removal of the Part D
related provisions at
§§ 422.164(g)(1)(iii)(B), (F), and (I) and
423.184(g)(1)(ii), and removal of the
provision at § 422.164(g)(1)(iii)(J).
D. Review of Sponsor’s Data
(§§ 422.164(h) and 423.184(h))
Currently, §§ 422.164(h) and
423.184(h) provide that an MA
organization (and a cost plan
organization as the regulations are
applied under § 417.472(k)) and a Part D
plan sponsor may request a review of
certain administrative data (that is, the
contracts’ appeals data and Complaints
Tracking Module data) before Star
Ratings are calculated. The regulations
provide that CMS will establish an
annual deadline by which such requests
must be submitted. At §§ 422.164(h)(3)
and 423.184(h)(3), CMS proposes to
expand the policy for requests that CMS
review certain data used for Star Ratings
to include administrative data used for
their contract’s Part D Star Rating
Patient Safety measures. These requests
would also have to be received by the
annual deadline set by CMS. We intend
that the requests could include CMS’s
review of Prescription Drug Event
(PDE), diagnosis code, and enrollment
data but the requests are not necessarily
limited to these specific data.
CMS reports and updates the rates for
the current Part D Star Ratings Patient
Safety measures (that is, Medication
Adherence for Cholesterol (Statins)
(ADH-Statins), Medication Adherence
for Hypertension (RAS Antagonists)
(ADH–RAS), Medication Adherence for
Diabetes Medications (ADH-Diabetes),
and Statin Use in Persons with Diabetes
(SUPD) measures) via the Patient Safety
Analysis Web Portal for sponsors to
review and download. Part D sponsors
can use the Patient Safety reports to
compare their performance to overall
averages and monitor their progress in
improving their measure rates. In the
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April 17, 2023, HPMS memorandum
titled ‘‘Information to Review Data Used
for Medicare Part C and D Star Ratings
and Display Measures,’’ CMS reminded
sponsors of the various datasets and
reports available for sponsors to review
their underlying measure data that are
the basis for the Part C and D Star
Ratings and display measures, including
the monthly Part D Patient Safety
measure reports. We expect sponsors to
review their monthly Patient Safety
reports that include measure rates along
with available underlying
administrative data and alert CMS of
potential errors or anomalies in the rate
calculations per the measure
specifications in advance of CMS’s plan
preview periods to allow sufficient time
to investigate and resolve them before
the release of the Star Ratings.
Reviewing administrative data for the
Patient Safety measures is a timeconsuming process. In addition, once
CMS implements sociodemographic
status (SDS) risk adjustment for the
three Medication Adherence measures,
as finalized in the April 2023 final rule
(88 FR 22265–22270), the final measure
rates, which are calculated in July after
the end of the measurement period, will
require increased processing time to
calculate. To allow enough time for
CMS to review a sponsor’s
administrative data and ensure the
accuracy of the final calculated Patient
Safety measure rates, we are proposing
that sponsors’ requests for CMS review
of administrative data must be received
no later than the annual deadline set by
CMS.
Beginning with the 2025
measurement year (2027 Star Ratings),
we propose at §§ 422.164(h)(3) and
423.184(h)(3) that any requests by an
MA organization or Part D sponsor to
review its administrative data for
Patient Safety measures be made by the
annual deadline set by CMS for the
applicable Star Ratings year. Similar to
the implementation of §§ 422.164(h)(1)
and (2) and 423.184(h)(1) and (2), to
provide flexibility to set the deadline
contingent on the timing of the
availability of data for plans to review,
we intend to announce the deadline in
advance either through the process
described for changes in and adoption
of payment and risk adjustment policies
section 1853(b) of the Act (that is, the
annual Advance Notice and Rate
Announcement) or an HPMS
memorandum.
Given the timing of the publication of
the Advance Notice of Methodological
Changes for Calendar Year (CY) 2025 for
Medicare Advantage (MA) Capitation
Rates and Part C and Part D Payment
Policies and of this proposal, we intend
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to announce the deadline for
measurement year 2025 in the final rule,
should this proposal be finalized. In
subsequent years, we will announce
annual deadlines in advance via annual
Advance Notice and Rate
Announcement, or by a HPMS
memorandum. For the 2025
measurement year (2027 Star Ratings),
we expect this deadline to be May 18,
2026. In establishing this deadline, we
factored in data completeness along
with operational deadlines to produce
the final Star Ratings. These requests
may be time-consuming to review, and
it is beneficial to receive the requests
before the final rates are calculated and
before the first plan preview.
Historically, we find that PDE data for
performance measurement are complete
by April of the following year (that is,
PDE data for Year of Service (YOS) 2025
is generally complete by April of 2026)
even though the PDE submission
deadline is established at the end of
June following the payment year.
E. Categorical Adjustment Index
(§§ 422.166(f)(2) and 423.186(f)(2))
We propose to calculate the
percentage LIS/DE enrollees and
percentage disabled enrollees used to
determine the Categorical Adjustment
Index (CAI) adjustment factor in the
case of contract consolidations based on
the combined contract enrollment from
all contracts in the consolidation
beginning with the 2027 Star Ratings.
The methodology for the CAI is codified
at §§ 422.166(f)(2) and 423.186(f)(2). The
CAI adjusts for the average withincontract disparity in performance
associated with the percentages of
enrollees who receive a low-income
subsidy or are dual eligible (LIS/DE) or
have disability status within that
contract. Currently, the percentage LIS/
DE enrollees and percentage disabled
enrollees for the surviving contract of a
consolidation that are used to determine
the CAI adjustment factor are calculated
using enrollment data for the month of
December for the measurement period
of the Star Ratings year for the surviving
contract as described at
§§ 422.166(f)(2)(i)(B) and
423.186(f)(2)(i)(B). To more accurately
reflect the membership of the surviving
contract after the consolidation, we
propose to determine the percentage
LIS/DE enrollees and percentage
disabled enrollees for the surviving
contract by combining the enrollment
data across all contracts in the
consolidation.
We propose to modify
§§ 422.166(f)(2)(i)(B) and
423.186(f)(2)(i)(B) to calculate the
percentage LIS/DE enrollees and the
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percentage disabled enrollees for the
surviving contract for the first two years
following a consolidation by combining
the enrollment data for the month of
December for the measurement period
of the Star Ratings year across all
contracts in the consolidation. Once the
enrollment data are combined across the
contracts in the consolidation, all other
steps described at §§ 422.166(f)(2)(i)(B)
and 423.186(f)(2)(i)(B) for determining
the percentage LIS/DE enrollees and
percentage disabled enrollees would
remain the same, but we are proposing
to restructure that regulation text into
new paragraphs (f)(2)(i)(B)(2) through
(4). We are proposing this change since
§§ 422.166(b)(3) and 423.186(b)(3) do
not address the calculation of
enrollment for the CAI in the event of
a contract consolidation; rather, they
focus on the calculation of measure
scores in the case of consolidations.
F. Health Equity Index Reward
(§§ 422.166(f)(3) and 423.186(f)(3))
We are proposing how to calculate the
health equity index (HEI) reward in the
case of contract consolidations
beginning with the 2027 Star Ratings.
(The 2027 Star Ratings will be the first
Star Ratings to include the HEI.) The
methodology for the HEI reward is
codified at §§ 422.166(f)(3) and
423.186(f)(3). The HEI rewards contracts
for obtaining high measure-level scores
for the subset of enrollees with the
specified social risk factors (SRFs). The
goal of the HEI reward is to improve
health equity by incentivizing MA, cost,
and PDP contracts to perform well
among enrollees with specified SRFs. In
calculating the HEI reward for the
surviving contract of a consolidation,
we want to avoid masking the scores of
contracts with low performance among
enrollees with the specified SRFs under
higher performing contracts. We also
want to avoid masking contracts that
serve relatively few enrollees with the
specified SRFs under contracts that
serve relatively many more of these
enrollees.
For the first year following a
consolidation, we propose to add new
paragraphs §§ 422.166(f)(3)(viii)(A) and
423.186(f)(3)(viii)(A) to assign the
surviving contract of a consolidation the
enrollment-weighted mean of the HEI
reward of the consumed and surviving
contracts using enrollment from July of
the most recent measurement year used
in calculating the HEI reward; the
existing rules laid out at
§§ 422.162(b)(3)(iv) and
423.182(b)(3)(iv) address how CMS will
handle combining measures scores for
consolidations, but do not address how
CMS will handle the calculation of the
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HEI when contracts consolidate since
the HEI is not a measure. We propose
that contracts that do not meet the
minimum percentage of enrollees with
the specified SRF thresholds or the
minimum performance threshold
described at §§ 422.166(f)(3)(vii) and
423.186(f)(3)(vii) would have a reward
value of zero used in calculating the
enrollment-weighted mean reward. For
the second year following a
consolidation, we propose at new
paragraphs §§ 422.166(f)(3)(viii)(B) and
423.186(f)(3)(viii)(B) that, when
calculating the HEI score for the
surviving contract, the patient-level data
used in calculating the HEI score would
be combined across the contracts in the
consolidation prior to calculating the
HEI score. The HEI score for the
surviving contract would then be used
to calculate the HEI reward for the
surviving contract following the
methodology described in
§§ 422.166(f)(3)(viii) and
423.186(f)(3)(viii).
G. Quality Bonus Payment Rules
(§ 422.260)
Sections 1853(n) and 1853(o) of the
Act require CMS to make QBPs to MA
organizations that achieve at least 4
stars in a 5-star quality rating system. In
addition, section 1854(b)(1)(C) of the
Act ties the share of savings that MA
organizations must provide to enrollees
as the beneficiary rebate to the level of
an MA organization’s QBP rating. The
administrative review process for an
MA contract to appeal its QBP status is
laid out at § 422.260(c). As described in
the final rule titled ‘‘Medicare Program;
Changes to the Medicare Advantage and
the Medicare Prescription Drug Benefit
Programs for Contract Year 2012 and
Other Changes,’’ which was published
in the Federal Register on April 15,
2011 (76 FR 21490–91), § 422.260(c)(1)
and (2) create a two-step administrative
review process that includes a request
for reconsideration and a request for an
informal hearing on the record, and
§ 422.260(c)(3) imposes limits on the
scope of requests for an administrative
review. We propose to revise the
language at § 422.260(c)(2)(vii) to
provide the CMS Administrator the
opportunity to review and modify the
hearing officer’s decision within 10
business days of its issuance. We
propose that if the Administrator does
not review and issue a decision within
10 business days, the hearing officer’s
decision is final and binding. Under this
proposal, if the Administrator does
review and modify the hearing officer’s
decision, a new decision will be issued
as directed by the Administrator. If
finalized, this proposed amendment
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would be implemented for all QBP
appeals after the effective date of the
final rule.
VIII. Improvements for Special Needs
Plans
A. Verification of Eligibility for C–SNPs
(§ 422.52(f))
Section 1859(b)(6) of the Act defines
specialized MA plans for special needs
individuals, as well as the term ‘‘special
needs individual.’’ Section 1859(f)(1) of
the Act provides that notwithstanding
any other provision of Part C of the
Medicare statute and in accordance with
regulations of the Secretary, an MA
special needs plan (SNP) may restrict
the enrollment of individuals under the
plan to individuals who are within one
or more classes of special needs
individuals. The regulation governing
eligibility for MA SNPs is at § 422.52. In
addition to meeting the definition of a
special needs individual in § 422.2 and
the general eligibility requirements for
MA enrollment in § 422.50, an
individual must meet the eligibility
requirements for the specific MA SNP in
which the individual seeks to enroll.
Currently, § 422.52(f) provides that each
MA SNP must employ a process
approved by CMS to verify the
eligibility of each individual enrolling
in the SNP. CMS adopted this provision
in paragraph (f) in the final rule with
comment period ‘‘Medicare Program;
Medicare Advantage and Prescription
Drug Benefit Programs: Negotiated
Pricing and Remaining Revisions,’’
which appeared in the Federal Register
on January 12, 2009 (74 FR 1494).
Historically, we have provided
operational guidance related to
eligibility criteria for enrollment in an
MA SNP that exclusively enrolls
individuals who meet the definition of
special needs individual under § 422.2
in our sub-regulatory manuals.148
We propose to revise paragraph
§ 422.52(f) to codify, with minor
modifications and clarifications, our
longstanding guidance on procedural
steps MA plans must take to verify an
individual’s eligibility for enrollment in
a chronic condition SNP (C–SNP). C–
SNPs are SNPs that restrict enrollment
to special needs individuals with
specific severe or disabling chronic
conditions, defined at § 422.2. By
codifying the verification requirements,
we intend to provide transparency and
stability for MA organizations offering
C–SNPs and other interested parties
148 This guidance can be found at https://
www.cms.gov/files/document/cy2021-maenrollment-and-disenrollment-guidance.pdf and
https://www.cms.gov/regulations-and-guidance/
guidance/manuals/downloads/mc86c16b.pdf.
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about this aspect of the MA program. It
will also clarify the SNP’s roles and
responsibilities and further assist MA
organizations in meeting the
requirements pertaining to verification
of eligibility for C–SNPs.
Specifically, we propose in new
§ 422.52(f)(1) to codify existing guidance
stating that for enrollments into a C–
SNP, the MA organization must contact
the individual applicant’s current
physician to confirm that the enrollee
has the specific severe or disabling
chronic condition(s). Although the
current sub-regulatory guidance in
chapter 16–B, section 40.2.1 of the
Medicare Managed Care Manual refers
only to the applicant’s existing provider,
we believe that a physician—either the
applicant’s primary care physician or a
specialist treating the qualifying
condition(s)—should provide the
required verification of the applicant’s
condition to ensure the accuracy and
integrity of the verification process.
Therefore, we are proposing to use the
term ‘‘physician’’ throughout proposed
new § 422.52(f).
To further clarify the verification
process, we also propose in new
§ 422.52(f)(1)(i) that the physician must
be the enrollee’s primary care physician
or specialist treating the chronic
condition, or conditions in the case of
an individual seeking enrollment in a
multi-condition C–SNP. The MA
organization may either (1) as proposed
at new § 422.52(f)(1)(i), contact the
applicant’s physician or physician’s
office and obtain verification of the
condition prior to enrollment, or (2) as
proposed at new § 422.52(f)(1)(ii), use a
Pre-enrollment Qualification
Assessment Tool (PQAT) prior to
enrollment and subsequently (which
can be after enrollment) obtain
verification of the condition(s) from the
enrollee’s physician no later than the
end of the individual’s first month of
enrollment in the C–SNP.149 Both
proposed options are discussed in the
current guidance. We continue to
believe that these procedures will allow
the MA organization to efficiently serve
149 CMS provides an outline of the Pre-enrollment
Qualification Assessment Tool in section 40.2.1 of
chapter 16–B of the Medicare Managed Care
Manual (MMCM). In 2017, CMS released a memo
entitled, ‘‘Discontinuation of CMS Approval
Process for C–SNP Pre-Enrollment Qualification
Assessment Tool,’’ stating that we would no longer
require chronic condition special needs plans (C–
SNPs) to seek CMS approval prior to using a PreEnrollment Qualification Assessment Tool. CMS
approval is granted for tools that meet the standards
articulated in section 40.2.1 of the MMCM and
individual review and approval of plan-specific
tools is not required. Therefore, MA organizations
are no longer required to submit these tools
individually to CMS for approval so long as the
standards outlined in the guidance are met.
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special needs populations while
maintaining the integrity of SNP
offerings under the MA program.
As part of this process, we propose at
new § 422.52(f)(1)(i) that verification of
the chronic condition(s) from the
applicant’s primary care physician or
treating specialist must be in a form and
manner authorized by CMS. Existing
guidance states that this verification can
be in the form of a note from a provider
or the provider’s office or documented
telephone contact with the physician or
physician’s office confirming that the
enrollee has the specific severe or
disabling chronic condition. These
would remain acceptable under this
proposal. Performing this preenrollment verification with the
applicant’s primary care physician or
specialist treating the qualifying
condition will mean that the C–SNP
may process the enrollment promptly.
Use of the PQAT requires both preenrollment and post-enrollment actions
by the C–SNP to conduct an assessment
and subsequently confirm the
information. The PQAT, per existing
guidance,150 would collect information
about the chronic condition(s) targeted
by the C–SNP directly from the enrollee
and must include a signature line for a
physician to confirm the individual’s
eligibility for C–SNP enrollment. In
order for the PQAT to be complete, a
physician must be the person who goes
through the PQAT with the enrollee.
The physician that goes through the
PQAT with the enrollee can be either
the enrollee’s physician or a physician
employed or contracted by the plan. A
physician must later review the
document to confirm that the
information supports a determination
that the enrollee is eligible for the C–
SNP, even without their presence at the
time of the determination by the
physician. The physician providing the
review and signature must be the
enrollee’s physician. Ultimately, a
physician’s review of and signature on
the completed PQAT provide
verification of the applicant’s special
needs status with regards to the
applicable chronic condition(s).
Currently, C–SNPs are not required to
submit the PQAT to CMS for review and
approval before the PQAT is used by the
C–SNP and CMS proposes to codify that
policy. The PQAT must meet the
standards articulated in proposed
§ 422.52(f)(1)(ii)(A), and therefore
review and approval of plan-specific
tools by CMS are not required.
150 This guidance can be found in chapter 16–B,
Special Needs Plans, section 40.2 of the Medicare
Managed Care Manual.
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• As proposed at
§ 422.52(f)(1)(ii)(A)(1), the PQAT must
include a set of clinically appropriate
questions relevant to the chronic
condition(s) on which the C–SNP
focuses. For example, an MA
organization sponsoring a Diabetes
Mellitus C–SNP would perhaps include
questions related to diagnoses of
diabetes, such as blood glucose level or
whether the enrollee is currently taking
a medication for diabetes mellitus.
• As proposed at
§ 422.52(f)(1)(ii)(A)(2), the PQAT must
gather information on the applicant’s
past medical history, current signs and/
or symptoms, and current medications
sufficient to provide reliable evidence
that the applicant has the applicable
condition(s).
• As proposed at
§ 422.52(f)(1)(ii)(A)(3), the PQAT must
include the date and time of the
assessment if completed during a faceto-face interview with the applicant, or
the receipt date if the C–SNP receives
the completed PQAT by mail or by
electronic means (if available).
• As proposed at
§ 422.52(f)(1)(ii)(A)(4), the PQAT must
include a signature line for and be
signed by a physician to confirm the
individual’s eligibility for C–SNP
enrollment. (We are also proposing that
this signature be from the applicant/
enrollee’s primary care physician or
treating specialist.)
• As proposed at § 422.52(f)(1)(ii)(B),
the C–SNP must conduct a postenrollment confirmation of each
enrollee’s information and eligibility
using medical information (medical
history, current signs and/or symptoms,
diagnostic testing, and current
medications) provided by the enrollee’s
primary care physician or the specialist
treating the enrollee’s chronic
condition.
• As proposed at § 422.52(f)(1)(ii)(C),
the C–SNP must include the
information gathered in the PQAT and
used in this verification process in the
records related to or about the enrollee
that are subject to the confidentiality
requirements in § 422.118.
• As proposed at § 422.52(f)(1)(ii)(D),
the C–SNP must track the total number
of enrollees and the number and percent
by condition whose post-enrollment
verification matches the pre-enrollment
assessment and the data and supporting
documentation must be made available
upon request by CMS.
In addition, we propose to codify at
§ 422.52(f)(1)(ii)(E) our longstanding
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guidance 151 to MA organizations
offering C–SNPs that choose see to use
a PQAT that the MA organization has
until the end of the first month of
enrollment to confirm that the
individual has the qualifying
condition(s) necessary for enrollment
into the C–SNP. If the C–SNP cannot
confirm that the enrollee has the
qualifying condition(s) within that time,
the C–SNP has the first seven calendar
days of the following month (i.e., the
second month of enrollment) in which
to send the enrollee notice of
disenrollment for not having the
qualifying condition(s). Disenrollment is
effective at the end of the second month
of enrollment; however, as also outlined
in current guidance, the C–SNP must
continue the individual’s enrollment in
the C–SNP if confirmation of the
qualifying condition(s) is obtained at
any point prior to the end of the second
month of enrollment. We propose to
codify at § 422.52(f)(1)(ii)(F), consistent
with existing guidance, that the C–SNP
must continue the enrollment of the
individual in the C–SNP if the C–SNP
confirms the qualifying condition(s)
prior to the disenrollment effective date.
Lastly, we propose to codify at
§ 422.52(f)(1)(iii) that the C–SNP is
required to have the individual’s current
physician (primary care physician or
specialist treating the qualifying
condition) administer the PQAT directly
with the enrollee or provide
confirmation (with or without the
presence of the enrollee) that the
information in the document supports a
determination that the individual is
eligible for the C–SNP. Once the
physician has confirmed that the PQAT
contains information that supports the
applicant’s chronic condition and signs
it, the PQAT is complete. Without a
physician’s signature, the process is
incomplete, and thus, the applicant
must be denied enrollment if the
enrollment has not yet happened or
disenrolled by the end of the second
month if the applicant had been
enrolled. If the individual is disenrolled
because the person’s eligibility cannot
be verified, SNPs must recoup any
agent/broker compensation consistent
with § 422.2274(d)(5)(ii).
These proposals represent the
codification of existing guidance
outlining the procedural steps MA
organizations currently take to verify an
individual’s eligibility for enrollment in
a C–SNP, with minor modifications and
clarifications. Therefore, we believe that
151 This guidance can be found in chapter 2,
section 20.10, and chapter 16–B, Special Needs
Plans, section 40.2 of the Medicare Managed Care
Manual.
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this proposal would not result in a new
or additional paperwork burden, as the
policy to verify eligibility for C–SNPs
has been in existence for some time. All
burden impacts related to the SNP
eligibility verification procedures have
already been accounted for under OMB
control number 0938–0753 (CMS–R–
267). These requirements have been
previously implemented and are
currently being followed by MA
organizations. Similarly, we do not
believe the proposed changes would
have any impact to the Medicare Trust
Fund.
B. I–SNP Network Adequacy
In accordance with § 422.116, CMS
conducts evaluations of the adequacy of
provider networks of all MA
coordinated care plans to ensure access
to covered benefits for enrollees. For
MA coordinated care plans, which
generally base coverage or cost sharing
on whether the provider that furnishes
services to an MA enrollee is in-network
or out-of-network, these evaluations are
particularly important. All MA special
needs plans (SNP) are coordinated care
plans and subject to the current
requirements for network adequacy.
Within the MA program, SNPs are
classified into three distinct types:
Chronic Care special needs plan (C–
SNP), Dual Eligible special needs plan
(D–SNP), and Institutional special needs
plan (I–SNP). An I–SNP is a SNP that
restricts enrollment to MA-eligible
individuals who meet the definition of
institutionalized and institutionalizedequivalent. One specific subtype of I–
SNP is the facility-based I–SNP. Here,
we use the term (‘‘facility-based I–SNP’’)
to refer to an I–SNP that restricts
enrollment to MA-eligible individuals
who meet the definition of
institutionalized; owns or contracts with
at least one institution, specified in the
definition of institutionalized in § 422.2,
for each county within the plan’s
county-based service area; and owns or
has a contractual arrangement with each
institutional facility serving enrollees in
the plan. Historically, the I–SNP
industry has stated that CMS’s current
network adequacy criteria under
§ 422.116 create challenges for facilitybased I–SNPs because facility-based I–
SNP enrollees access services and seek
care in a different way than enrollees of
other plan types.
In the ‘‘Medicare Program; Contract
Year 2024 Policy and Technical
Changes to the Medicare Advantage
Program, Medicare Prescription Drug
Benefit Program, Medicare Cost Plan
Program, Medicare Parts A, B, C, and D
Overpayment Provisions of the
Affordable Care Act and Programs of
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All-Inclusive Care for the Elderly;
Health Information Technology
Standards and Implementation
Specifications’’ proposed rule, which
appeared in the Federal Register on
December 27, 2022 (87 FR 79452) (‘‘the
December 2022 proposed rule’’), we
explained in detail how I–SNPs restrict
enrollment to MA-eligible individuals
who are institutionalized or
institutionalized-equivalent, as those
terms are defined in § 422.2 and
proposed new definitions for the
different types of I–SNPs. As a result,
the enrollees in I–SNPs are individuals
who continuously reside in or are
expected to continuously reside for 90
days or longer in one of the specified
facilities listed in the definition of
‘‘institutionalized’’ at § 422.2 or
individuals (‘‘institutionalizedequivalent’’) who are living in the
community but require an institutional
level of care. We refer readers to the
December 2022 proposed rule for a more
detailed discussion of the eligibility
requirements for I–SNPs. (87 FR 79566
through 79568) See also chapter 16–B,
section 20.3 of the Medicare Managed
Care Manual.152 Our use of the term
‘‘facility-based I–SNP’’ in this proposed
rule aligns with the proposed definition
of ‘‘Facility-based Institutional special
needs plan (FI–SNP)’’ in the December
2022 proposed rule.
Per section 1859(f)(2) of the Act, I–
SNPs restrict enrollment to MA-eligible
individuals who, for 90 days or longer,
have had or are expected to need the
level of services provided in a long-term
care (LTC) facility, which includes: a
skilled nursing facility (SNF), a nursing
facility (NF), an intermediate care
facility for individuals with intellectual
disabilities (ICF/IDD), an inpatient
psychiatric hospital, a rehabilitation
hospital, an LTC hospital, or a swingbed hospital. See § 422.2 for the
definition of ‘‘institutionalized’’ for the
details of the types of facilities. Facilitybased I–SNPs serve a vulnerable cohort
of Medicare beneficiaries with well over
95 percent of facility-based I–SNP
enrollees being eligible for both
Medicare and Medicaid. Generally,
facility-based I–SNP enrollees reside
either temporarily or permanently in an
institution, therefore, these enrollees
typically receive most of their health
care services through or at the facility in
which they reside, most often a SNF. As
a result of the way that these enrollees
receive covered services, CMS’s
established network adequacy time and
distance standards under § 422.116 may
152 https://www.cms.gov/regulations-andguidance/guidance/manuals/downloads/
mc86c16b.pdf.
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not be a meaningful way to measure
provider network adequacy for and
ensure access to covered benefits for
enrollees of this plan type. Time and
distance standards are created using
several factors, including pattern of
care. In order to comply with the
network evaluation requirements in
§ 422.116, a facility-based I–SNP must
contract with sufficient providers of the
various specialties within the time and
distance requirements specified in that
regulation. The I–SNP industry has
indicated through public comments and
in prior correspondence to CMS that
many facility-based I–SNPs have
difficulty contracting with providers
outside their facilities, due to their
model of care. This is because these
providers know that enrollees of the I–
SNP will not routinely seek care with
these providers since they generally do
not travel away from the facility for
care.
The MA organizations offering and
those that are interested in offering
facility-based I–SNPs have raised
questions about whether our network
standards are appropriate considering
the nature of the facility-based I–SNP
coverage model. The residential nature
of this model creates inherent
differences in patterns of care for
facility-based I–SNP enrollees as
compared to the prevailing patterns of
community health care delivery in other
MA plan types. For example, most
residents of a facility receive their care
from a provider at the facility rather
than traveling to a provider outside the
facility whereas individuals who live at
home in the community would need to
travel to a provider to receive health
care services.
To address these concerns, CMS is
proposing to adopt a new exception for
facility-based I–SNP plans from the
network evaluation requirements. This
provision would apply only to facilitybased I–SNPs.
CMS adopted minimum access
requirements for MA coordinated care
plans (which include all SNPs) in
§ 422.112 and network evaluation
criteria in § 422.116 as means to
implement and ensure compliance with
section 1852(d)(1)(A) of the Act, which
permits MA plans to limit coverage to
items and services furnished by or
through a network of providers subject
to specific exceptions (such as
emergency medical services) and so
long as the MA organization makes
benefits available and accessible to their
enrollees. Currently, § 422.116(f) allows
an MA plan to request an exception to
network adequacy criteria when both of
the following occur: (1) certain
providers or facilities are not available
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for the MA plan to meet the network
adequacy criteria as shown in the
Provider Supply file (that is, a crosssectional database that includes
information on provider and facility
name, address, national provider
identifier, and specialty type and is
posted by State and specialty type); and
(2) 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. In evaluating exception
requests, CMS considers whether: (i) the
current access to providers and facilities
is different from the Health Service
Delivery (HSD) reference file (as defined
at 42 CFR 422.116(a)(4)(i)) 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
Traditional Medicare pattern of care;
and (iii) the approval of the exception
is in the best interests of beneficiaries.
CMS has provided examples of
situations that meet the first
requirement for an exception to be
requested in sub-regulatory guidance,
specifically the Medicare Advantage
and section 1876 Cost Plan Network
Adequacy Guidance.153 The following
examples of situations where providers
or facilities are not available to contract
with the MA plan do not account for the
issues that are unique to facility-based
I–SNPs:
• Provider is no longer practicing (for
example, deceased, retired),
• Provider does not contract with any
organizations or contracts exclusively
with another organization,
• Provider does not provide services
at the office/facility address listed in the
supply file,
• Provider does not provide services
in the specialty type listed in the supply
file,
• Provider has opted out of Medicare,
or
• Provider is sanctioned and on the
List of Excluded Individuals and
Entities.
In addition, the use of Traditional
Medicare telehealth providers or mobile
providers and the specific patterns of
care in a community that would be the
basis for an approval exception do not
account for the provider network issues
unique to facility-based I–SNPs that we
propose to address in this rule.
Therefore, we are proposing to amend
153 https://www.cms.gov/files/document/
medicare-advantage-and-section-1876-cost-plannetwork-adequacy-guidance08302022.pdf.
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78565
our network adequacy regulations at
§ 422.116(f) to establish an additional
exception to the current CMS network
adequacy requirements outlined in
§ 422.116 and we are proposing that this
exception be specific to facility-based I–
SNPs. Under this proposal, facilitybased I–SNPs would not be required to
meet the current two prerequisites to
request an exception from the network
adequacy requirements in § 422.116 but
would have alternate bases on which to
request an exception.
First, CMS is proposing to broaden
the acceptable rationales for an
exception from the requirements in
§ 422.116(b) through (e) for facilitybased I–SNPs. We are proposing that a
facility-based I–SNP may request an
exception from the network adequacy
requirements in § 422.116 when one of
two situations occurs. To add these
proposed new rationales to
§ 422.116(f)(1), we are reorganizing the
current regulation text; the two current
requirements for an exception request
will be moved to new paragraphs
(f)(1)(i)(A) and (B) and the proposed
new rationales for an exception request
will be in new paragraphs (f)(1)(ii)(A)
and (B). Second, we are proposing new
considerations CMS will use when
determining whether to grant an
exception under § 422.116(f) that are
specific to the proposed new acceptable
rationales for an exception request. We
are proposing to add a new paragraph
(f)(2)(iv) to specify the proposed new
considerations that will apply to the
new exceptions for facility-based I–
SNPs, which will be added to the
existing considerations in
§ 422.116(f)(2).
Our proposal includes new bases on
which only facility-based I–SNPs may
request an exception from the network
adequacy requirements, additional
considerations for CMS when deciding
whether to approve an exception
request from a facility-based I–SNP, and
a new contract term for facility-based I–
SNPs that receive the exception from
the § 422.116 network adequacy
evaluation. Because we evaluate
network adequacy and grant an
exception at the contract level, the
proposed new exception is limited to
contracts that include only facilitybased I–SNPs.
The first proposed new basis for an
exception request is that a facility-based
I–SNP is unable to contract with certain
specialty types required under
§ 422.116(b) because of the way
enrollees in facility-based I–SNPs
receive care. For purposes of this first
proposed new basis for an exception,
the inability to contract means the MA
organization offering the facility-based
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I–SNP could not successfully negotiate
and establish a contract with a provider,
including individual providers and
facilities. This is broader than the
existing condition for an exception that
certain providers are unavailable for the
MA plan. The non-interference
provision at section 1854(a)(6) of the
Act prohibits CMS 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, CMS cannot assume
the role of arbitrating or judging the
bona fides of contract negotiations
between an MA organization and
available providers or facilities.
Currently, CMS does not regard an MA
organization’s inability to contract with
a provider as a valid rationale for an
exception from the network adequacy
evaluation but interested parties have
indicated through public comments and
in prior correspondence to CMS that,
historically, facility-based I–SNP plans
have encountered significant struggles
contracting with the necessary number
of providers to meet CMS network
adequacy standards due to their unique
care model. We propose to add this new
basis for an exception request to
§ 422.116(f)(1)(ii)(A). CMS is also
proposing that its decision whether to
approve an exception for a facility-based
I–SNP on this specific basis (that the I–
SNP is unable to contract with certain
specialty types required under
§ 422.116(b) because of the way
enrollees in facility-based I–SNPs
receive care) will be based on whether
the facility-based I–SNP submits
evidence of the inability to contract
with certain specialty types required
under § 422.116 due to the way
enrollees in facility-based I–SNPs
receive care. For example, an
organization could submit letters or
emails to and from the providers’ offices
demonstrating that the providers were
declining to contract with any facilitybased I–SNP. CMS proposes to add this
requirement in a new paragraph
(f)(2)(iv)(A). Under this proposal, CMS
will also consider the existing factors in
addition to the new factors proposed
here that are unique to the specific new
exception proposed for facility-based I–
SNPs. We solicit comment on this
proposed new rationale for an exception
from the network adequacy
requirements in § 422.116(b) through (e)
and on the type of evidence we should
consider in determining whether to
grant an exception.
We are also proposing a second basis
on which a facility-based I–SNP may
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request an exception from the network
adequacy requirements in § 422.116(b)
through (e) if:
(1) A facility-based I–SNP provides
sufficient and adequate access to basic
benefits through additional telehealth
benefits (in compliance with § 422.135)
when using telehealth providers of the
specialties listed in paragraph (d)(5) in
place of in-person providers to fulfill
network adequacy standards in
paragraphs (b) through (e).
(2) Substantial and credible evidence
that sufficient and adequate access to
basic benefits is provided to enrollees
using additional telehealth benefits (in
compliance with § 422.135) furnished
by providers of the specialties listed in
paragraph (d)(5) of this section and the
facility-based I–SNP covers out-ofnetwork services furnished by a
provider in person when requested by
the enrollee as provided in
§ 422.135(c)(1) and (2), with in-network
cost sharing for the enrollee.
We believe it is appropriate to permit
exceptions in these situations because
enrollees in facility-based I–SNP plans
do not generally travel to receive care,
so the time and distance standards that
apply to other plan types are not
appropriate for I–SNP plans. As part of
this proposal, we are proposing to add
to the factors that CMS will consider
whether to approve the exception
request a new factor specifically related
to this type of exception.
Finally, we are proposing regulation
text to ensure that the exception for
facility-based I–SNPs is used by and
available only to facility-based I–SNPs.
We are proposing a new paragraph (f)(3)
at § 422.116 to require any MA
organization that receives the exception
provided for facility-based I–SNPs to
agree to offer only facility-based I–SNPs
on the contract that receives the
exception. To support the provision
outlined at § 422.116(f)(3), CMS also
proposes to add, at § 422.504(a)(21), a
new contract provision that MA
organizations must not establish
additional plans (or plan benefit
packages, called PBPs) that are not
facility-based I–SNPs to a contract that
is within the scope of proposed
§ 422.116(f)(3). This will ensure MA
organizations that have received the
exception do not submit additional
PBPs that are not facility-based I–SNPs
to their facility-based I–SNP-only
contracts. CMS reviews networks at the
contract level which means if an MA
organization were to add an MA plan
(that is, a PBP) that is not a facilitybased I–SNP to a contract, the exception
we propose here would not be
appropriate. We welcome comment on
this aspect of our proposal and whether
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additional guardrails are necessary to
ensure that the proposed new exception
from network adequacy evaluations is
limited to facility-based I–SNPs
consistent with our rationale for it.
Under our proposal, facility-based I–
SNPs would still be required to adhere
to § 422.112 regarding access to covered
benefits. For example,
§ 422.112(a)(1)(iii) requires an MA
coordinated care plan to arrange for and
cover any medically necessary covered
benefit outside of the plan provider
network, but at in-network cost sharing,
when an in-network provider or benefit
is unavailable or inadequate to meet an
enrollee’s medical needs. Because all
SNPs, including facility-based I–SNPs,
are coordinated care plans, this
beneficiary protection applies to them.
Similarly, the timeliness of access to
care requirements newly adopted at
§ 422.112(a)(6)(i) would apply. We
believe that our proposal appropriately
balances the need to ensure access to
covered benefits for enrollees in facilitybased I–SNPs while recognizing the
unique way this type of MA plan
furnishes benefits and how enrollees
generally receive services at the
institution where the enrollee resides.
Expanding this proposed new exception
from the § 422.116 network adequacy
requirements to other I–SNPs that enroll
special needs individuals that reside in
the community or other SNPs or MA
plans that are not designed to furnish
services to institutionalized special
needs individuals would not be
appropriate or serve the best interests of
the Medicare program or Medicare
beneficiaries.
We request comment on this proposal.
C. Increasing the Percentage of Dually
Eligible Managed Care Enrollees Who
Receive Medicare and Medicaid
Services From the Same Organization
(§§ 422.503, 422.504, 422.514, 422.530,
and 423.38)
Dually eligible individuals face a
complex range of enrollment options
based on MA plan types (that is, HMOs,
PPOs, private fee-for-service plans, MA
special needs plans, etc.), enrollment
eligibility, and plan performance, but
which do not consider the enrollee’s
Medicaid choice. Further, many of the
coverage options available to dually
eligible individuals—even including
many dual eligible special needs plans
(D–SNP)—do not meaningfully integrate
Medicare and Medicaid, chiefly because
the parent organization of the D–SNP
does not also provide the enrollee’s
Medicaid services. The current managed
care enrollment and eligibility policies
have resulted in a proliferation of such
D–SNPs and leave dually eligible
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individuals susceptible to aggressive
marketing tactics from agents and
brokers throughout the year.
Over the last decade, we have taken
numerous steps to improve the
experiences and outcomes for dually
eligible individuals through various
forms of Medicare-Medicaid integrated
care. Despite progress, there remain a
significant number of enrollees who
receive Medicare services through one
managed care entity and Medicaid
services through a different entity
(misaligned enrollment), rather than
from one organization delivering both
Medicare and Medicaid services
(aligned enrollment 154). In the final rule
titled Medicare and Medicaid Programs;
Policy and Technical Changes to the
Medicare Advantage, Medicare
Prescription Drug Benefit, Programs of
All-Inclusive Care for the Elderly
(PACE), Medicaid Fee-For-Service, and
Medicaid Managed Care Programs for
Years 2020 and 2021 (CMS–4185–F)
(hereinafter referred to as the April 2019
final rule), we expressed our belief that
aligned enrollment, and especially
exclusively aligned enrollment, is a
critical part of improving experiences
and outcomes for dually eligible
individuals. Exclusively aligned
enrollment (EAE) occurs when
enrollment in a parent organization’s D–
SNP is limited to individuals who are
also enrolled in that organization’s
Medicaid managed care organization.
Congress’ advisory commissions have
emphasized similar themes: the
Medicare Payment Advisory
Commission (MedPAC) has ‘‘long
believed that D–SNPs should have a
high level of integration so they have
the proper incentives to coordinate care
across Medicare and Medicaid.’’ 155 The
ddrumheller on DSK120RN23PROD with PROPOSALS2
154 42 CFR 422.2 (definition of ‘‘aligned
enrollment’’).
155 MedPAC response to Congressional request for
information on dual-eligible beneficiaries, page 2,
January 13, 2023.
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Medicaid and CHIP Payment and
Access Commission’s (MACPAC’s)
‘‘long-term vision is for all dually
eligible beneficiaries to be enrolled in
an integrated model’’ 156 and has noted
that a key feature of integrated care is
‘‘financial alignment where a single
entity receives a single payment to cover
all Medicare and Medicaid services.’’ 157
Longer term, for dually eligible
individuals who are in Medicare and
Medicaid managed care, we believe that
we should continue to drive toward
increasing aligned enrollment until it is
the normative, if not only, managed care
enrollment scenario. Our proposals here
represent an incremental step in that
direction, balancing our long-term
policy vision with our interest in
limiting disruption in the short term.
For dually eligible individuals that elect
MA plans, we are focused on increasing
enrollment in integrated D–SNPs: fully
integrated dual eligible special needs
plans (FIDE SNPs),158 highly integrated
dual eligible special needs plans (HIDE
SNPs),159 and applicable integrated
plans (AIPs).160 These D–SNP types
156 MACPAC response to proposed rule on policy
and technical changes to Medicare Advantage and
Medicare Part D for contract year 2024 (CMS–4201–
P), page 1, February 13, 2023.
157 MACPAC response to request for information
on data and recommendations to improve care for
dually eligible beneficiaries, page 3, January 13,
2023.
158 Effective 2025, FIDE SNPs as defined in
§ 422.2 are required to have EAE and would
therefore be AIPs by definition. To receive the FIDE
designation, a D–SNP would be required to provide
nearly all Medicaid services, including long-term
services and supports, Medicaid behavioral health
services, home health and DME.
159 HIDE SNPs as defined in § 422.2 are required
to cover long-term services and supports or
behavioral health services but may have more
Medicaid services carved out relative to plans with
the FIDE designation. HIDE SNPs that also operate
with EAE would meet the definition of an AIP, but
there is no requirement for EAE for the HIDE
designation.
160 AIPs as defined in § 422.561 are D–SNPs with
EAE, where the companion Medicaid MCO covers
Medicaid benefits including primary care and acute
care, Medicare cost-sharing, and at a minimum one
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78567
more meaningfully integrate Medicare
and Medicaid services than
coordination-only D–SNPs 161 that are
not also AIPs.
In this section we describe
interconnected proposals that would (1)
replace the current quarterly special
enrollment period (SEP) with a onetime-per month SEP for dually eligible
individuals and other LIS eligible
individuals to elect a standalone PDP,
(2) create a new integrated care SEP to
allow dually eligible individuals to elect
an integrated D–SNP on a monthly
basis, (3) limit enrollment in certain D–
SNPs to those individuals who are also
enrolled in an affiliated Medicaid
managed care organization (MCO), and
(4) limit the number of D–SNPs an MA
organization, its parent organization, or
an entity that shares a parent
organization with the MA organization,
can offer in the same service area as an
affiliated Medicaid MCO in order to
reduce ‘‘choice overload’’ of D–SNP
options in certain markets. Affiliated
Medicaid MCOs are Medicaid MCOs
offered by the MA organization, the
same parent organization, or another
subsidiary of the parent organization. In
combination, our proposals would
create more opportunities for dually
eligible individuals to elect integrated
D–SNPs, more opportunities to switch
to Traditional Medicare, and fewer
opportunities to enroll in MA–PD plans
that do not integrate Medicare and
Medicaid services. Table HC1
summarizes the combined effects of
these proposals, then we describe each
proposal in greater detail.
of the following: home health services, medical
supplies, equipment and appliances (DME), or
nursing facility services.
161 Dual eligible special needs plans (D–SNPs) are
defined at § 422.2. ‘‘Coordination-only’’ D–SNPs are
D–SNPs that neither meet the FIDE SNP nor HIDE
SNP definition at § 422.2 and for which there are
no Federal requirements to cover any Medicaid
benefits either directly or through an affiliated
Medicaid managed care plan.
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TABLE HCl: ENROLLMENT SCENARIOS UNDER CURRENT RULES AND
PROPOSED AMENDMENT-INDIVIDUAL PERSPECTIVE
(NOIE: This table does not include other applicable seps)
Elect any MA plan during initial
coverage election period (ICEP) or
annual election period (AEP), or
switch between any plans during
MA open enrollment period (MAOEP
Elect Medicare fee-for-service
(FFS) and standalone prescription
dru lan PDP , mid- ear
Elect an integrated D-SNP (FIDE
SNP, HIDE SNP, or AIP) as
eli "ble, mid- ear
Elect a non-integrated D-SNP or
other MA lan, mid- ear
Elect any MA plan during ICEP or
AEP, or switches between any plans
durin MA-OEP
Elect Medicare FFS and standalone
PDP, mid- ear
Elect an MA plan, mid-year
Permitted, except individuals in
Medicaid MCOs would not be able
to select a misaligned D-SNP
where applicable 162
Permitted
Permitted each month
One change
permitted per
quarter(exceptthe
last quarter)
Permitted each month, but must be
aligned enrollment
Not permitted
Permitted
Permitted
One change
permitted per
quarter(exceptthe
last uarter
Permitted each month
Not permitted
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1. Changes to the Special Enrollment
Periods for Dually Eligible Individuals
and Other LIS Eligible Individuals
Section 1860D–1(b)(3)(D) of the Act
directs the Secretary to establish a SEP
for full-benefit dually eligible
individuals under Part D. The SEP,
subsequently referred to as the
continuous dual SEP, codified at
§ 423.38(c)(4), was later extended to all
other subsidy-eligible beneficiaries by
162 We propose that during AEP and other
available enrollment periods, MA organizations
would not be permitted to enroll dually eligible
individuals into a D–SNP where such enrollment
would not result in aligned enrollment with an
affiliated Medicaid MCO offered in the same service
area (that is, a Medicaid MCO offered by the MA
organization, its parent organization, or another
subsidiary of the parent organization).
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regulation.163 The continuous dual SEP
allowed eligible beneficiaries to make
Part D enrollment changes (that is,
enroll in, disenroll from, or change Part
D plans, including Medicare Advantage
Prescription Drug (MA–PD) plans)
throughout the year, unlike other Part D
enrollees who generally may switch
plans only during the AEP or via other
applicable SEPs each year.
In the April 2018 final rule, we cited
concerns with usage of the continuous
dual SEP related to enrollees changing
plans frequently, hindering care
coordination efforts by D–SNPs; plans
having less incentive to innovate and
163 Medicare Program; Policy and Technical
Changes to the Medicare Advantage and the
Medicare Prescription Drug Benefit Programs
(CMS–4085–F) (75 FR 19720 (April 15, 2010)).
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invest in serving high-cost enrollees
who may disenroll at any time; and
agents and brokers targeting dually
eligible individuals due to their ability
to make enrollment elections
throughout the year (83 FR 16514). We
had considered limiting use of the SEP
to once per calendar year, limiting use
of the SEP to two or three uses per
calendar year, or prohibiting use of the
SEP for enrollment into non-integrated
MA–PD plans, but allowing continuous
use of the SEP to allow eligible
beneficiaries to enroll into (a) integrated
D–SNPs for dually eligible individuals
or (b) standalone PDPs (83 FR 16515).
We received a mix of concern and
support from commenters on our
proposals.
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Our proposals create a new SEP and revise the duals/LIS SEP, but otherwise do not change the remaining SEPs. To
highlight the changes in our proposals without overly complicating this table, we did not reference the other SEPs.
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Ultimately, the April 2018 final rule
amended the continuous dual SEP to
allow usage once per calendar quarter
during the first nine months of the year
(that is, one election during each of the
following time periods: January–March,
April–June, July–September). We noted
that our changes struck a balance
between allowing dually eligible
individuals opportunities to change
plans while also maintaining stability
with care coordination and case
management (83 FR 16515).
The quarterly dual SEP reduced
individuals moving from one Part D
plan (including an MA–PD) to another
Part D plan (including an MA–PD) as
frequently. However, we have concerns
with the quarterly dual SEP:
• Marketing. We finalized numerous
policies to reduce aggressive marketing
tactics in the April 2023 final rule,164
but we remain concerned about
marketing opportunities, especially
when they focus on dually eligible
individuals who, as a group, have lower
levels of education, health literacy, and
access to resources that could help
overcome sub-optimal coverage
decisions. Because the quarterly dual
SEP still allows the vast majority of
dually eligible individuals to enroll in
almost any MA–PD plan, they remain a
target for marketing activities from all
types of plans throughout the year.
• Ability to enroll in integrated D–
SNPs. The quarterly dual SEP does not
allow dually eligible individuals to
enroll in integrated D–SNPs after those
individuals have exhausted the
opportunities allowed by the quarterly
dual SEP.
• Complexity for States. State
Medicaid agencies have shown interest
in opportunities to bring Medicare and
Medicaid managed care enrollment
policies into greater alignment and
reduce complexity. The quarterly dual
SEP has created some challenges related
to aligning Medicare and Medicaid
enrollment dates for dually eligible
individuals seeking to enroll in
integrated products. For example,
California needed expenditure authority
to waive § 438.56(e)(1) under a section
1115(a) demonstration to allow for a
Medicaid MCO disenrollment to be
delayed during the last calendar quarter
to maintain exclusively aligned
enrollment with a corresponding D–
SNP. This expenditure authority would
not have been necessary if the dual SEP
was available to make elections
164 Medicare Program; Contract Year 2024 Policy
and Technical Changes to the Medicare Advantage
Program, Medicare Prescription Drug Benefit
Program, Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the Elderly
(CMS–4201–F) (88 FR 22122 (April 12, 2023)).
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throughout the year. In the capitated
financial alignment models of the
Financial Alignment Initiative (FAI), we
waived the quarterly dual SEP rules at
State request to allow for monthly
opportunities for individuals to enroll
or disenroll. This alleviated the
complexity of different Medicare and
Medicaid enrollment periods and allows
dually eligible individuals more
opportunities to enroll in integrated
products.
• Complexity for enrollment
counselors and individuals. Enrollment
counselors such as State Health
Insurance Assistance Programs (SHIPs)
and State ombudsman programs have
also noted that the once-per-quarter rule
is complicated. Without any accessible
central data source on who has already
used the quarterly dual SEP, it is not
clear to options counselors (or
sometimes to beneficiaries themselves)
what enrollment options are truly
available to dually eligible individuals
at any given time.
To further protect Medicare
beneficiaries, reduce complexity for
States and enrollment counselors, and
increasingly promote integrated care, we
are proposing two SEP changes. Section
1860D–1(b)(3)(D) of the Act requires the
Secretary to establish special enrollment
periods for full-benefit dually eligible
individuals, although it does not specify
the frequency or mechanics of those
SEPs. Further, section 1860D–1(b)(3)(C)
of the Act grants the Secretary the
authority to create SEPs for individuals
who meet other exceptional
circumstances.165 Section 1859(f)(1) of
the Act permits the Secretary to set forth
regulations related to how MA
organizations restrict the enrollment of
individuals who are within one or more
classes of special needs individuals.
Section 1859(f)(6) establishes the
authority to adopt a transition process to
move dually eligible individuals out of
SNPs when they are not eligible for the
SNP. Section 1859(f)(8) of the Act also
reflects an interest in and goal of
furthering the integration of D–SNPs;
the requirement for us to establish
procedures for unified grievance and
appeals processes and requirement, in
section 1859(f)(8)(D), for a mandatory
minimum level of integration illustrate
how efforts to increase integration in
implementing and adopting standards
for the MA program further the goals of
the program. Based on these authorities,
we propose to amend § 423.38(c)(4)(i) to
replace the quarterly dual SEP with a
165 Medicare Program; Policy and Technical
Changes to the Medicare Advantage and the
Medicare Prescription Drug Benefit Programs
(CMS–4085–F) (75 FR 19720 (April 15, 2010)).
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simpler new dual/LIS SEP. The
proposed dual/LIS SEP would allow
dually eligible and other LIS-enrolled
individuals to enroll once per month
into any standalone prescription drug
plan.
Functionally, the revised dual/LIS
SEP would mean that such individuals
could, in any month, switch PDPs or
leave their MA–PD for Traditional
Medicare plus a standalone PDP (plans
that only offer prescription drug
coverage). However, the dual/LIS SEP
would no longer permit enrollment into
MA–PD plans or changes between MA–
PD plans, although such options would
still be available where another election
period permits.
In conjunction, based on the statutory
authorities described above, we also
propose to create a new integrated care
SEP at § 423.38(c)(35) for dually eligible
individuals. This new integrated care
SEP would allow enrollment in any
month into FIDE SNPs, HIDE SNPs, and
AIPs for those dually eligible
individuals who meet the qualifications
for such plans.
In combination, our SEP proposals
draw heavily from MedPAC’s 2008
recommendation to Congress, which
proposed eliminating dually eligible
individuals’ ability to enroll in MA–PD
plans, except special needs plans with
State contracts, outside of open
enrollment. MedPAC also recommended
dually eligible individuals be able to
disenroll from an MA–PD plan and
return to Traditional Medicare at any
time of the year.166
For dually eligible individuals, our
two SEP proposals would allow a
monthly election to:
• Leave an MA–PD plan for
Traditional Medicare by enrolling in a
standalone PDP,
• Switch between standalone PDPs,
or
• Enroll in an integrated D–SNP such
as a FIDE, HIDE, or AIP.
If an eligible individual attempts to
use, or uses, both the monthly dual/LIS
SEP and the integrated care SEP within
the same month, the application date of
whichever SEP is elected last in time is
the SEP effectuated the first of the
following month.
As a result of these proposals, dually
eligible and other LIS-eligible
individuals, like other Medicare
beneficiaries, would be able to enroll
into non-AIP coordination-only D–
SNPs 167 or other MA plans only during
166 Medicare Payment Advisory Commission,
‘‘Report to Congress: Medicare Payment Policy,’’
March 2008.
167 Dual eligible special needs plans (D–SNPs) are
defined at § 422.2. ‘‘Coordination-only’’ D–SNPs are
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the ICEP, AEP, or where another SEP
permits. While the proposed changes
constrain some enrollment options at
certain times of the year, dually eligible
individuals and other LIS-eligible
individuals would never have fewer
choices than people who are not dually
or LIS eligible.
We believe the proposed SEP changes
would:
• Create more opportunity for dually
eligible or LIS individuals to leave MA–
PD plans if MA is not working well for
them, by providing an opportunity to
enroll in a standalone PDP, which
results in disenrollment from the MA–
PD plan and enrollment in Traditional
Medicare.168
• Reduce the incentive for most plans
to deploy aggressive sales tactics
targeted at dually eligible or LISenrolled individuals outside of the AEP.
Based on our review of 2023 plans,
approximately 5 percent of the plans
that can currently enroll dually eligible
individuals using the quarterly dual SEP
would be available as options for dually
eligible individuals using the proposed
new monthly integrated care SEP.
• Increase transparency for Medicare
beneficiaries and enrollment
counselors-such as SHIPs-on
opportunities to change plans, by
eliminating the need to determine
whether the current once-per-quarter
SEP opportunity had already been used.
• Create more opportunities for
enrollment into integrated D–SNPs
through which an individual could
receive Medicare and Medicaid services
and care coordination from the same
organization.
• Reduce the burden on States
working to align Medicaid MCO
enrollment to D–SNP enrollment,
particularly for States transitioning their
FAI demonstrations to integrated D–
SNPs (all FAI demonstration States
waived the implementation of the
quarterly dual SEP as it proved too
operationally challenging to implement
for Medicare-Medicaid Plans).
• Strengthen incentives for MA
sponsors to also compete for Medicaid
managed care contracts.
While there are advantages to the new
proposed SEP changes, we recognize
there are potential challenges:
• In States with few or no integrated
D–SNPs, dually eligible individuals
would not be able to change MA–PD
plans outside of the AEP, MA–OEP, or
D–SNPs that neither meet the FIDE SNP nor HIDE
SNP definition at § 422.2 and are not required to
cover any Medicaid benefits.
168 We note that enrollment in a standalone PDP
would not result in automatic disenrollment from
a Medicare MA-only Private Fee-for-Service plan
unless that plan also offers Part D.
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other available SEPs, limiting their
ability to change plans as their needs
change. Choices outside of AEP, MA–
OEP, or other available SEPs would
similarly be limited in States where
integrated D–SNPs only serve limited
geographic regions.
• MA plans may have marginally less
incentive to innovate and invest in
meeting the needs of high-cost dually
eligible enrollees in a situation where
these enrollees may disenroll at any
time. This could exacerbate the
phenomenon of higher-cost dually
eligible individuals disenrolling from
MA.169 170 171
• Some dually eligible individuals
would be able to change between
integrated care plans monthly, which
could hinder care coordination and case
management efforts by those plans.
• Finally, since LIS individuals
without Medicaid are ineligible for
integrated D–SNPs, our proposal would
limit how the dual/LIS SEP can be used
for these individuals compared to the
current scope of the SEP. LIS eligible
individuals without full Medicaid and
partial-benefit dually eligible
individuals would have the opportunity
to disenroll from an MA–PD plan (to
Traditional Medicare) in any month
throughout the year, and could switch
between standalone PDPs on a monthly
basis, but—with few exceptions—could
not use the new integrated care SEP to
enroll in an MA–PD.172 These
individuals could elect an MA–PD or
non-AIP coordination-only D–SNP for
which they are eligible only during the
ICEP, the AEP, the MA–OEP (as
applicable), or by using a different SEP.
We estimate approximately one million
partial-benefit dually eligible
individuals and other LIS eligible
individuals, or 7.5 percent of all
individuals with LIS, would no longer
be able to make quarterly MA–PD
elections.173 Dually eligible and other
LIS-eligible individuals would also
169 GAO Report to Congressional Requesters,
Medicare Advantage Disenrollment, pages 19–20,
June 2021.
170 https://www.gao.gov/assets/gao-17-393.pdf.
171 https://www.healthaffairs.org/doi/10.1377/
hlthaff.2015.0272.
172 There is no Federal prohibition on partialbenefit dually eligible individuals enrolling in HIDE
SNPs. However, most States limit enrollment in
HIDE SNPs to full-benefit dually eligible
individuals.
173 Section 11404 of the Inflation Reduction Act
(IRA) amended section 1860D–14 of the Act to
expand eligibility for the full LIS to individuals
with incomes up to 150 percent of the Federal
poverty level (FPL) beginning on or after January 1,
2024. See Medicare Program; Contract Year 2024
Policy and Technical Changes to the Medicare
Advantage Program, Medicare Prescription Drug
Benefit Program, Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the Elderly
(CMS–4201–F) (88 FR 22123 (April 12, 2023)).
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continue to be eligible, if applicable, for
other SEPs outlined in §§ 422.62(b) and
423.38(c), which include circumstances
like enrolling into a 5-star plan, change
in residence, or enrollment in PACE.174
Section 423.40(c) currently provides
that the effective date of an enrollment
change in Part D during a special
enrollment period specified in
§ 423.38(c), including the existing SEP
for dually eligible and other LIS-eligible
individuals, will be the first day of the
calendar month following the month in
which the election is made, unless
otherwise noted. We are considering
using flexibilities at section 1851(f)(4) of
the Act (as cross-referenced at section
1860D–1(b)(1)(B)(iv) of the Act) and at
§ 423.40(c) to establish a Medicare
enrollment effective date for the
proposed integrated care SEP at
§ 423.38(c)(35) that differs from the
effective date in the current quarterly
dual/LIS SEP at § 423.38(c)(4).
Establishing a different enrollment
effective date could allow better
alignment with Medicaid enrollment
effective dates, for example, in
situations where States are unable to
enroll individuals on the first of the
month following an enrollment request
after a certain cut-off date and delay the
effective date until the first of the
following month. However, aligning
with Medicaid enrollment effective
dates may delay enrollment in
integrated care plans and prevent dually
eligible individuals from selecting an
integrated D–SNP on a monthly basis.
We welcome comments on utilizing
these flexibilities to establish a different
enrollment effective date for the
proposed integrated care SEP. See
section VIII.E. for further discussion of
alignment of enrollment effective dates
and a request for comments on this
topic.
We also welcome comments on the
proposed changes to the dual SEP, the
proposed integrated care SEP, and their
combined impacts.
2. Enrollment Limitations for NonIntegrated Medicare Advantage Plans
Aligned enrollment is a key feature of
the FAI, PACE, and other long-standing
integrated care programs such as the
Massachusetts’ Senior Care Options and
Minnesota’s Senior Health Options that
started as demonstration programs that
were precursors to D–SNPs. Individual
States may also use their State Medicaid
agency contracts (SMAC) to limit
174 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 (CMS–4182–F) (83 FR 16516
(April 16, 2018)).
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enrollment in a D–SNP to the enrollees
in an affiliated Medicaid MCO. Further,
we have adopted, as part of the
definition in § 422.2, enrollment limits
for FIDE SNPs that require, beginning
January 1, 2025, FIDE SNPs to have
exclusively aligned enrollment.
Separate from contracting with D–
SNPs via SMACs, States have discretion
in how they arrange their Medicaid
managed care programs and may use
Medicaid MCOs to cover a
comprehensive scope of Medicaid
benefits or use prepaid health plans to
cover a smaller scope of Medicaid
benefits.175 Many States with Medicaid
managed care programs select a limited
number of Medicaid MCOs through a
competitive procurement process. State
approaches vary regarding eligibility for
Medicaid MCOs that are part of the
State’s managed care program (for
example, whether plans cover just
dually eligible enrollees or additional
Medicaid populations), service areas,
and carved-in benefits for dually eligible
enrollees. While there may be some
overlap in plan parent organizations
operating both Medicaid MCOs and D–
SNPs within a State, it is not always the
case.176 Service areas are commonly
misaligned between Medicaid MCOs
and D–SNPs. States have the option to
pursue EAE when it meets their own
Medicaid managed care policy goals and
objectives; however, placing
responsibility solely on States to
implement and facilitate EAE has often
led to a complex market of D–SNPs,
many of which only meet minimum
integration requirements, as well as a
complex set of Federal and State
enrollment policies for States, plans,
advocates, and beneficiaries to navigate.
In many service areas, dually eligible
individuals face complicated enrollment
policies, overwhelming marketing, and
an increasingly complex array of plans
purportedly designed especially for
them but that do not offer meaningful
Medicare and Medicaid integration due
to service area and enrollment
misalignment. Enrollment in D–SNPs
has increased rapidly and now exceeds
five million. We estimate that
approximately 1.26 million were in
aligned enrollment as of July 2022, and
this number has also grown over
time.177 However, the majority of D–
175 See 42 CFR 438.2 for definitions of the terms
managed care organization (MCO), prepaid
ambulatory health plan, and prepaid inpatient
health plan.
176 MedPAC Report to Congress, Promoting
integration in dual-eligible special needs, table 12–
6, page 436, June 2019.
177 The FY22 CMS Medicare-Medicaid
Coordination Office Report to Congress indicates
that as of July 2022, 1.75 million full-benefit dually
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SNP enrollment remains in unaligned
plans where the individual is either in
a non-AIP coordination-only D–SNP or
in one parent organization’s D–SNP and
another parent organization’s Medicaid
MCO, and the increases in enrollment in
such plans has exceeded the increases
in enrollment for integrated D–SNPs.178
Analysis by MedPAC in 2019 found that
‘‘14 percent of [D–SNP] enrollees
qualify for full Medicaid benefits and
are in D–SNPs that have a companion
managed long term services and
supports (MLTSS) plan run by the same
parent company, but they are not
enrolled in that MLTSS plan.’’ As
MedPAC noted, ‘‘some enrollees may
not be required to enroll in an MLTSS
plan, but for those who are, these cases
of misaligned enrollment are unlikely to
lead to any meaningful integration given
the inherent challenges of coordinating
the efforts of two separate managed care
companies.’’ 179
While some States have utilized
SMACs and selective contracting to
limit the availability of D–SNPs in the
State to those MA organizations that
also have contracts with the State to
cover Medicaid services, other D–SNP
markets have grown without any
limitations on non-integrated plans. In
some markets, parent organizations of
MA organizations have acquired
multiple D–SNPs by purchasing smaller
plans and have not consolidated the
various plans, resulting in one parent
organization operating multiple D–SNPs
within a single State, often with
overlapping service areas. For States
that do not require parent organizations
to consolidate their plans, multiple D–
SNPs of this type may continue to
operate indefinitely. This creates a
market with a large number D–SNP
options that often do not offer
significantly different benefits or
eligible individuals were enrolled in managed care
arrangements where the same organization covers
both Medicare and Medicaid services. CMS utilized
the underlying data to estimate that of the 1.75
million, 1.26 million were enrolled in a D–SNP and
affiliated Medicaid MCO offered by the same
organization. The remaining half million were
enrolled in Medicare-Medicaid plans, PACE, and
managed fee-for-service arrangements. The FY22
Medicare-Medicaid Coordination Office Report to
Congress can be accessed here: https://
www.cms.gov/files/document/mmco-reportcongress.pdf-0.
178 Velasquez, David E., E. John Orav, and Jose
´ F.
Figueroa. Enrollment and characteristics of dualeligible Medicare and Medicaid beneficiaries in
integrated care programs, Health Affairs 42, No. 5
(2023), 685.
179 MedPAC Report to Congress, Promoting
integration in dual-eligible special needs plans,
Chapter 12, page 422, June 2019. Retrieved from
https://www.medpac.gov/wp-content/uploads/
import_data/scrape_files/docs/default-source/
reports/jun19_ch12_medpac_reporttocongress_
sec.pdf.
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78571
networks, which creates confusion for
plan selection and could lead to
individuals choosing unaligned
Medicare and Medicaid plans.
One State provides a useful (but not
necessarily unique) example. In this
State, for 2023, there are 47 D–SNP plan
benefit packages (PBPs) offered through
24 different plan contracts. A few parent
organizations’ D–SNPs account for a
large share of the plans in this State:
UnitedHealth Group operates 15 D–SNP
PBPs across six different MA contracts,
Humana offers eight D–SNP PBPs across
two MA contracts, and Centene offers
five D–SNP PBPs across three MA
contracts. A search of available options
in Medicare Plan Finder (MPF) for a
dually eligible individual in a zip code
in this State yields 69 MA–PD options,
including 19 D–SNPs. Of the 19 D–
SNPs, five are offered by Centene, three
are offered by Elevance, three are
offered by UnitedHealth Group, and two
are offered by Humana. The large
number of D–SNPs operated by a
relatively small group of parent
organizations in this State illustrates the
‘‘choice overload’’ faced by dually
eligible individuals, their families,
advocates, and enrollment counselors.
Although Medicaid managed care in
this State is mandatory for dually
eligible individuals, and many of the
same D–SNP parent organizations
operate Medicaid MCOs in the State,
there is currently no EAE required.
Additionally, D–SNP and Medicaid
MCO service areas are misaligned
throughout the State, hindering
meaningful integration and robust care
coordination for enrollees despite a
relatively small group of parent
organizations. Further, the abundance of
non-AIP coordination-only D–SNP
options reduces the likelihood that a
dually eligible individual would select
a more integrated option. Additionally,
numerous plan options in one service
area increases the potential for
marketing issues including agents and
brokers targeting dually eligible
individuals to switch into another plan.
We recognize that States have policy
interests and goals that shape their
Medicaid managed care programs, and
our intent is to help further support
States interested in implementing EAE.
We have historically deferred to States
to use SMACs to align Medicare and
Medicaid plan offerings consistent with
State policy priorities. However, as the
number of dually eligible individuals
with misaligned enrollment and sheer
number of D–SNPs have grown, we now
believe that Federal rulemaking is
warranted to promote greater alignment
of D–SNPs and Medicaid MCOs and to
begin to simplify the array of choices.
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We have authority, per section
1857(e)(1) of the Act, to add MA
contract terms and conditions not
inconsistent with the MA statute (that is
Part C of Title XVIII of the Act) as the
Secretary may find necessary and
appropriate. Given how section
1859(f)(8) of the Act reflects a goal of
furthering the integration of D–SNPs
and how our proposal is designed to
reduce choice overload situations for
dually eligible individuals while
furthering opportunities for enrollment
in integrated D–SNPs (that is, FIDE
SNPs, HIDE SNPs, and AIPs), we believe
that the standard in section 1857(e)(1) is
met. Further, section 1854(a)(5) of the
Act is clear that we are not obligated to
accept any and every MA plan bid.
Based on these authorities, we are
proposing new regulations (at
§§ 422.503(b)(8), 422.504(a)(20),
422.514(h), and 422.530(c)(4)(iii))
related to how MA organizations offer
and enroll eligible individuals into D–
SNPs. Proposed § 422.503(b)(8) would
establish a new qualification for an MA
organization (or new applicant to be an
MA organization) to offer D–SNP(s)
while proposed § 422.504(a)(20) would
establish a new contract term for certain
MA organizations; both are tied to the
substantive limits we are proposing in
§ 422.514(h). Proposed § 422.514(h)
would establish conditions for how
certain MA organizations and D–SNPs
may enroll dually eligible individuals
and limit the number of D–SNPs that
may be offered by certain MA
organizations. Finally, proposed
§ 422.530(c)(4)(iii) would establish a
new crosswalk to authorize MA
organizations that are subject to these
new enrollment limitations to crosswalk
their enrollees to a single D–SNP to
accomplish aligned enrollment.
Together, our proposals at
§§ 422.503(b)(8), 422.504(a)(20), and
422.514(h)(1) and (2) would require the
following:
• Beginning in plan year 2027, when
an MA organization, its parent
organization, or an entity that shares a
parent organization with the MA
organization, also contracts with a State
as a Medicaid MCO that enrolls dually
eligible individuals in the same service
area, D–SNPs offered by the MA
organization, its parent organization, or
an entity that shares a parent
organization with the MA organization,
must limit new enrollment to
individuals enrolled in (or in the
process of enrolling in) the D–SNP’s
affiliated Medicaid MCO. This would
apply when any part of the D–SNP
service area(s) overlaps with any part of
the Medicaid MCO service area, even if
the two service areas do not perfectly
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align. Additionally, only one D–SNP
may be offered by an MA organization,
its parent organization, or another MA
organization with the same parent
organization in the same service area as
the aligned Medicaid MCO. We would
only enter into a contract with one D–
SNP for full-benefit dually eligible
individuals in the same service area as
that MA organization’s affiliated
Medicaid MCO (with limited exceptions
as described below).
• Beginning in 2030, such D–SNPs
must only enroll (or continue to enroll)
individuals enrolled in (or in the
process of enrolling in) the affiliated
Medicaid MCO. Therefore, by 2030,
integrated D–SNPs would be required to
disenroll individuals who are not
enrolled in both the D–SNP and
Medicaid MCO offered under the same
parent organization (that is, offered by
the parent organization or any
subsidiary), except that D–SNPs would
still be able to use a period of deemed
continued eligibility to retain enrollees
who temporarily lost Medicaid coverage
as described in § 422.52(d). This also
means that where an enrollee is
temporarily disenrolled from the
affiliated Medicaid MCO but is expected
to be re-enrolled in the affiliated
Medicaid MCO within the period of
deemed continued eligibility, the D–
SNP would not be required to disenroll
that enrollee during that period.
Consistent with how CMS believes
MA organizations under the same
parent organization share operational
and administrative functions, we are
proposing to apply the proposed
regulations at the parent organization
level.
We are proposing a corresponding
new provision at § 422.530(c)(4)(iii) that
would provide a new crosswalk
exception to allow one or more MA
organizations that share a parent
organization and offer D–SNPs subject
to these proposed new limits to
crosswalk enrollees (within the same
parent organization and among
consistent plan types) when the MA
organization chooses to non-renew or
consolidate its current D–SNPs to
comply with the new rules in proposed
§§ 422.504(a)(20) and 422.514(h).
Currently, § 422.530(a)(2) does not allow
enrollee crosswalks across different
contracts or plan types. The proposed
new crosswalk exception would
explicitly permit moving enrollments
across contracts held by MA
organizations with the same parent
organization; because we are not
including any explicit exception from
the rule in § 422.530(a)(2) prohibiting
crosswalks to different plan types, the
receiving D–SNP must be the same plan
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type as the D–SNP out of which the
enrollees are crosswalked. We expect
MA organizations who offer D–SNPs to
leverage § 422.530(c)(4)(iii)—as well as
standard MA processes to add or
remove service areas—to come into
compliance with § 422.514(h).
We believe that allowing this
crosswalk would limit enrollee
disruption if MA organizations nonrenew D–SNPs to comply with our
proposal. In addition, we believe this
new crosswalk is consistent with
preserving the evergreen nature of
enrollee elections given the differences
in the benefits being offered by the D–
SNPs that are owned or controlled by
the same parent organization are
generally not meaningful beyond the
scope of annual changes explained in
the Annual Notice of Change. For
example, in contract year 2023, there is
one parent organization with three MA
organizations that offer a total of 13
HMO D–SNP benefit packages in one
State. Only five of those D–SNPs enroll
full-benefit dually eligible individuals,
and the benefits offered in each of the
D–SNPs are substantively similar.
We are proposing the following
exceptions to our proposals at
§§ 422.504(a)(20) and 422.514(h)(1) and
(2):
• In certain circumstances, State D–
SNP policy may require the need for
more than one D–SNP for full-benefit
dually eligible individuals to operate in
the same service area. Under
§ 422.514(h)(3)(i), we propose to permit
an MA organization, its parent
organization, or an entity that shares a
parent organization with the MA
organization, offering more than one D–
SNP for full-benefit dually eligible
individuals in the same service area as
that MA organization’s affiliated
Medicaid MCO only when a SMAC
requires it. For example, where a SMAC
limits enrollment for certain groups into
certain D–SNPs (such as by age group),
the MA organization may offer
additional D–SNPs for different groups
of full-benefit dually eligible
individuals in the same service area
accordingly. This exception allows for
States that currently have different
integrated D–SNP programs based on
age or benefit design to continue to
operate these programs and allows
States the flexibility to design future
integrated D–SNP programs with
eligibility nuances should they so
choose. This proposed exception would
only be available where the SMAC
requires different eligibility groups for
the different D–SNPs that are offered by
the same MA organization, its parent
organization, or another MA
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organization that shares the parent
organization.
• Numerous parent organizations
operate both HMO and PPO D–SNPs in
States where they also contract with a
State as a Medicaid MCO, and the
proposed regulation at §§ 422.504(a)(20)
and 422.514(h)(1) and (2) would apply
to both HMO and PPO D–SNPs.
However, as noted above,
§ 422.530(a)(2) does not allow enrollee
crosswalks across different plan types,
and we are not including any exception
from that existing rule in the new
crosswalk exception proposed at
§ 422.530(c)(4)(iii). To minimize
enrollee disruption, our proposal would
not prohibit an MA organization, its
parent organization, or another MA
organization that shares a parent
organization with the MA organization,
from continuing to operate both an
HMO D–SNP and a PPO D–SNP in a
State where the proposed new policy
applies. However, to achieve the goals
of the new regulation, including
simplification of the D–SNP market and
promotion of integrated care through
aligned Medicare and Medicaid
products, we propose at
§ 422.514(h)(3)(ii) that the MA
organization, its parent organization, or
another MA organization that shares a
parent organization with the MA
organization may offer (or continue to
offer) both the HMO and PPO D–SNPs
only if they no longer accept new fullbenefit dually eligible enrollees in the
same service area as the D–SNP affected
by the new regulations at
§§ 422.504(a)(20) and 422.514(h). Under
this proposal, the MA organization, its
parent organization, and another MA
organization that shares a parent
organization with the MA organization
may only accept new enrollment in one
D–SNP for full-benefit dually eligible
individuals in the same service area as
an affiliated Medicaid MCO, and such
new enrollment is limited to the fullbenefit dually eligible individuals who
are enrolled (or are enrolling) in the
affiliated Medicaid MCO.
We also propose at § 422.503(b)(8)
that in service areas in which a D–SNP
limits enrollment to individuals
enrolled in (or in the process of
enrolling in) an affiliated Medicaid
MCO, the MA organization, its parent
organization, or entities that share a
78573
parent organization with the MA
organization may not newly offer
another D–SNP for full-benefit dually
eligible individuals, if it would result in
noncompliance with § 422.514(h).
Additionally, we propose at
§ 422.504(a)(20) to establish a new
contract term for MA organizations that
offer D–SNPs to require compliance
with the enrollment limits we are
proposing to add to § 422.514(h). These
proposals would apply regardless of any
EAE requirements in State SMACs,
unless the exception to accommodate
State policy choices, described in
proposed § 422.514(h)(3)(i), applies.
Table HC2 summarizes enrollment
scenarios to illustrate the combined
effects of our proposed SEP changes and
enrollment limitations. The term ‘‘D–
SNP’s parent organization’’ as used in
the table includes the MA organization
that offers the D–SNP, the MA
organization’s parent organization, and
any other entity (MA organization or
otherwise) that shares the parent
organization with the MA organization
that offers the D–SNP.
TABLE HC2: 2027 SCENARIOS FOR D-SNP ENROLLMENT UNDER THE
PROPOSED INTEGRATED CARE SEP AND PROPOSED ENROLLMENT
LIMITATIONS-PLAN PERSPECTIVE
Only enrollees in the parent
organization's companion
Medicaid MCO who also
meet eligibility requirements
based on terms of that State's
SMAC
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D-SNP' s parent organization
does NOT have an affiliated
Medicaid MCO that enrolls
full-benefit dually eligible
individuals in same service
area
We look to a hypothetical example of
how the proposed regulations would
likely play out in the market. For this
example, Parent Organization Alpha
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Any individuals who meet
eligibility requirements based
on terms of that State's
SMAC
operates three MA organizations in
Montgomery County. For the sake of
this example, the service areas for all D–
SNPs encompass Montgomery County,
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Each month
Only during ICEP, AEP,
MA-OEP, or via an existing
SEP
and each of the D–SNPs enrolls both
full-benefit and partial-benefit dually
eligible individuals of all ages.
E:\FR\FM\15NOP2.SGM
15NOP2
EP15NO23.021
D-SNP' s parent organization
has an affiliated Medicaid
MCO that enrolls full-benefit
dually eligible individuals in
same service area
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TABLE HC3: HYPOTHETICAL EXAMPLE-D-SNP CURRENT LANDSCAPE
Parent Organization Alpha
MA Organization
Gamma
HIDEHMODSNP Gamma 001
MA Organization Omega
HIDE PPO D-SNP
Omega
We anticipate that under proposed
§ 422.514(h), for periods beginning on or
after January 1, 2027, Parent
Organization Alpha would have to
choose one of the three D–SNPs offered
by its MA organization subsidiaries to
align with the Plan Omega Medicaid
MCO. For this example, MA
Organization Omega chooses HIDE D–
SNP Omega 001 to serve as the D–SNP
aligned with Medicaid MCO Omega and
permitted to continue under proposed
HIDE HMO D-SNP Omega 001
§ 422.514(h). Under the proposed
crosswalk authority at
§ 422.530(c)(4)(iii), MA Organization
Omega and MA Organization Gamma
would be able to move enrollees from
Gamma 001 into Omega 001 on January
1, 2027. MA Organization Gamma could
then convert HIDE D–SNP Gamma 001
to coordination-only D–SNP Gamma
001 and keep that plan open for partialbenefit dually eligible individuals, or
elect to non-renew Gamma 001 and
Medicaid MCO
Omega (in
Montgomery
County)
keep only Omega 001 as the plan
aligned with the Omega Medicaid MCO
into which full-benefit dually eligible
individuals may enroll so long as they
are also enrolled in the Omega Medicaid
MCO. Further, under proposed
§ 422.514(h)(3)(ii), MA Organization
Omega could retain the HIDE PPO D–
SNP, but it would be closed to new
enrollment for full-benefit dually
eligible individuals in Montgomery
County.
TABLE HC4: HYPOTHETICAL EXAMPLE - POSSIBLE D-SNP LANDSCAPE AFTER
POTENTIAL ACTIONS BY PARENT ORGANIZATION*
Parent Or2anization Alpha-under proposed rule
MA Organization Omega
HIDE PPO D-SNP
Omega*
Now frozen to new
enrollment
HIDE HMO D-SNP Omega 001 * now
aligned with Medicaid MCO Omega for
full-benefit dually eligible individuals:
• 2027: new enrollment limited to individuals
enrolled in (or in the process of enrolling in)
Medicaid MCO Omega
• 2030: 100 percent of enrollment aligned with
Medicaid MCO Omega; unaligned enrollees
would be disenrolled
Medicaid MCO
Omega (in
Montgomery County)
Our proposals on enrollment
limitations for non-integrated D–SNPs
would apply based on an MA
organization having an affiliated
Medicaid MCO. However, we are
considering whether our proposals
should apply where an MA organization
has other affiliated Medicaid managed
care plan options as well, including
prepaid inpatient health plans (PIHPs)
and prepaid ambulatory health plans
(PAHPs). PIHPs and PAHPs are limited
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in what they cover and do not have
comprehensive risk contracts. Some
States use PIHPs or PAHPs to deliver
specific categories of services, like
behavioral health, or a single benefit,
such as non-emergency medical
transportation, using a single contractor.
The revenue for a PIHP or PAHP is
usually less than the revenue for an
MCO. As such, to the extent our
proposal incentivizes an organization to
end its Medicaid managed care
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contracts to avoid our new contracting
limitations, that incentive would be
stronger for a PIHP or PAHP than an
MCO. Therefore, we are concerned that
applying our proposals to PIHPs and
PAHPs could create incentives that are
disruptive yet do not significantly
further the goals of our proposals. We
welcome comments on this issue.
If we finalize our proposals, we would
consider updates to the systems and
supports designed to aid individuals in
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EP15NO23.022 EP15NO23.023
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making Medicare choices. This would
include MPF, HPMS, and other
resources that help to outline available
plan choices to individuals, SHIP
counselors, and others. This may be
especially important where dually
eligible individuals have choices that
would vary based on the type of plan
and time of year. We would consider the
best ways to show only those plans
available to individuals and highlight
options that align with Medicaid
enrollment. We welcome
recommendations on how the choice
architecture could best support the
proposals or objectives described in this
section.
Overall, we believe our proposals at
§§ 422.503(b)(8), 422.504(a)(20),
422.514(h), and 422.530(c)(4)(iii) would:
• Increase the percentage of D–SNP
enrollees who are in aligned enrollment,
and—over time—exclusively aligned
enrollment (EAE), which would
increase access to the comprehensive
coordination of care, unified appeal
processes across Medicare and
Medicaid, continuation of Medicare
services during an appeal, and
integrated materials that come with
enrollment in one or more of the various
types of integrated D–SNPs. The impact
would be concentrated in those States
that have Medicaid managed care but do
not have EAE requirements already. In
such States, to comply with the
proposals, MA organizations that have
multiple D–SNP PBPs available to fullbenefit dually eligible individuals and
that also offer (or have parent
organizations that offer) Medicaid MCOs
in the same service area would likely
choose to consolidate their PBPs down
to a single PBP for full-benefit dually
eligible individuals that is aligned with
their Medicaid MCO that fully or
partially overlaps the D–SNPs service
area. Such MA organizations could
operate non-AIP coordination-only D–
SNPs both for service areas where they
do not serve beneficiaries on the
Medicaid side and for partial-benefit
dually eligible individuals. (We believe
that consolidation is more likely due to
the potential administrative burden of
offering multiple D–SNPs for which
enrollment is restricted.)
• Reduce the number of D–SNP
options overall, and thus reduce choice
overload and market complexity where
parent organizations offer multiple D–
SNP options in the same or overlapping
service areas.
• Remove some incentives for agents
and brokers to target dually eligible
individuals (especially among employed
or captive agents affiliated with plans
that do not offer integrated D–SNPs),
thus lessening the assistance needed
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from advocates and SHIP counselors to
correct enrollment issues.
• Simplify provider billing and lower
the risk of inappropriate billing, as more
enrollees would be in D–SNPs with
aligned enrollment.
• Promote integrated care and create
more opportunities to provide truly
integrated experience for beneficiaries
by requiring plans to align enrollment
(for example, D–SNPs can better
coordinate care across Medicare and
Medicaid when plans are aligned).
• In 2030, increase the number of D–
SNPs with EAE, and therefore increase
the number of D–SNPs that would be
AIPs that are required to use unified
appeals and grievance procedures and
continuation of Medicare benefits
pending appeal.
• Potentially lead to more States
requiring D–SNP-only contracts (see
§ 422.107(e)) after 2030, as aligned
enrollment and service areas for D–
SNPs with affiliated Medicaid MCOs
would be Federally required, allowing
States to receive the benefits of D–SNPonly contracts (like HPMS access for
oversight and information sharing,
greater transparency on Star Ratings
specific to D–SNP enrollees in their
State, increased transparency on health
care spending, among other benefits).180
While there are many benefits to our
proposals, we acknowledge there are
certain challenges:
• Our proposals would reduce the
number of D–SNP options for Medicaid
MCO enrollees in some States. In
general, we share MedPAC’s assessment
that cases of misaligned enrollment are
unlikely to lead to any meaningful
integration. However, it is plausible that
some dually eligible individuals could
benefit from the unique combinations of
provider networks and supplemental
benefits that could be possible only by
enrolling in misaligned Medicare and
Medicaid plans.
• Making plan choices clear under
our proposals to dually eligible
individuals, SHIP counselors and others
would require changes to MPF, HPMS,
and other CMS public materials
explaining Medicare coverage options.
Systems changes often present unknown
challenges and a learning curve for
users while they become accustomed to
new updates.
• It also may seem that our proposal
on limiting enrollment in D–SNPs
offered by MA organizations with
affiliated Medicaid MCOs, in isolation,
would disadvantage parent
organizations that choose to offer
180 MMCO memo on 42 CFR 422.107(e) available
here: https://www.cms.gov/files/document/
stateoppsintegratedcareprogs.pdf.
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78575
Medicaid MCOs as well as D–SNPs
because such organizations would be
limited in the number of D–SNP
offerings and would be required to align
their enrollment between D–SNP and
MCO for full-benefit dually eligible
individuals. However, our SEP
proposals would have the opposite
effect by permitting enrollment into
integrated D–SNP options that cover
both Medicare and Medicaid benefits
using the new one-time-per month SEP.
Therefore, we believe our proposals, in
combination, would maintain a high
level of competition and choice, even
while imposing some new constraints.
• MA organizations that operate both
D–SNPs and Medicaid MCOs might
elect to participate in fewer competitive
Medicaid procurements (or exit
Medicaid managed care in ‘‘any willing
provider’’ States) to be exempted from
the proposed restrictions on plan
enrollment and number of plan
offerings. This could adversely affect
competition and the minimum choice
requirements in § 438.52 for Medicaid
managed care programs. However, our
SEP proposals would have the opposite
effect, since only integrated D–SNPs
could benefit from the new integrated
care SEP, and overall, we believe our
proposals, in combination, maintain
strong incentives for organizations to
compete for Medicaid managed care
contracts.
• The enrollment and eligibility
restrictions—without the offsetting
proposed SEP changes—could
incentivize sponsors to create D–SNP
look-alikes or other types of MA plans
to build enrollment of dually eligible
individuals without being subject to the
enrollment limits and integration
requirements associated with D–SNPs
(although we plan to mitigate this risk
with proposed revisions to § 422.514(d)
and (e) in section VIII.G of this proposed
rule). Finally, beginning in 2030, our
proposal would no longer allow some
enrollees to stay in their current D–
SNPs, causing some enrollee disruption
where the D–SNPs were unable to
completely align their D–SNP and
Medicaid MCO populations.
We welcome comments on our overall
policy direction, specific proposals, and
analysis of their likely effects.
D. Comment Solicitation: Medicare Plan
Finder and Information on Certain
Integrated D–SNPs
Medicare Plan Finder (MPF) is an
online searchable tool located on the
Medicare.gov website that allows
individuals to compare options for
enrolling in MA or Part D plans.
Medicare beneficiaries can also enroll in
a plan using MPF. Each year, we work
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
to improve its functionality by
implementing enhancements to MPF.
MPF users can find information on D–
SNPs that also provide Medicaid
benefits for dually eligible individuals.
However, the extent to which MPF
highlights those plans is currently
limited. We are soliciting comment to
inform our intent to improve MPF
functionality in the future to make it
easier for dually eligible MPF users to
assess MA plans that cover their full
array of Medicare and Medicaid
benefits.
One important consideration is how
MPF displays benefits offered by MA
and Part D plans. Currently, MPF only
displays benefits that are included in
the MA plan benefit package (PBP) (that
is, Medicare Parts A and B benefits, Part
D coverage, approved Medicare
supplemental benefits, and Value Based
Insurance Design (VBID)/Uniform
Flexibility (UF)/Supplemental Benefits
for Chronically Ill (SSBCI)). For most
MPF users, this represents the totality of
their coverage.
However, for applicable integrated
plans (AIPs), as defined at § 422.561, D–
SNP enrollment is limited to those
individuals who also receive Medicaid
benefits through the D–SNP or affiliated
Medicaid managed care organization
(MCO) under the same parent
organization. For these D–SNPs, the
benefits listed in MPF accurately reflect
those covered by Medicare but do not
reflect all the benefits available to all
enrollees in the D–SNP.
For example, in most States, all dually
eligible individuals who qualify to
enroll in an AIP would have access to
Medicaid-covered non-emergency
medical transportation (NEMT).
However, MPF currently only displays
NEMT as a covered benefit for any MA
plan if it is also covered as an MA
supplemental benefit. As such, all other
things equal, an MA plan that offers
NEMT as an MA supplemental benefit
appears in MPF to have more generous
coverage than an AIP that does not
cover NEMT as an MA supplemental
benefit but does cover it under the
affiliated Medicaid MCO contract.
Information about only Medicare
benefits covered by MA plans available
to the individual, although accurate,
may not provide as much information to
dually eligible MPF users as would be
beneficial, since the combination of
available Medicare and Medicaid
benefits available through some
integrated D–SNPs may be greater than
the Medicare benefits reflected in MPF.
It may also create a perverse incentive
for D–SNPs to offer certain types of
supplemental benefits for Medicare
marketing purposes even when the same
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services are already available to all
enrollees in the plan through Medicaid.
We believe there is an opportunity to
better inform dually eligible MPF users.
For AIPs, we are considering adding a
limited number of specific Medicaidcovered benefits (for example, dental,
NEMT, certain types of home and
community-based services, or others) to
MPF when those services are available
to enrollees through the D–SNP or the
affiliated Medicaid MCO. We would
limit this functionality to AIPs, because
in such plans all enrollees—by
definition—receive Medicaid benefits
through the AIP.
We would not include in the MPF
display any Medicaid benefits that are
available but only through a separate
carve-out. Consider, for example, a State
in which NEMT is available to dually
eligible individuals but through a
Statewide vendor separate from the AIP.
In this instance, displaying NEMT in
MPF would accurately represent that all
D–SNP enrollees have coverage for
NEMT in Medicaid, but it would not
accurately characterize the D–SNP’s role
(or the role of the affiliated Medicaid
MCO offered by D–SNP parent
organization) in delivering the service.
We continue to consider whether to
indicate which services are Medicare
supplemental benefits and which are
Medicaid, weighing whether the
additional information would be worth
the added complexity.
Displaying Medicaid benefits in MPF,
even with the limitations described
above, would present new operational
challenges for CMS. We do not currently
capture the necessary information for
AIPs or other D–SNPs in a systematic
manner to populate MPF with
information about Medicaid benefits
covered by D–SNPs. (Medicaid benefit
information is included in State
Medicaid agency contracts (SMACs) that
D–SNPs submit annually to CMS, but
the information is not standardized and
can be inconsistent and difficult to
retrieve. Also, the current timing of
SMAC submissions by the first Monday
in July may not allow CMS enough time
to review the SMACs and make the
Medicaid benefits information available
to MPF for an early October release.)
Another way to potentially capture the
necessary information would be for us
to provide a mechanism by which D–
SNPs can report it to us annually. We
solicit comment on the practicality and
means for accomplishing this. Our
experiences with integrated PBPs in the
Medicare-Medicaid Financial
Alignment Initiative would inform our
implementation, but enhancements to
MPF would require effort and some
opportunity cost. Nonetheless, we
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believe we can better inform dually
eligible MPF users about the benefits to
which they are entitled and, in doing so,
better integrate their experience across
Medicare and Medicaid. With support
from the Administration for Community
Living and the National Council on
Aging, the My Care My Choice website
is currently available to showcase
integrated care plan options (and more)
for three States (California, Michigan,
and Ohio).181 We are also interested in
stakeholders submitting comments
about any features from the My Care My
Choice website that are particularly
helpful for individuals in understanding
and making plan choices.
Such enhancements to MPF would
not require rulemaking. We are
soliciting comments on the concepts
described above to inform our decision
about whether and how to implement
changes to MPF along these lines.
E. Comment Solicitation: State
Enrollment Vendors and Enrollment in
Integrated D–SNPs
We, along with our State partners,
have worked to create integrated care
options for dually eligible individuals.
When individuals choose to enroll, we
want the enrollment process to be easy
to navigate. Unfortunately, there remain
technical challenges that can impede
the ease of enrollment in integrated D–
SNPs, including misalignment of
Medicare and Medicaid enrollment
processes, start dates, and related
operational challenges for States and
plans, as well as potentially confusing
non-integrated enrollee communication
materials.
In the FAI, CMS delegated eligibility
and enrollment functions for MedicareMedicaid Plans (MMPs) to States by
waiving regulations at 42 CFR part 422,
subpart B, insofar as they were
inconsistent with the passive
enrollment process used for each
demonstration and with limiting
enrollment in MMPs to certain dually
eligible individuals. Operationally,
many States have leveraged their State
Medicaid enrollment vendors to
operationalize enrollment, eligibility, or
both. Which functions FAI States have
chosen to delegate to their enrollment
vendors or keep in-house (for example,
enrollment vendor call center,
enrollment noticing, eligibility
determinations and enrollment
processing) vary depending on the State.
Within the context of the FAI
demonstrations, the use of a State
enrollment vendor serves multiple
purposes:
181 The My Care My Choice website is available
at: https://www.mycaremychoice.org/en.
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• Effectuating Medicare and Medicaid
enrollment simultaneously to avoid
misalignment between enrollment start
and end dates,
• Serving as an unbiased source of
information about integrated managed
care plans and coverage options, and
• Reducing the risk of real or
perceived conflicts of interest when
plans initiate enrollment directly.
Outside of the FAI, dually eligible
individuals elect MA plans, including
D–SNPs, by enrolling directly with the
plan, or Third-Party Marketing
Organizations, or via 1–800–Medicare
and the Medicare Online Enrollment
Center. This creates special challenges
for D–SNPs that have exclusively
aligned enrollment (EAE) with affiliated
Medicaid MCOs because these D–SNPs
then need to separately coordinate
enrollment of the dually eligible
individual into the D–SNP’s affiliated
Medicaid MCO. Some States have
expressed interest in leveraging State
enrollment vendors, including
enrollment brokers as described in
section 1903(b)(4) of the Act, to
effectuate EAE for integrated D–SNPs
and their affiliated Medicaid MCOs.
Based on this experience, we are
assessing ways to:
• Promote enrollment in integrated
D–SNPs and reduce the likelihood of
misaligned Medicare and Medicaid
managed care enrollment for
beneficiaries,
• Work toward an integrated D–SNP
enrollment process that is operationally
practical for both CMS and States,
• Create alignment—to the extent
feasible—between Medicare and
Medicaid managed care enrollment start
and end dates,
• Protect beneficiaries from abusive
enrollment practices without creating
barriers to enrollment into a plan of
choice, and
• Streamline beneficiary messaging
and communication related to
enrollment.
1. Current Opportunity for Use of State
Enrollment Vendors for Enrollment in
Integrated D–SNPs
States can utilize Medicaid
enrollment vendors for enrollment in
integrated D–SNPs through
requirements in the SMAC required by
§ 422.107. States may thus require D–
SNPs to contract directly with the
State’s enrollment vendor to verify D–
SNP eligibility and effectuate D–SNP
enrollment transactions. While these
contracts could govern the respective
obligations of the broker and the D–
SNP, they would have to be uniform for
all D–SNPs in the State, and in order to
avoid a violation of section 1903(b)(4) of
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the Act and §§ 438.71(c)(2) and 438.810
regarding a broker having a financial
interest in a provider or managed care
plan in the State, the State would have
to compensate its enrollment broker for
performing these functions. D–SNPs
would be in the position to provide the
necessary information and oversight of
the enrollment mechanisms and
activities. D–SNPs would still be subject
to existing regulations at § 422.504(i),
maintaining ultimate responsibility for
adhering to and complying with all
terms and conditions of their contract
with CMS.
States can implement, and require of
D–SNPs, specific messaging directing
dually eligible individuals to take
enrollment actions via the State’s
enrollment vendor only, similar to the
noticing and messaging that applies in
the FAI demonstrations. States could
choose which functions to direct the D–
SNPs to contract with the enrollment
vendor for via the SMAC. States could
also choose to direct the D–SNPs via the
SMAC to not elect use of the Medicare
Online Enrollment Center.
States could require D–SNPs to
transfer prospective enrollees to the
State’s enrollment vendor for eligibility
confirmation, as MMPs are required to
do under the FAI demonstrations (for
example, via warm transfer, in which
the D–SNP staff transfers the
prospective enrollee to the State’s
enrollment vendor but passes on the
relevant information about the
prospective enrollee). The enrollment
vendor or the D–SNP—depending upon
the contractual arrangement—would
then effectuate the enrollment or
disenrollment for Medicare and
Medicaid. States could also require
plans to direct enrollees to their vendor
for disenrollments. Currently, under
FAI, MMPs cannot accept enrollment
requests directly from an individual or
process the request, but instead they
must forward the request to the State or
State’s enrollment vendor within two
business days.
Under an arrangement in which a
State requires D–SNPs to contract with
the State’s enrollment vendor, D–SNPs
would retain the responsibility to
oversee any functions delegated to the
State’s enrollment vendor under
§ 422.504 provisions that require MA
plans to oversee first tier, downstream,
and related entities. However, as noted
earlier, financial arrangements would
need to be structured to avoid violating
the independence and conflict of
interest limitations that apply to
enrollment brokers under section
1903(b)(4) of the Act and §§ 438.71(c)
and 438.810.
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Requiring D–SNPs to contract with a
State’s enrollment vendor for
enrollment and eligibility functions
could create a simpler, streamlined
enrollment experience for dually
eligible individuals and may reduce the
risk of misaligned Medicare and
Medicaid enrollment. As in the FAI
demonstrations, the State’s enrollment
vendor would need to implement
Medicare managed care eligibility and
enrollment policies, such as Medicare
special enrollment periods and
Comprehensive Addition and Recovery
Act provisions.
Finally, like the FAI demonstrations,
States can prohibit D–SNPs, via SMACs,
from using agents and brokers to
perform the activities described in
§§ 422.2274 and 423.2274.
2. Medicaid Managed Care Enrollment
Cut-Off Dates
One challenge of applying FAI
enrollment processes outside the
demonstration context is alignment of
Medicaid and Medicare managed care
enrollment start and end dates. Sections
1851(f)(2) and 1860D–1(b)(1)(B)(iv) of
the Social Security Act, and regulations
codified at §§ 422.68 and 423.40(c)
respectively, generally require that
Medicare enrollments become effective
on the first day of the first calendar
month following the date on which the
election or change is made, although
section 1851(f)(4) of the Act and
§§ 422.68(d) and 423.40(c) allow CMS
flexibility to determine the effective
dates for enrollments that occur in the
context of special enrollment periods.
Medicaid managed care regulations at
§ 438.54 do not specify the timelines or
deadlines by which any enrollment
must be effective.
Some States have cut-off dates after
which enrollment in a Medicaid
managed care plan is not effectuated
until the first calendar day of the next
month after the following month. (For
example, an application received on
March 28 would be effective May 1 in
some States.) If a dually eligible
individual is trying to enroll in an
integrated D–SNP at the end of a month
in a State with a Medicaid managed care
enrollment cut-off date, there could be
a monthlong lag between their Medicare
managed care effective date and
Medicaid managed care effective date.
The lag in start dates between Medicare
and Medicaid services for an integrated
D–SNP can be confusing to enrollees,
operationally challenging for integrated
plans, and difficult to describe in plan
materials, particularly in instances
where the D–SNP and Medicaid MCO
are described as a single integrated
organization.
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We are interested in learning more
about reasons for implementing
Medicaid managed care enrollment cutoff dates and the barriers, as well as
potential solutions, to aligning Medicare
and Medicaid managed care enrollment
start and end dates. We invite comment
from interested parties, including States,
D–SNPs, and Medicaid managed care
plans, about their specific operational
challenges related to potential changes
to Medicaid cut-off dates to align them
with the Medicare start date.
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3. Comment Solicitation
We are seeking feedback on the
feasibility of the approach to enrollment
outlined above (requiring integrated D–
SNPs to contract with State enrollment
brokers), as well as any specific
concerns about States implementing it.
We are soliciting comments on, but
not limited to, the following topics:
• What challenges do individuals face
when trying to enroll in integrated D–
SNPs?
• What are States’ reasons for having
a specific Medicaid managed care
enrollment cut off date in place?
• What type of operational or systems
barriers do States and Medicaid
managed care plans face to making
changes to their Medicaid enrollment
cut-off date to align with the Medicare
managed care enrollment start date?
• What potential concerns would
stakeholders have about CMS using
flexibilities at section 1860D–
1(b)(1)(B)(iv) of the Act and § 423.40(c)
to determine effective dates for
Medicare enrollments that occur in the
context of our proposed special
enrollment period for integrated care?
(For example, Medicare enrollment
effective dates that align with Medicaid
enrollment effective dates, even if they
are not the first day of the first calendar
month following the date on which the
election or change is made.)
• Are there operational or systems
barriers for States and Medicaid
managed care plans to align
disenrollment dates with Medicare?
• What concerns, if any, should we
consider with States requiring D–SNPs
to route enrollment through the State
enrollment vendor via the SMAC? Are
there any Federal regulations, other than
or in addition to the limitations on
enrollment brokers under section
1903(b)(4) and §§ 438.71(c) and 438.810,
that interested parties view as an
impediment to this option?
• What type of technical assistance
related to effectuating MA plan and D–
SNP enrollment and eligibility
processes would be helpful to States?
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• What concerns should we consider
about potential abusive enrollment
practices?
• What are States’ current
requirements and policies related to
agents and brokers?
• Are there other aspects of the
integrated enrollment and disenrollment
processes in FAI that should apply to
D–SNPs?
F. Clarification of Restrictions on New
Enrollment Into D–SNPs via State
Medicaid Agency Contracts (SMACs)
(§§ 422.52 and 422.60)
To elect a specialized MA plan for
special needs individuals as defined at
§ 422.2 (special needs plans or SNPs),
an individual must meet the eligibility
requirements for the specific type of
SNP in which the individual wishes to
enroll. At § 422.52(b), we define the
eligibility requirements for individuals
to enroll in a SNP. These eligibility
requirements indicate that an individual
must meet the regulatory definition of a
special needs individual at § 422.2, meet
the eligibility requirements for the
specific SNP they elect to enroll in, and
be eligible to elect an MA plan under
§ 422.50. For D–SNPs, we also require at
§ 422.107(c)(2) that the categories and
criteria for eligibility for dually eligible
individuals to enroll in the SNP be
included in the SMAC between the
State and the D–SNP. D–SNPs must
restrict enrollment eligibility categories
or criteria consistent with the SMAC.
Currently, numerous States add
eligibility categories and criteria to their
SMACs that restrict new D–SNP
enrollment to prioritize and promote
integrated care. For example, some
States only allow D–SNPs to enroll fullbenefit dually eligible individuals.
Other States only allow D–SNPs to
enroll individuals who are also in an
affiliated Medicaid managed care plan,
creating exclusively aligned enrollment.
State restrictions serve an important
purpose in maximizing the number of
dually eligible individuals who receive
coordinated services through the same
organization for both Medicare and
Medicaid; minimizing disruption for
enrollees currently served by existing
D–SNPs; and allowing for the creation
of D–SNP benefit packages that are
tailored to certain subsets of dually
eligible individuals.
State limitation of D–SNP enrollment
to certain populations has been a feature
throughout the history of D–SNPs.
Nonetheless, we believe we can further
clarify our regulations.
We propose to revise § 422.52(b)(2) to
be explicit that to be eligible to elect a
D–SNP, an individual must also meet
any additional eligibility requirements
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established in the SMAC. We also
propose to revise § 422.60(a)(1) and add
§ 422.60(a)(3) to be more explicit that
MA organizations may restrict
enrollment in alignment with
§ 422.52(b)(2). Neither proposal is
intended to change our longstanding
policy. We do not expect any new
burden associated with these proposed
changes because States are already
including eligibility categories and
criteria in their SMACs and we are
reviewing those accordingly.
G. Contracting Standards for Dual
Eligible Special Needs Plan Look-Alikes
(§ 422.514)
In the final rule titled Medicare
Program; Contract Year 2021 Policy and
Technical Changes to the Medicare
Advantage Program, Medicare
Prescription Drug Benefit Program, and
Medicare Cost Plan Program which
appeared in the Federal Register on
June 2, 2020 (85 FR 33796) (hereinafter
referred to as the June 2020 final rule),
CMS finalized the contracting
limitations for D–SNP look-alikes at
§ 422.514(d) and the associated
authority and procedures for
transitioning enrollees from a D–SNP
look-alike at § 422.514(e). For plan year
2022 182 and subsequent years, as
provided in § 422.514(d)(1), CMS does
not enter into a contract for a new nonSNP 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. For plan year 2023 and
subsequent years, as provided in
§ 422.514(d)(2), CMS will not renew a
contract with a non-SNP MA plan that
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.
We established these contract
limitations to address the proliferation
and growth of D–SNP look-alikes, which
raised concerns related to effective
implementation of requirements for D–
SNPs established by section 1859 of the
Act (including amendments made by
the Medicare Improvements for Patients
and Providers Act of 2008 (Pub. L. 110–
275) and the Bipartisan Budget Act of
182 CMS amended § 422.514(d)(1) in the April
2023 final rule, so the regulation text now refers to
plan year 2024 and subsequent years; however, the
regulation was in effect, with the reference to 2022
and subsequent years, as described here.
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2018 (Pub. L. 115–123)). We adopted the
regulation to ensure full implementation
of requirements for D–SNPs, such as
contracts with State Medicaid agencies,
a minimum integration of Medicare and
Medicaid benefits, care coordination
through health risk assessments (HRAs),
and evidence-based models of care. In
addition, we noted how limiting these
D–SNP look-alikes would address
beneficiary confusion stemming from
potentially misleading marketing
practices by brokers and agents that
market D–SNP look-alikes to dually
eligible individuals. For a more detailed
discussion of D–SNP look-alikes and
their impact on the implementation of
D–SNP Medicare and Medicaid
integration, we direct readers to the June
2020 final rule (85 FR 33805 through
33820) and 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 (85 FR 9018 through
9021) (also known as the February 2020
proposed rule).
In the April 2023 final rule, we
finalized amendments to close
unforeseen loopholes in the scope of the
regulation adopted to prohibit D–SNP
look-alikes. Specifically, we finalized
language at § 422.514(g) to apply the
prohibitions on contracting with D–SNP
look-alikes to individual segments of an
MA plan. We also finalized language at
§ 422.514(d)(1) to apply the D–SNP
look-alike contracting limitation to both
new and existing (that is, renewing) MA
plans that are not SNPs and submit bids
with projected enrollment of 80 percent
or more enrollees of the plan’s total
enrollment that are dually eligible for
Medicare and Medicaid.
1. Reducing Threshold for Contract
Limitation on D–SNP Look-Alikes
ddrumheller on DSK120RN23PROD with PROPOSALS2
Our contracting limitations at
§ 422.514(d) mean that we do not
contract with non-SNP MA plans that
have enrollment consisting of 80
percent or more of enrollees who are
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entitled to Medicaid. We set the
threshold at 80 percent or higher based
on a 2019 MedPAC analysis that
showed the proportion of dually eligible
individuals in most geographic areas
did not exceed the 80-percent
threshold; 183 at that time, no MA plan
service area had more than 50 percent
dually eligible beneficiaries, and
therefore dually eligible enrollment of
80 percent or greater would not be the
result of any plan that had not intended
to achieve high enrollment of dually
eligible individuals (85 FR 33812). The
80-percent threshold also captured
almost three-quarters of the non-SNP
MA plans with more than 50 percent
dually eligible enrollees (85 FR 33812).
As described in the June 2020 final rule,
we also considered two other
approaches: (1) setting the threshold 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; and (2) setting a lower threshold
for dually eligible enrollment at a point
between 50 and 80 percent (85 FR
33807). In addition to 80 percent or
higher being an indicator that the plan
is designed to attract disproportionate
dually eligible enrollment, we believed
this threshold would be easier for MA
organizations to determine
prospectively and operationally easier
for CMS to implement than a threshold
that varied across each service area.
A number of commenters on the
February 2020 proposed rule
recommended that we set a threshold
lower than 80 percent. These
commenters expressed concern that a
threshold of 80 percent could be
‘‘gamed’’ by MA organizations to keep
enrollment of dually eligible individuals
just under the ceiling. Some
commenters recommended that CMS set
the ceiling for dually eligible enrollment
at 50 percent with a commenter citing
MACPAC analysis showing faster
growth in projected enrollment among
183 See June 2019 MedPAC Report to Congress,
Chapter 12 at https://www.medpac.gov/wp-content/
uploads/import_data/scrape_files/docs/defaultsource/reports/
jun19_ch12_medpac_reporttocongress_sec.pdf.
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78579
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.
In the June 2020 final rule, we
responded that we believed the 80percent threshold was reasonable
because, based on the 2019 MedPAC
analysis on 2017 data, it far exceeded
the share of dually eligible individuals
in any given MA plan service area—no
MA plan service area had more than 50
percent dually eligible beneficiaries—
and, therefore, would not be the result
for any plan that had not intended to
achieve high dually eligible enrollment.
We also stated that we would monitor
for potential gaming after
implementation of the final rule by
reviewing plan enrollment data and
consider future rulemaking as needed
(85 FR 33812).
In response to our proposals to close
unforeseen D–SNP look-alike loopholes
in the April 2023 final rule, some
commenters again recommended we
lower the threshold to less than 80
percent (88 FR 22131). A few
commenters recommended we lower the
threshold below 80 percent without
recommending a specific percentage,
and other commenters recommended
we lower the threshold to 50 percent.
The commenters suggested that
lowering the threshold further would
promote integrated care and minimize
beneficiary confusion. As one of these
commenters, MACPAC noted that it
‘‘remains concerned that while CMS’s
focus on plans where 80 percent or
more of all enrollees are dually eligible
addresses the most egregious instances,
there could still be a real risk of growth
in non-SNP MA plans falling below the
80-percent threshold and thus
continuing to detract from Federal and
State efforts to integrate care.’’ We
analyzed the percentage of non-SNP MA
plans’ dually eligible enrollment as a
percentage of total enrollment from plan
years 2017 through 2023. Our analysis
shows that the number of non-SNP MA
plans with high levels of dually eligible
individuals has grown substantially.
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
TABLE 1: TOTAL NUMBER OF NON-SNPS BY DUALLY ELIGIBLE INDIVIDUALS
AS PERCENT OF TOTAL ENROLLMENT AND YEAR
Year
Total Number of
Total Number
Total Number
Total Number
Non-SNPMA
ofNon-SNP
ofNon-SNP
of Non-SNP MA
Plans with 50-60% MA Plans with
MA Plans with
Plans with 50Dually Eligible
60-70% Dually
70-80% Dually
80% Dually
Individuals
Eligible
Eligible
Eligible
Individuals
Individuals
Individuals
2017
9
4
2
15
2018
13
6
5
24
2019
16
19
17
52
2020
30
18
17
65
2021
33
25
19
77
2022
58
35
26
119
2023
58
40
30
128
Percent
544%
900%
1,400%
753%
growth from
2017 to 2023
Source: CMS analysis of Integrated Data Repository (IDR) data for January of each respective year. Analysis
conducted in April 2023.
TABLE 2: TOTAL ENROLLMENT IN NON-SNPS BY PERCENT OF DUALLY
ELIGIBLE INDIVIDUALS ENROLLED AND YEAR
Year
Total Enrollees Total Enrollees
Total Enrollees in Total Enrollees
in Non-SNP
in N on-SNP MA Non-SNPMA
in N on-SNP MA
MA Plans with Plans with 60Plans with 70Plans with 5080% Dually
80% Dually
50-60% Dually 70% Dually
Eligible
Eligible
Eligible
Eligible
Individuals
Individuals
Individuals
Individuals
2017
26,231
3,091
246
29,568
2018
26,132
2,570
2,957
31,659
2019
9,204
8,171
16,459
33,834
2020
46,319
15,939
20,320
82,578
2021
54,185
29,738
23,652
107,575
2022
75,926
45,522
26,481
147,929
2023
105,534
92,100
53,334
250,968
Percent
302%
2,880%
21,580%
749%
growth from
2017 to 2023
BILLING CODE 4120–01–C
The rate of growth from 2017 to 2023
in the number of non-SNP MA plans
with 50 to 60 percent (544 percent
increase), 60 to 70 percent (900 percent),
and 70 to 80 percent dually eligible
individuals as a percent of total
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enrollment (1,400 percent) 184 exceeded
the rate of enrollment growth for all
MA–PD plans (109 percent) over the
184 CMS analysis of Integrated Data Repository
(IDR) data for January of each respective year.
Analysis conducted in April 2023, as shown in
Table 1.
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same period of time.185 The increased
growth in non-SNP MA plans with
dually eligible individuals between 50
and 80 percent of total enrollment
suggests to us that MA organizations are
185 CMS data from the Contract Year 2021 and
2023 Landscape Plan shows the total number of
MA–PD plans in 2017 was 2,332 and the total
number of MA–PD plans in 2023 is 4,875.
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Source: CMS analysis of Integrated Data Repository (IDR) data for January of each respective year. Analysis
conducted in April 2023.
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
ddrumheller on DSK120RN23PROD with PROPOSALS2
offering plans for dually eligible
individuals but circumventing rules for
D–SNPs, including requirements from
the Bipartisan Budget Act of 2018, and
detracting from Federal and State efforts
to better integrate Medicare and
Medicaid benefits. This growth in
enrollment in these non-SNP plans is
likely also drawing enrollment from
integrated care D–SNPs and similar
integrated programs. Recent analysis
found that almost one-third of dually
eligible individuals newly enrolled in
D–SNP look-alikes were previously
enrolled in fully integrated dual eligible
SNPs (FIDE SNPs), other D–SNPs, PACE
plans, or MMPs.186
We also conducted analysis with 2023
data mimicking MedPAC’s 2019
analysis showing the share of dually
eligible individuals enrolled in non-SNP
MA plans against the share of
beneficiaries in a plan service area who
are dually eligible individuals.187
MedPAC’s analysis showed that in most
MA markets, the share of beneficiaries
in a plan service area who are dually
eligible was clustered in the 10 to 25
percent range and in no county
exceeded 50 percent. Their analysis
showed that dually eligible individuals
generally represented 30 percent or less
of non-SNP MA plans’ total enrollment.
MedPAC’s analysis informed our
decision to set the threshold for dually
eligible enrollment at 80 percent of a
non-SNP MA plan’s enrollment because
it far exceeded the share of dually
eligible individuals in any given market
(by 30 percentage points or more) at that
point in time and, therefore, would not
be the result for any plan that had not
intended to achieve high dually eligible
enrollment. Similar to the earlier
MedPAC analysis, our analysis of 2023
data shows the share of beneficiaries in
a plan service area who are dually
eligible is clustered in the 10 to 30
percent range and does not exceed 49
percent except in one county (at 56
percent).188 Also like MedPAC, we
found that for most non-SNP MA plans,
dually eligible individuals generally
represent 30 percent or less of the plan’s
total enrollment. However, whereas
186 Ma, Y., Austin F., Roberts, E., Johnston, K.,
Phelan, J., and Figueroa, J. ‘‘Rapid Enrollment
Growth In ‘Look-Alike’ Dual-Eligible Special Needs
Plans: A Threat To Integrated Care’’, Health Affairs
(July 2023) 919–927. Retrieved from https://
www.healthaffairs.org/doi/epdf/10.1377/
hlthaff.2023.00103.
187 See June 2019 MedPAC Report to Congress,
Chapter 12 at https://www.medpac.gov/wp-content/
uploads/import_data/scrape_files/docs/defaultsource/reports/jun19_ch12_medpac_
reporttocongress_sec.pdf.
188 CMS analysis of 2023 non-SNP MA plan data
in the IDR. Analysis conducted in April 2023, as
shown in Table 1.
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MedPAC found 13 non-SNP MA plans
with dually eligible enrollment between
50 percent and 80 percent for 2017,189
we found 128 non-SNP MA plans with
enrollment in that range for 2023.190
To address the substantial growth in
non-SNP MA plans with
disproportionately high enrollment of
dually eligible individuals, we propose
lowering the D–SNP look-alike
threshold from 80 percent to 60 percent
incrementally over a two-year period.
We propose to lower the threshold for
dually eligible enrollment to 60 percent
of a non-SNP MA plan’s enrollment
because it exceeds the share of dually
eligible individuals in any given MA
plan service area currently and,
therefore, would not be the result for
any plan that simply reflected the
concentration of dually eligible
enrollees in its service area.
We propose a limitation on non-SNP
MA plans with 70 or greater percent
dually eligible individuals for contract
year 2025. For contract year 2026, we
propose to reduce the threshold from 70
percent to 60 percent or greater dually
eligible enrollment as a share of total
enrollment. This incremental approach
would minimize disruptions to dually
eligible individuals and allow MA
organizations and CMS to operationalize
these transitions over a two-year period.
As discussed in more detail below, we
would maintain processes to minimize
disruption for the enrollees in plans
affected by this proposed change.
Based on 2023 data, we expect the
lower threshold would impact 30 nonSNP MA plans with dually eligible
individuals representing 70 to 80
percent of total enrollment and 40 nonSNP MA plans with dually eligible
individuals representing 60 to 70
percent of total enrollment. Some of the
plans that could be affected by our
proposal are offered in States (that is,
California, Massachusetts, Minnesota)
that limit contracting to integrated D–
SNPs, such as FIDE SNPs and AIPs.
Based on 2023 plan data, 12 non-SNP
MA plans in California, Massachusetts,
and Minnesota have shares of dually
eligible enrollment between 60 and 80
percent. These States have chosen to
limit their markets to certain D–SNPs to
integrate Medicare and Medicaid for
dually eligible individuals. Lowering
the D–SNP look-alike contracting
limitation to 60 percent will help to
189 June 2019 MedPAC Report to Congress,
Chapter 12, calculated from Table 12–9 at https://
www.medpac.gov/wp-content/uploads/import_
data/scrape_files/docs/default-source/reports/
jun19_ch12_medpac_reporttocongress_sec.pdf.
190 CMS analysis of 2023 non-SNP MA plan data
in the IDR. Analysis conducted in April 2023, as
shown in Table 1.
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simplify choices for dually eligible
individuals in these States and promote
Medicare and Medicaid integration
objectives.
We propose revisions to the rule on
dually eligible enrollment at
§ 422.514(d)(1) to apply the lower
thresholds to new and existing non-SNP
MA plan bids. Specifically, we propose
amending paragraph (d)(1)(ii) such that
CMS would not enter into or renew a
contract for a new or existing non-SNP
MA plan that projects enrollment in its
bid of 80 percent or more dually eligible
individuals for plan year 2024 (as is
already the case under current
regulations); 70 percent or more dually
eligible individuals for plan year 2025;
and 60 percent or more dually eligible
individuals for plan year 2026 and
subsequent years. Consistent with our
current practice, we would apply the
proposed changes at § 422.514(d)(1)(ii)
to all bids for the next plan year,
including any bids for non-SNP MA
plans projected to exceed the threshold
even if the actual enrollment for the
current plan year is under the threshold
at § 422.514(d)(1).
Similarly, we propose revisions to
paragraph (d)(2) to apply the lower
thresholds to non-SNP MA plan
enrollment. Specifically, we propose to
amend paragraph (d)(2)(ii) to state that
we will not renew a contract with a nonSNP MA plan that has actual
enrollment, using January enrollment of
the current year, in which dually
eligible individuals constitute 80
percent or more dually eligible
individuals for plan year 2024 (as is
already the case under current
regulations); 70 percent or more dually
eligible individuals for plan year 2025;
or 60 percent or more dually eligible
individuals for plan year 2026 or
subsequent years. In operationalizing
these proposed changes, for example,
we would use January 2024 enrollment
data to identify non-SNP MA plans that
exceed the proposed 70-percent
threshold, for purposes of determining
whether to renew contracts with these
plans for plan year 2025. We would use
January 2025 enrollment data to identify
non-SNP MA plans that exceed the
proposed 60-percent threshold for
purposes of determining whether to
renew contracts with these plans for
plan year 2026. Consistent with existing
rules, we would not apply the
contracting limitation in § 422.514(d)(2)
to any non-SNP MA plan that has been
active for less than one year and has
enrollment of 200 or fewer individuals.
We considered lowering the threshold
to 50 percent, given the growth in the
number of non-SNP MA plans between
50 and 60 percent dually eligible
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individuals as a share of total
enrollment. MedPAC’s analysis of 2017
data and our analysis of 2023 data
showed that there are some service areas
where the entire Medicare population is
around 50 percent dually eligible
individuals and 50 percent non-dually
eligible individuals. As such, lowering
the threshold to 50 percent could
prohibit plans that reflect the
distribution of eligibility in that
community. Also, it is less clear that a
plan is designed to target dually eligible
individuals and circumvent the
statutory D–SNP requirements when a
plan appeals equally to dually eligible
individuals and non-dually eligible
individuals. Although we propose to
lower the threshold to 60 percent, we
solicit comments on whether the
alternative to reduce the threshold to 50
percent is more appropriate to protect
against plans circumventing the
requirements for D–SNPs while
enrolling a disproportionate number of
dually eligible individuals.
2. Amending Transition Processes and
Procedures for D–SNP Look-Alikes
Section 422.514(e) establishes
parameters 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 the
existing processes and procedures, 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 transition
process allows MA enrollees to be
transitioned at the end of the year from
one MA plan offered by an MA
organization to another MA–PD plan (or
plans) without having to complete an
election form or otherwise indicate their
enrollment choice as typically required,
but it also permits the enrollee to make
an affirmative choice for another MA
plan or standalone Part D plan of his or
her choosing during the annual election
period (AEP) preceding the year for
which the transition is effective.
Consistent with our description of the
transition process in the June 2020 final
rule (85 FR 33816), 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
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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 SEP,
depending on the circumstances.
Existing provisions at paragraphs
(e)(1)(i) through (iv) outline 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. At existing paragraph (e)(1)(i), we
allow a non-renewing D–SNP look-alike
to transition that plan’s 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 the threshold
established in paragraph (d)(2)(ii) (now,
80 percent but with the proposed
amendment, this would refer to the
scheduled change in the threshold).
SNPs receiving transitioned enrollment
are not subject to this proposed limit on
dually eligible individual enrollment.
Under existing paragraph (e)(1)(ii), we
require that any plan receiving
transitioned enrollment be an MA–PD
plan as defined in § 422.2. Under
existing paragraph (e)(1)(iii), any MA
plan receiving transitioned enrollment
from a D–SNP look-alike is 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). Finally,
paragraph (e)(1)(iv) requires that the
receiving plan be of the same plan type
(for example, HMO or PPO) of the D–
SNP look-alike out of which enrollees
are transitioned.
At existing paragraph (e)(2)(ii), the
current transition process requires MA
organizations 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 422.2267(e)(3). Consistent with
§ 422.111(d)(2), enrollees 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 AEP.
At existing paragraph (e)(4), the
regulation addresses situations where
the prohibition on contracting or
renewing a D–SNP look alike is applied
and the D–SNP look alike is terminated.
In such situations where an MA
organization does not transition some or
all current enrollees from a D–SNP lookalike to one or more of the MA
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organization’s other plans as provided
in proposed paragraph (e)(1), the MA
organization is required to send affected
enrollees a written notice consistent
with the non-renewal notice
requirements at § 422.506(a)(2).
This transition process is
conceptually similar to ‘‘crosswalk
exception’’ procedures at § 422.530(c).
However, in contrast to the crosswalk
exceptions, our transition process at
§ 422.514(e) permits transition across
contracts and across MA organizations
under the same parent organization, as
well as from non-SNP plans to SNPs.
We propose to apply the existing
transition processes and procedures at
§ 422.514(e) to non-SNP MA plans that
meet the proposed D–SNP look-alike
contracting limitation of 70 percent or
more dually eligible individuals
effective plan year 2025 and 60 percent
or more dually eligible individuals
effective plan year 2026. Consistent
with the initial years of implementation
of the D–SNP look-alike contract
limitations with the 80-percent
threshold, maintaining these transition
processes and procedures will help to
minimize disruption as a result of the
prohibition on contract renewal for
existing D–SNP look-alikes. However,
for plan year 2027 and subsequent
years, we propose to limit the
§ 422.514(e) transition processes and
procedures to D–SNP look-alikes
transitioning dually eligible enrollees
into D–SNPs. Based on our experience
with D–SNP look-alike transitions
effective plan year 2023, the vast
majority of enrollees are transitioned to
other MA–PDs under the same parent
organization as the D–SNP look-alike.
Based on our review of D–SNP lookalike transition plans thus far, we expect
the experience for transitions effective
plan year 2024 to follow a similar
pattern. We propose this new limitation
on the transition process at new
paragraph (e)(1)(v).
MA organizations can utilize other
CMS processes to transition D–SNP
look-alike enrollees to non-D–SNPs. For
example, an MA organization can utilize
the CMS crosswalk process if it is
transitioning the full D–SNP look-alike
enrollment to one non-SNP plan benefit
package (PBP) of the same type offered
by the same MA organization under the
same contract provided all requirements
at § 422.530 for a crosswalk are met. An
MA organization moving the entire
enrollment of the D–SNP look-alike PBP
to another PBP of the same type under
the same contract may structure this
action as a consolidation of PBPs and
use the crosswalk for consolidated
renewal process, under
§ 422.530(b)(1)(ii). An MA organization
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may utilize the crosswalk exception
process at § 422.530(c)(2) to request to
transition the entire enrollment of the
MA contract (including the D–SNP lookalike) to another MA contract offered by
another MA organization with the same
parent organization as part of a contract
consolidation of separate MA contracts.
As part of reviewing a request for a
crosswalk exception under
§ 422.530(c)(2), CMS reviews the
contract consolidation to ensure
compliance with the change of
ownership regulations (§§ 422.550
through 422.553).
While multiple options exist for MA
organizations to transition D–SNP lookalike enrollees to other non-SNP MA
plans, these pathways are not available
for moving enrollees from D–SNP lookalikes to D–SNPs. We believe it is
appropriate to limit the transition
process in § 422.514(e) since although
other options remain available to
transition enrollees from the D–SNP
look-alike, MA organizations do not
have other options to transition D–SNP
look-alike enrollees into D–SNPs, and
movement into D–SNPs encourages
enrollment in integrated plans.
Furthermore, we are concerned that if
D–SNP look-alikes continue to be
allowed to transition enrollees into nonD–SNPs indefinitely, there is little
incentive for MA organizations to avoid
non-compliance with the D–SNP lookalike thresholds. Thus, for plan year
2027 and subsequent years, we propose
to add new paragraph § 422.514(e)(1)(v)
to limit the existing D–SNP look-alike
transition pathway to MA organizations
with D–SNP look-alikes transitioning
enrollees into D–SNPs.
We are also considering an alternative
to our proposal that would eliminate the
70-percent threshold applying for plan
year 2025 but would involve additional
conditions and changes related to the
transition authority Specifically, this
alternative would:
• Apply the 60-percent threshold
beginning in plan year 2026;
• Permit use of the transition
authority into non-SNP MA plans (as
currently permitted under § 422.514(e))
for plan year 2025; and
• Limit use of transition authority
under § 422.514(e) to transition D–SNP
look-alike enrollees into D–SNPs for
plan year 2026 and beyond.
Relative to our proposal, this
alternative would give plans with dually
eligible individual enrollment between
70 and 80 percent of total enrollment
(based on January 2024 enrollment data)
one additional year to apply for a new
D–SNP or service area expansion to an
existing D–SNP, such that these plans
could transition enrollees into a D–SNP
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for plan year 2026. The alternative
would balance the additional year using
the existing 80-percent enrollment
threshold to identify prohibited D–SNP
look-alikes with an earlier limitation on
the § 422.514(e) transition authority to
enrollees transitioning into non-SNPs.
We solicit comment on whether this
alternative is a better balance of the
goals of our policy to prohibit
circumvention of the requirements for
D–SNPs and to encourage and
incentivize enrollment in integrated
care plans. Among the factors we would
consider in adopting the alternative
instead of our proposal is the extent to
which plans with between 70 and 80
percent dually eligible enrollment in
plan year 2024 expect to be able to
establish a D–SNP in the same service
area as the D–SNP look-alike if given an
additional year (that is, 2026) to
transition enrollees. Based on 2023 plan
year data, approximately two-thirds of
the MA organizations with non-SNP MA
plans with between 70 and 80 percent
dually eligible individuals already have
a D–SNP under the same MA
organization with the vast majority of
those D–SNPs having a service area that
covers the same service area as the nonSNP MA plan. The other approximately
one-third of the MA organizations with
non-SNP MA plans with between 70
and 80 percent dually eligible
individuals do not have a D–SNP in the
same service area in plan year 2023. If
given an additional year, these MA
organizations would have more time in
which to establish D–SNPs in the same
service areas as non-SNP MA plans and
transition the enrollees into a D–SNP.
We also propose a technical edit at
§ 422.514(e)(1)(i) to make the term
‘‘specialized MA plan for special needs
individuals’’ lowercase, consistent with
the definition of D–SNPs at § 422.2.
H. For D–SNP PPOs, Limit Out-ofNetwork Cost Sharing (§ 422.100)
MA organizations offer a range of
health plan options including Medicare
savings account (MSA) plans, private
fee-for-service (PFFS) plans, preferred
provider organizations (PPOs), health
maintenance organizations (HMOs) and
health maintenance organizations with
point of services benefits (HMO/POS).
(See § 422.4.) The most common health
plan options are HMOs and PPOs.
HMOs generally require enrollees to use
network providers. PPOs have a
network of providers but also pay for
services delivered by providers not
contracted with the MA organization as
a network provider. PPOs can be
attractive to Medicare beneficiaries who
want a broader choice of providers than
would be available through an HMO or
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78583
who have a specific preferred provider,
like a psychiatrist, who is not in
network. MA organizations offer PPOs
that are open to all Medicare
beneficiaries as well as D–SNP PPOs
that enroll only individuals dually
eligible for Medicare and Medicaid.191
Enrollment in D–SNP PPOs has
increased in recent years, rising to
approximately 925,000 enrollees as of
May 2023, accounting for about 17
percent of total D–SNP enrollment. D–
SNP PPO enrollment has increased by
38 percent from May 2022 to May
2023.192 Four national MA sponsors
account for over 98 percent of D–SNP
PPO enrollment.193
Like PPOs offered primarily to
Medicare beneficiaries not entitled to
Medicaid benefits, D–SNP PPOs
generally have higher cost sharing for
out-of-network services than for the
same services obtained from network
providers. For non-D–SNP PPOs, the
higher out-of-network cost sharing is
meant to incentivize use of in-network
providers. In D–SNP PPOs, however, the
large majority of enrollees are protected
from being billed for covered Medicare
services by Medicare providers,
including out-of-network providers.
Instead, when these enrollees access
services, either State Medicaid agencies
pay the cost sharing or, if State payment
of cost sharing is limited by a Medicaid
rate for the service that is lower than the
amount the D–SNP paid the provider,
the provider must forego receipt of the
cost sharing amounts.
Those cost sharing amounts for out-ofnetwork services in D–SNP PPOs are
often significantly higher than the cost
sharing for the same services under
original Medicare.
Our review of D–SNP PPO out-ofnetwork cost sharing shows that for
some important services, the cost
sharing applicable to out-of-network
services far exceeds the Medicare FFS
cost sharing for these Part A and B
benefits. For example, as of 2023:
• Primary care providers: 59 percent
of D–SNP PPOs charge out-of-network
coinsurance above 20 percent, with
most ranging from 30 to 40 percent.
• Part B prescription drugs: 53
percent of D–SNP PPOs charge an outof-network coinsurance above 20
percent, with most ranging from 30 to
40 percent.
191 There are currently no D–SNP PFFS plans.
MSA plans are prohibited from enrolling dually
eligible individuals. HMO/POS plans have
1,423,000 enrollees as of July 2023.
192 D–SNP PPO enrollment was at approximately
668,000 as if May 2023.
193 The four sponsors are UnitedHealth Group (69
percent of national D–SNP PPO enrollment),
Humana (23 percent), Centene (4 percent), and
Elevance (2 percent).
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• DME: 50 percent of D–SNP PPOs
charge an out-of-network coinsurance
above 20 percent, with most ranging
from 30 to 50 percent.
• Home health: 41 percent of D–SNP
PPOs charge an out-of-network
coinsurance for home health services
(original Medicare has no coinsurance).
Out-of-network coinsurance ranged
from 20 percent to 40 percent.
• Dialysis: Three percent of D–SNP
PPOs charge an out-of-network
coinsurance above 20 percent for
dialysis.
• Skilled Nursing Facility (SNF): 46
percent of D–SNP PPOs charge between
20 and 50 percent coinsurance for outof-network SNF stays, considerably
more than Traditional Medicare, which
charges nothing for the first 20 days of
a stay and a per diem charge for days
21–100.
• Inpatient Hospital (Acute): 47
percent of D–SNP PPOs charged
between 20 and 50 percent for an
inpatient stay at an out-of-network acute
care hospital, which can be
substantially more than the Part A
deductible in Traditional Medicare.
• Inpatient Hospital (Psychiatric): 46
percent of D–SNP PPOs charge between
20 and 50 percent coinsurance for outof-network inpatient psychiatric
services, substantially greater than the
inpatient deductible charged under
Traditional Medicare.
By contrast, cost sharing for innetwork services in these D–SNP PPOs
largely tracks the cost sharing structure
in Traditional Medicare. Seventy-nine
percent charge a Part B deductible.
Eighty-five percent charge 20 percent for
professional services, like visits with
primary care and specialist physicians,
and 100 percent charge 20 percent
coinsurance for Part B drugs and DME,
consistent with Traditional Medicare.
While this in-network benefit design is
consistent with statutory and regulatory
requirements for overall and servicespecific limits under § 422.100(f)(6)
(which sets specific cost sharing limits
for certain in-network services tied to
the maximum out-of-pocket (MOOP)
limit used by the plan) and (j) (which
identifies services for which in-network
cost sharing must not exceed cost
sharing in Traditional Medicare) for innetwork benefits, it differs from non-D–
SNP PPOs which generally provide
greater reductions in in-network cost
sharing (compared to Traditional
Medicare cost sharing) as supplemental
benefits.
This higher cost sharing for out-ofnetwork services in D–SNP PPOs raises
several concerns.
First, when State Medicaid agencies
pay the cost sharing for out-of-network
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services, these levels of cost sharing
raise costs for State Medicaid programs.
This is especially true for those few
States that, by policy, pay the full
Medicare cost sharing amounts for all
Medicare services, rather than for
specific services in the Medicaid
benefit.
Second, certain dually eligible
enrollees, specifically full-benefit dually
eligible enrollees who are not Qualified
Medicare Beneficiaries (QMBs), are
liable for cost sharing if they go out of
network to providers not enrolled in
Medicaid, as services from these
providers are not covered by Medicaid
unless the provider is enrolled in
Medicaid. (QMBs, in contrast, have
applicable Medicare cost-sharing
amounts covered by Medicaid based on
coverage of cost-sharing for Medicare
covered services.) Non-QMB full-benefit
dually eligible individuals are protected
from cost sharing under
§ 422.504(g)(1)(iii) if they use innetwork providers, including providers
not enrolled in Medicaid. The
regulation imposes obligations on MA
organizations to ensure that their
contracted—that is, in-network—
providers do not collect cost sharing
from enrollees when the State is
responsible for paying such amounts.
However, this protection does not
extend to out-of-network providers not
enrolled in Medicaid.
Third, the higher out-of-network cost
sharing disadvantages out-of-network
safety net providers serving D–SNP PPO
enrollees in States where limits
established by Medicaid rates for the
service result in no State payment of
cost sharing.194 In such a scenario, the
provider may receive 70 or 60 percent
of the Traditional Medicare rate for the
services rather than the 80 percent that
the provider would receive under
Traditional Medicare (or as an innetwork provider). We are concerned
that this effective payment cut
disincentivizes providers from serving
dually eligible enrollees, which may
compromise access to services for these
enrollees. In addition, we are concerned
that such disincentives undermine the
promise of out-of-network access that is
a key component of how D–SNP PPOs
are marketed to potential enrollees.
In addition to the potential impact on
States, safety net providers and dually
194 For example, if the Medicare (or MA) rate for
a service is $100, of which $20 is beneficiary
coinsurance, and the Medicaid rate for the service
is $90, the State would only pay $10. If the
Medicaid rate is $80 or lower, the State would make
no payment. This is often referred to as the ‘‘lesser
of’’ policy. Under the ‘‘lesser of’’ policy, a State
caps its payment of Medicare cost-sharing at the
Medicaid rate for a particular service.
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eligible individuals of this cost sharing
structure, we believe such higher cost
sharing for out-of-network services may
result in situations that are inconsistent
with the policy goals underlying section
1852(a)(2) of the Act. Section
1852(a)(2)(A) of the Act describes how
MA organizations can satisfy the
requirement to cover Traditional
Medicare services (that is, Part A and B
benefits, with limited exceptions) under
section 1852(a)(1)(A) when covered
services are furnished by non-contracted
(that is, out-of-network) providers. This
statute provides that the MA
organization has satisfied its coverage
obligation for out-of-network services if
the plan provides payment in an
amount ‘‘so that the sum of such
payment and any cost sharing provided
for under the plan is equal to at least the
total dollar amount for payment for such
items and services as would otherwise
be authorized under parts A and B
(including any balance billing permitted
under such parts).’’
For a non-D–SNP PPO, in which the
majority of plan enrollees must pay plan
cost sharing, the total dollar amount for
a service paid at the Medicare rate will
equal the total dollar amount under
parts A and B, even if the cost sharing
exceeds the cost sharing under original
Medicare.
For a D–SNP PPO, however, the vast
majority of plan enrollees are not liable
for cost sharing for out-of-network
services, just as they are not liable for
such cost sharing under Traditional
Medicare.195 Therefore, whenever State
Medicaid limits on payment of
Medicare cost sharing result in no
payment of cost sharing or payment of
only a portion of cost sharing, the total
dollar amount of payment received by
the out-of-network provider for these
covered services is less than the
provider would collect under
Traditional Medicare whenever the plan
out-of-network cost sharing exceeds the
cost sharing for those services under
Traditional Medicare.
For example, a provider in a State that
capped its cost sharing payments at a
Medicaid primary care rate that is 70
percent of the Medicare rate would
receive just 70 percent of that Medicare
rate when the provider is not in the
PPO’s network and the PPO’s out-ofnetwork cost sharing is 30 percent or
higher. That provider would receive 80
percent of the Medicare rate under
195 For more information on cost sharing
protections applicable to dually eligible
individuals, see: https://www.cms.gov/medicaremedicaid-coordination/medicare-and-medicaidcoordination/medicare-medicaid-coordinationoffice/qmb.
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Traditional Medicare for the covered
service.
This lesser net out-of-network
provider payment in a D–SNP PPO
undermines the balance of obligations
and benefits among MA organizations
and Medicare providers that the statute
creates to regulate out-of-network
payments and beneficiary access for the
MA program. While section
1852(a)(2)(A) of the Act requires the
total dollar amount to be at least as
much as would be authorized under
Traditional Medicare, Medicare
providers are required by sections
1852(k)(1) and 1866(a)(1)(O) of the Act
to accept such amounts as payment in
full. When a D–SNP PPO imposes cost
sharing greater than Traditional
Medicare and that cost sharing is
unpaid by the State and uncollectable
from the beneficiary, the MA
organization has, in effect, failed to
fulfill the spirit of its side of this
statutory scheme and the providers are
in effect forced to accept less than they
would receive under original Medicare
if they agree to treat the D–SNP PPO
enrollee.
In a D–SNP PPO, therefore, we are
concerned that the combination of these
issues results in a situation frustrating
the underlying intent of section
1852(a)(2)(A) of the Act because, for
services furnished to many (if not all)
enrollees in the D–SNP PPO, the out-ofnetwork provider potentially receives a
total payment that is less than the total
payment available under Traditional
Medicare. To address these concerns,
we are proposing new limits on out-ofnetwork cost sharing under D–SNP
PPOs. We have authority under section
1856(b)(1) of the Act to establish
standards for MA organizations and MA
plans to carry out the MA statute (that
is, Part C of Title XVIII of the Act) in
addition to authority, under section
1857(e)(1) of the Act, to adopt
additional terms and conditions for MA
contracts that are not inconsistent with
the Part C statute and that are necessary
and appropriate for the MA program.
Further, CMS is not obligated to accept
any and every bid from an MA
organization and is authorized to
negotiate MA bids under section
1854(a)(5)(C) and (a)(6)(B) of the Act.
This proposal would establish
minimum standards for D–SNP PPO
plans that are consistent with and
necessary and appropriate for the MA
program to address our concerns.
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We propose at § 422.100(o)(1) that an
MA organization offering a local PPO
plan or regional PPO plan that is a dual
eligible special needs plan (that is, a D–
SNP) cap out-of-network cost sharing for
professional services at the cost sharing
limits for such services established at
§ 422.100(f)(6) when such services are
delivered in network starting in 2026.
The term ‘‘professional services’’ as
used here means the same thing as it
does in existing § 422.100(f)(6)(iii) and
includes primary care services,
physician specialist services, partial
hospitalization, and rehabilitation
services. Under this proposal, a D–SNP
PPO with a catastrophic limit set at the
mandatory MOOP limit in 2026 and
subsequent years must have cost sharing
for a visit with an out-of-network
psychiatrist or other specialist (that is,
cost sharing subject to paragraph
(f)(6)(iii)) that is capped at 30 percent
coinsurance. If the catastrophic limit is
set at the intermediate MOOP limit in
2026 and subsequent years, the
coinsurance cap would be set at 40
percent. If the catastrophic limit is set
at the lower MOOP limit in 2026 and
subsequent years, the coinsurance cap
would be 50 percent. Under our
proposal, the rules in § 422.100(f)(6) and
(j)(1) about how we assess that
copayments that are actuarially
equivalent to coinsurance would apply
here as well.
We propose to apply cost sharing
limits on out-of-network professional
services because this category of
services includes the physician and
psychiatry services most utilized out-ofnetwork in D–SNP PPOs. In addition,
physician services are among the
services for which Medicaid rates will
most commonly either result in no
payment of cost sharing due to limits on
Medicaid rates or will increase State
liability for cost sharing but still not
result in total payment of at least 80
percent of the Medicare rate.196
Our proposal at § 422.100(o)(1) also
would require that cost sharing for outof-network acute and psychiatric
inpatient services be limited by the cost
sharing caps under § 422.100(f)(6) that
now apply only to in-network benefits.
196 Only 14 States have Medicaid primary care
rates that are greater than 80 percent of the
Medicare rate. See: https://www.kff.org/medicaid/
state-indicator/medicaid-to-medicare-fee-index/
?currentTimeframe=0&sortModel=
%7B%22colId%22:%22Location%22,%22sort%22:
%22asc%22%7D.
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Using the same methodology to
calculate comparable FFS cost sharing
in § 422.100(f)(6)(iv), the cost sharing
limit for a D–SNP PPO with a
catastrophic limit set at the mandatory
MOOP limit could not exceed 100
percent of estimated Medicare FFS cost
sharing, including the projected Part A
deductible and related Part B costs, for
each length-of-stay scenario in an outof-network inpatient or psychiatric
hospital. For catastrophic limits
equivalent to the intermediate and
lower MOOP amounts, higher cost
sharing for out-of-network cost sharing
for inpatient and psychiatric stays could
be charged as described at
§ 422.100(f)(6)(iv)(D)(2) and (3),
respectively.
We also propose at § 422.100(o)(2), by
cross-referencing § 422.100(j)(1), that
cost sharing for out-of-network services
under D–SNP PPOs be limited to the
existing cost sharing limits now
applicable to specific in-network
services for all MA plans:
• Cost sharing for chemotherapy
administration services, including
chemotherapy/radiation drugs and
radiation therapy integral to the
treatment regimen, other Part B drugs,
and renal dialysis services as defined at
section 1881(b)(14)(B) of the Act, would
be capped at the cost sharing applicable
for those service under Traditional
Medicare.
• For skilled nursing care, defined as
services provided during a covered stay
in a skilled nursing facility (SNF) during
the period for which cost sharing would
apply under Traditional Medicare, cost
sharing would be limited to the cost
sharing amounts under Traditional
Medicare when the MA plan establishes
the mandatory MOOP catastrophic limit
under § 422.101(d)(3). When the MA
plan establishes the lower MOOP
catastrophic limit, the cost sharing
could not be greater than $20 per day for
the first 20 days of a SNF stay. When the
MA plan establishes the intermediate
MOOP catastrophic limit, the cost
sharing could not be greater than $10
per day for the first 20 days of a SNF
stay.
• Regardless of the MOOP amount
established by the MA plan, the per-day
cost sharing for days 21 through 100
could not be greater than one eighth of
the projected (or actual) Part A
deductible amount.
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• For home health services (as
defined in section 1861(m) of the Act),
when the MA plan establishes a
mandatory or intermediate MOOP type,
cost sharing could not be greater than
Traditional Medicare. When the MA
plan establishes the lower MOOP
catastrophic limit, the cost sharing
could not be greater than 20 percent
coinsurance or an actuarially equivalent
copayment.
• Cost sharing could not be greater
than the applicable cost sharing under
Traditional Medicare, when the MA
plan establishes the mandatory MOOP
catastrophic limit for the following
specific service categories of durable
medical equipment (DME): equipment,
prosthetics, medical supplies, diabetes
monitoring supplies, diabetic shoes or
inserts.
For regional PPO D–SNPs, we propose
to exclude paragraph (j)(1)(C)(2) and the
last sentence of paragraph (j)(1)(E)
regarding overall actuarial equivalence
requirements to avoid conflict with
section 1852(a)(1)(B)(ii) of the Act.
We propose applying out-of-network
cost sharing limits to those services
enumerated at § 422.100(f)(6) and (j)(1)
because MA organizations and CMS
have experience limiting cost sharing to
Traditional Medicare for these
categories of services when they are
furnished in-network. In addition, this
would establish alignment and
consistency between the in-network and
out-of-network cost sharing used by D–
SNP PPOs for these services. We also
note that section 1852(a)(1)(B)(iv) of the
Act limits cost sharing for some of these
services, including chemotherapy
administration and dialysis, to cost
sharing levels in Traditional Medicare,
which CMS has implemented in
§ 422.100(j) to apply to in-network
benefits. As noted above, these services
are among those services for which D–
SNP PPOs most often impose cost
sharing greater than Traditional
Medicare.
We are considering a requirement to
limit all D–SNP PPO out-of-network
cost sharing to no greater than
Traditional Medicare, or using a limit
specifically for physician services,
including psychiatric and other mental
health services, rather than using the
cost sharing limits in § 422.100(f)(6).
These are among the most commonly
accessed services out-of-network in D–
SNP PPOs, and these safety net
providers are most likely to see reduced
payment compared to their Traditional
Medicare patients, which weighs in
favor of requiring cost sharing to align
with Traditional Medicare. Although we
continue to consider these alternatives
and request comment on them, we
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decided to propose application of the
cost sharing limits that are applicable
for in-network coverage for specific
benefit categories, some of which are
capped at Traditional Medicare cost
sharing and some of which are higher.
We propose to take this measured
approach on the one hand to impose
cost sharing limits on those services
where the limits would have the most
impact—those services most used outof-network in D–SNP PPOs and where
the greater cost sharing has the most
impact on provider payment and, for
those dually eligible beneficiaries liable
for cost sharing, ability to pay. We also
believe this approach, at least initially,
would mitigate any negative impact on
MA organizations and D–SNP PPO
enrollees as MA organizations redirect
funds from other supplemental benefits
to reduce cost sharing for these out-ofnetwork services. However, we seek
comment on whether there are
additional out-of-network services for
which cost sharing should be limited to
the levels applicable in Traditional
Medicare.
We considered proposing out-ofnetwork cost sharing limits for D–SNP
PPOs only for services for which the
Medicaid payment of cost sharing did
not result in a total payment that was at
least equivalent to the payment under
Traditional Medicare. That approach
would address our concern about how
high out-of-network costs sharing by D–
SNP PPOs appears to circumvent the
goal of section 1852(a)(2)(A) of the Act
that the out-of-network providers that
furnish covered services to enrollees in
MA plans receive the amount that the
provider would have received under
Traditional Medicare. However, such an
approach would create an overly
complex and likely unworkable system
of cost sharing limits that differed both
by State (depending on whether State
policy limited cost sharing for specific
services), by service, and—in some
cases—by individual provider. For
example, a State may pay the full
Medicare cost sharing for Part B drugs
administered by an oncologist but set
the rate for administration of those
drugs at 50 percent of the Medicare rate,
resulting in no payment of cost sharing.
That would result in two parts of a
single services—payment for
chemotherapy drugs and administration
of such drugs—being subject to different
cost sharing limits. The services subject
to cost sharing limits could also change
over time as States changed the rates at
which they reimbursed for such
services.
We also considered proposing out-ofnetwork cost sharing limits only for
services furnished out of network to
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QMBs because they are always
protected from being billed cost sharing
(see sections 1848(g)(3), 1866(a)(1)(A),
1902(n), and 1905(p)(3) of the Act).
However, this would not allow for the
MA organization to apply its benefit
uniformly to all its members, as
required by 42 CFR 422.100(d)(2)(i),
unless the SMAC limits enrollment in
the D–SNP PPO to QMBs. In addition,
managing cost sharing benefits in a nonuniform way could be administratively
burdensome for both MA organizations
and providers or difficult to clearly and
accurately explain to enrollees in the
member materials.
Finally, we believe our proposed
uniform application of out-of-network
cost sharing limits for all PPO D–SNPs
is the appropriate way to address our
concerns about section 1852(a)(2)(A),
the shifting of costs to States, the
reduction in net payments to safety net
providers, and the potential for
excessive cost sharing for those dually
eligible individuals, who, while low
income, do not benefit from cost sharing
protections out of network.
To provide the industry time to adjust
to and for CMS to operationalize these
new requirements, we propose to
implement these new limits starting for
the 2026 plan year.
Currently, D–SNP PPOs already
submit out-of-network benefits for a
limited review to ensure that cost
sharing does not exceed 50 percent of
the costs (as required by
§ 422.100(f)(6)(i)) and in-network
benefits for a review to ensure
compliance with the cost sharing limits
we propose to apply to out-of-network
cost sharing. Therefore, we do not
believe this proposed rule creates
substantial information collection
requirements.
We do not expect any new burden to
be associated with these proposed
changes, as MA organizations are
currently required to include
information on MA cost sharing in their
bids. Further, we do not expect any
additional burden on CMS, as
modifications to account for this
proposed provision would be completed
as part of normal business operations.
IX. Updates to Program of All-Inclusive
Care for the Elderly (PACE) Policy
A. Corrective Action (§ 460.194)
Sections 1894(e)(4) and 1934(e)(4) of
the Act require CMS, in cooperation
with the State administering agency
(SAA), to conduct comprehensive
reviews of PACE organizations’
compliance with all significant program
requirements. Additionally, sections
18941(e)(6)(A)(i) and 1934(e)(6)(A)(i) of
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the Act condition the continuation of
the PACE program agreement upon
timely execution of a corrective action
plan if the PACE provider fails to
substantially comply with the program
requirements as set forth in the Act and
regulation. In the 1999 PACE interim
final rule, we specified at § 460.194(a)
and (c) that PACE organizations must
take action to correct deficiencies
identified by CMS or the SAA, or PACE
organizations may be subject to sanction
or termination (84 FR 66296). The 2019
PACE final rule amended § 460.194(a) to
expand the ways CMS or the SAA may
identify deficiencies that the PACE
organization must correct (84 FR 25677).
These include ongoing monitoring,
reviews, audits, or participant or
caregiver complaints, and for any other
instance in which CMS or SAA
identifies programmatic deficiencies
requiring correction (84 FR 25677).
The 1999 PACE interim final rule also
specified at § 460.194(b) that CMS or the
SAA monitors the effectiveness of PACE
organizations’ corrective actions. The
burden on CMS and SAAs to always
monitor the effectiveness of every
corrective action taken by the
organization after an audit is high, and
the number of audits, and thus the
number of instances in which
monitoring is required, increases each
year because the PACE program
continues to rapidly grow, and CMS is
required to conduct audits in each year
of the three-year trial period for new
PACE contracts. However, our
experience overseeing this program has
shown that it is not always necessary or
worthwhile for CMS to monitor the
effectiveness of every corrective action
taken by an audited organization. For
example, a PACE organization may
implement a corrective action that
impacts its unscheduled reassessments
due to a change in participant status,
but historically, these types of
assessments are not conducted
frequently, therefore, it may not be
worthwhile for CMS or the states to
spend resources monitoring the
effectiveness of that correction due to
limited data available for CMS or the
SAA to monitor. Therefore, we propose
to revise § 460.194(b) to specify that, at
their discretion, CMS or the SAA may
monitor the effectiveness of corrective
actions. This proposal would give CMS
and the SAA the flexibility to determine
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how to use their oversight resources
most effectively, which will be
increasingly important as PACE
continues to grow.
This proposal would not change our
expectation that PACE organizations
expeditiously and fully correct any
identified deficiencies, and CMS and
the SAAs would continue to engage in
monitoring efforts that prioritize
participant health and safety and
program integrity. In addition, as a part
of a PACE organization’s oversight
compliance program, we require at
§ 460.63 that PACE organizations adopt
and implement effective oversight
requirements, which include measures
that prevent, detect and correct noncompliance with CMS’s program
requirements. A PACE organization’s
oversight compliance program must, at
a minimum, include establishment and
implementation of procedures and a
system for promptly responding to
compliance issues as they are raised. In
addition, compliance oversight
programs must ensure ongoing
compliance with CMS requirements.
Since the effect of the proposed
change would be to provide CMS and
the SAA more flexibility when
monitoring the effectiveness of
corrective actions without placing new
requirements on CMS, the SAAs, or
PACE organizations, we believe this
change would create no additional
burden for PACE organizations.
Additionally, we do not expect this
change to have economic impact on the
Medicare Trust Fund.
We solicit comment on this proposal.
B. Service Determination Requests
Pending Initial Plan of Care (§ 460.121)
Sections 1894(b)(2)(B) and
1934(b)(2)(B) of the Act specify that
PACE organizations must have in effect
written safeguards of the rights of
enrolled participants, including
procedures for grievances and appeals.
Along with the regulations at § 460.120
related to grievances, and § 460.122
related to appeals, CMS created a
process for service determination
requests, the first stage of an appeal, at
§ 460.121.
The PACE regulations define a service
determination request as a request to
initiate a service; modify an existing
service, including to increase, reduce,
eliminate, or otherwise change a service;
or to continue coverage of a service that
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the PACE organization is recommending
be discontinued or reduced (see
§ 460.121(b)(1)(i) through (iii)). In the
January 2021 final rule (86 FR 6024), we
finalized an exception to the definition
of service determination request at
§ 460.121(b)(2), which, as amended,
provides that requests to initiate,
modify, or continue a service do not
constitute a service determination
request if the request is made prior to
completing the development of the
initial plan of care. When we proposed
this exception in the February 2020
proposed rule, we noted that the
exception would apply any time before
the initial plan was finalized and
discussions among the interdisciplinary
team (IDT) ceased (85 FR 9125). We
explained that we believed this change
would benefit both participants and
PACE organizations because it would
allow the IDT and the participant and/
or caregiver ‘‘to continue to discuss the
comprehensive plan of care taking into
account all aspects of the participant’s
condition as well as the participant’s
wishes’’ (Id.). We also stated that ‘‘if a
service was not incorporated into the
plan of care in a way that satisfies the
participant, the participant would
always have the right to make a service
determination request at that time’’ (85
FR 9126).
Our intention for this provision was
that the IDT would discuss specific
requests made by a participant and/or
caregiver as part of the care planning
process and determine whether these
requests needed to be addressed in the
plan of care. We stated in the February
2020 proposed rule that if a participant
asked for a specific number of home
care hours, that the request would not
need to be processed as a service
determination request because the IDT
was actively considering how many
home care hours the participant should
receive as part of the development of the
initial plan of care (85 FR 9125). This
rationale is also consistent with our
statement in the proposed rule titled
‘‘Medicare and Medicaid Programs;
Programs of All-Inclusive Care for the
Elderly (PACE),’’ which appeared in the
August 16, 2016 Federal Register, that
‘‘CMS expects the plan of care to reflect
that the participant was assessed for all
services even where a determination is
made that certain services were
unnecessary at that time’’ (81 FR 54684).
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However, as part of our oversight and
monitoring of PACE organizations, we
have found that often requests made by
participants and/or caregivers prior to
the finalizing of the care plan are not
discussed during the care planning
process and are therefore not considered
by the IDT. These requests are some of
the first communications from
participants related to the care they will
be receiving from the PACE organization
and would otherwise be considered
service determination requests at any
other stage of their enrollment. While
we continue to believe that it is not
prudent for the PACE organization to
process these requests as service
determination requests, it is important
that the IDT consider these requests and
determine whether they are necessary
for the participant.
Therefore, we propose to modify the
regulation text at § 460.121(b)(2) to
specify that service requests made prior
to developing the participant’s initial
plan of care must either be approved
and incorporated into the participant’s
initial plan of care, or the rationale for
why it was not approved and
incorporated must be documented.
Specifically, we propose to add the add
the following language at
§ 460.121(b)(2). For all requests
identified in this section, the
interdisciplinary team must—
• Document the request; and
• Discuss the request during the care
plan meeting and either—
++ Approve the requested service and
incorporate it into the participant’s
initial plan of care; or
++ Document their rationale for not
approving the service in the initial plan
of care.
We believe this change is consistent
with existing plan of care requirements
at § 460.104(b) and aligns with our plan
of care proposals in the December 2022
proposed rule (87 FR 79452).
As the development of the plan of
care is a typical responsibility for the
IDT, any burden associated with this
would be incurred by persons in their
normal course of business. Therefore,
the burden associated with
documenting the determination of any
assessment of a participant and/or
caregiver service request during the
initial care planning process is exempt
from the PRA in accordance with 5 CFR
1320.3(b)(2).
requires that we solicit comment on the
following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
We are soliciting public comment (see
section VII.D. of this preamble for
further information) on each of these
issues for the following sections of this
document that contain information
collection requirements. Comments, if
received, will be responded to within
the subsequent final rule.
X. 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
1. Private Sector
A. Wage Data
To derive mean costs, we are using
data from the most current U.S. Bureau
of Labor Statistics’ (BLS’s) National
Occupational Employment and Wage
Estimates for all salary estimates
(https://www.bls.gov/oes/2022/may/
oes_nat.htm), which, at the time of
publication of this proposed rule,
provides May 2022 wages. In this
regard, Table J1 presents BLS’ mean
hourly wage, our estimated cost of
fringe benefits and other indirect costs
(calculated at 100 percent of salary), and
our adjusted hourly wage.
Business ooerations soecialists (all others)
Compliance officers
Comouter oro=mmer
fusurance Sales Agent (Agent-Broker)
Pharmacist
Pharmacy Technician
Phvsician all others
Software and Web Develooers. Pro=mmers Testers
Software Developers
Registered Nurse
As indicated, except for Insurance
Sales Agents, we are adjusting our
employee hourly wage estimates by a
factor of 100 percent. This is necessarily
a rough adjustment, both because fringe
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Occupation
Code
13-1199
13-1041
15-1251
41-3021
29-1051
29-2052
29-1229
15-1250
Mean Hourly
Wa2e ($/hr)
39.75
37.01
49.42
37.00
62.22
19.35
114.76
60.07
Fringe
Benefits
and
Other
Indirect
Costs
($/hr)
39.75
37.01
49.42
n/a
62.22
19.35
114.76
60.07
Adjusted
Hourly
Wa2e ($/hr)
79.50
74.02
98.84
n/a
124.44
38.70
229.52
120.14
63.91
42.8
63.91
42.8
127.82
85.6
15-1252
24-1141
benefits and other indirect costs vary
significantly from employer to employer
and because methods of estimating
these costs vary widely from study to
study. In this regard, we believe that
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doubling the hourly wage to estimate
costs is a reasonably accurate estimation
method.
However, the mean wage for
Insurance Sales Agent is being applied
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to Agent-Brokers who work on behalf of
Medicare Advantage plans. We are not
adjusting their mean hourly wage for
fringe benefits and other indirect costs
because this proposed rule includes a
proposal which accounts for payments
for certain administrative activities
while explicitly precluding others.
These proposed payments would have
their own annual update.
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2. Beneficiaries
We believe that the cost for
beneficiaries undertaking administrative
and other tasks on their own time is a
post-tax wage of $20.71/hr. The Valuing
Time in U.S. Department of Health and
Human Services Regulatory Impact
Analyses: Conceptual Framework and
Best Practices identifies the approach
for valuing time when individuals
undertake activities on their own time.
To derive the costs for beneficiaries, a
measurement of the usual weekly
earnings of wage and salary workers of
$998, divided by 40 hours to calculate
an hourly pre-tax wage rate of $24.95/
hr. This rate is adjusted downwards by
an estimate of the effective tax rate for
median income households of about 17
percent, resulting in the post-tax hourly
wage rate of $20.71/hr. Unlike our
private sector wage adjustments, we are
not adjusting beneficiary wages for
fringe benefits and other indirect costs
since the individuals’ activities, if any,
would occur outside the scope of their
employment.
For valuing time spent outside of
work, there is logic to this approach but
also to using a fully loaded wage. In the
past we have used occupational code
00–0000, the average of all occupational
codes, which currently is $29.76/hr.
Thus we propose a range for enrollees
of $20.71/hr–$29.76/hr. Nevertheless,
the upper limit is based on an average
over all occupations while the lower
limit reflects a detailed analysis by
ASPE targeted at enrollees many of
whom are over 65 and unemployed;
consequently, in our primary estimates
we will use the lower limit as we
consider it more accurate. The effect of
this range will be footnoted in Table J5
and the summary table. Since the
impact to beneficiaries is approximately
$54,000, increasing the wage by 50
percent would result in a roughly
$24,000 increase.
B. Proposed Information Collection
Requirements (ICRs)
The following ICRs are listed in the
order of appearance within the
preamble of this proposed rule.
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1. ICRs Regarding Network Adequacy in
Behavioral Health (§ 422.116(b)(2) and
(d)(2) and (5))
The following proposed changes will
be submitted to OMB for review under
control number 0938–1346 (CMS–
10636).
To ensure that MA enrollees have
access to provider networks sufficient to
provide covered services, including
behavioral health service providers, we
are proposing to add one new facilityspecialty type that will be subject to
network adequacy evaluation under
§ 422.116. As discussed in the
‘‘Expanding Network Adequacy
Requirements for Behavioral Health’’
section of the preamble, we are
proposing to amend the network
adequacy requirements to add one
combined facility-specialty category
called ‘‘Outpatient Behavioral Health’’
under § 422.116(b)(2) and to add
‘‘Outpatient Behavioral Health’’ to the
time and distance requirements in
§ 422.116(d)(2). This new category can
include, for network adequacy
evaluation purposes, provider types
including Marriage and Family
Therapists (MFTs), Mental Health
Counselors (MHCs), Opioid Treatment
Program (OTP) providers Community
Mental Health Centers or other
behavioral health and addiction
medicine specialists and facilities.
Based on the current regulation at
§ 422.116(e)(2) for all facility-specialty
types other than acute inpatient
hospitals, the minimum provider
number requirement for this proposed
new provider type is one. Finally, we
also propose to add the new ‘‘Outpatient
Behavioral Health’’ facility-specialty
type to the list at § 422.116(d)(5) of the
specialty types that will receive a 10percentage point credit towards the
percentage of beneficiaries that reside
within published time and distance
standards for certain providers when the
plan includes one or more telehealth
providers of that specialty type that
provide additional telehealth benefits,
as defined in § 422.135, in its contracted
network. To determine the potential
burden regarding this proposal, we
considered cost estimates for MA
organizations to update policies and
procedures. However, the burden for
updating the HPMS system is a burden
to CMS and its contractors and hence
not subject to COI review.
Although there is a no cost for MA
organizations to report new specialty
types to CMS for their network
adequacy reviews as this proposal
requires, we have determined that there
is a minimal one-time cost for MA
organizations to update their policies
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and procedures associated with this
proposal.
First, regarding reporting the
proposed new specialty types to CMS,
MA organizations are already
conducting ongoing work related to
network adequacy reviews that happen
during the initial or service area
application, or every 3 years for the
triennial review. This proposal would
only require that the proposed specialty
type be added to the Health Services
Delivery (HSD) tables during any
network adequacy evaluation requested
by CMS. The time to conduct tasks
related to adding additional specialty
types on the HSD tables is negligible.
We understand that MA organizations
will need to update their policies and
procedures related to submission of
HSD tables to ensure that the new
required behavioral health specialty
type is included. We estimate that it
would take 5 minutes (0.0833 hr) at
$79.50/hr for a business operations
specialist to update of policies and
procedures related to this task. In
aggregate we estimate a one-time burden
of 62 hours (742 MA contracts * 0.0833
hr) at a cost $4,929 (62 hr * $79.50/hr).
2. ICRs Regarding Standards for
Electronic Prescribing ((§ 423.160 and
45 CFR 170.205 and 170.299)
In section III.B. of this proposed rule,
we propose updates to the standards to
be used for electronic transmission of
prescriptions and prescription-related
information for Part D covered drugs for
Part D eligible individuals. This
includes: (1) after a transition period,
requiring the National Council for
Prescription Drug Plans (NDPDP)
SCRIPT standard version 202301,
proposed for adoption at 45 CFR
170.205(b)(2), and retiring use of NCPDP
SCRIPT standard version 2017071 for
communication of a prescription or
prescription-related information
supported by Part D sponsors; (2)
requiring use of NCPDP RTPB standard
version 13 for prescriber RTBTs
implemented by Part D sponsors
beginning January 1, 2027; and (3)
requiring use of NCPDP Formulary and
Benefit (F&B) standard version 60,
proposed for adoption at 45 CFR
170.205(u), and retiring use of NCPDP
F&B version 3.0 for transmitting
formulary and benefit information
between prescribers and Part D
sponsors. These proposals update
existing standards that have historically
been exempt from the PRA, as explained
in this section.
The initial electronic prescribing
standards for the Medicare Part D
program were adopted in the final rule
‘‘Medicare Program; Standards for E-
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Prescribing Under Medicare Part D and
Identification of Backward Compatible
Version of Adopted Standard for EPrescribing and the Medicare
Prescription Drug Program (Version
8.1)’’ (Initial Standards final rule),
which appeared in the April 4, 2008,
Federal Register (73 FR 18917). The
Initial Standards final rule implemented
the first update to the electronic
prescribing foundation standards in the
Part D program that had been adopted
in the final rule ‘‘Medicare Program; EPrescribing and the Prescription Drug
Program’’ (Foundation Standards final
rule), which appeared in the November
7, 2005, Federal Register (70 FR 67567).
The Initial Standards final rule adopted
the updated the National Council for
Prescription Drug Programs (NCPDP)
SCRIPT standard version 8.1 and retired
the previous NCPDP SCRIPT standard
version 5.0. With respect to ICRs in the
Initial Standards final rule, CMS stated
that as a third-party disclosure
requirement subject to the PRA,
Medicare Part D sponsors must support
and comply with the adopted eprescribing standards relating to
covered Medicare Part D drugs,
prescribed for Medicare Part D eligible
individuals. However, the requirement
that Medicare Part D sponsors support
electronic prescription drug programs in
accordance with standards set forth in
this section, as established by the
Secretary, does not require that
prescriptions be written or transmitted
electronically by prescribers or
dispensers. These entities are required
to comply with the adopted standards
when they electronically transmit
prescription or prescription-related
information for covered transactions.
Testimony presented to the [National
Committee on Vital and Health
Statistics] indicates that most health
plans/[pharmacy benefit managers]
currently have [electronic] prescribing
capability either directly or through
contract with another entity. Therefore,
we do not believe that utilizing the
adopted standards will impose an
additional burden on Medicare Part D
sponsors. Since the standards that have
been adopted are already familiar to
industry, we believe the requirement to
utilize them in covered [electronic]
prescribing transactions constitutes a
usual and customary business practice.
As such, the burden associated with the
requirements is exempt from the PRA as
stipulated under 5 CFR 1320.3(b)(2).
Subsequent rules which have updated
electronic prescribing standards in the
Medicare Part D program have not
included any burden estimates.
Specifically—
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• The ‘‘Medicare Program; Revisions
to Payment Policies Under the
Physician Fee Schedule, DME Face-toFace Encounters, Elimination of the
Requirement for Termination of NonRandom Prepayment Complex Medical
Review and Other Revisions to Part B
for CY 2013’’ final rule, which appeared
in the November 16, 2012, Federal
Register (77 FR 68891). This final rule
updated the electronic prescribing
standards in Medicare Part D from
NCPDP SCRIPT standard version 8.1 to
version 10.6;
• The ‘‘Medicare Program; Revisions
to Payment Policies Under the
Physician Fee Schedule, Clinical
Laboratory Fee Schedule & Other
Revisions to Part B for CY 2014’’ final
rule, which appeared in the Federal
Register December 10, 2013 (78 FR
74229). This final rule updated the
electronic prescribing standards in
Medicare Part D from NCPDP Formulary
and Benefit (F&B) standard version 1.0
to 3.0; and
• 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, which appeared in
the Federal Register April 16, 2018 (83
FR 16640). This final rule updated the
electronic prescribing standards in
Medicare Part D from NCPDP SCRIPT
standard version 10.6 to 2017071.
Rationale that further supports CMS’s
longstanding approach to not estimate
burden associated with updating
electronic prescribing standards is
described in the proposed rule
‘‘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’’
(November 2017 proposed rule), which
appeared in the November 28, 2017,
Federal Register (82 FR 56336). When
describing the proposed update of the
NCPDP SCRIPT standard from version
10.6 to 2017071 in the November 2017
proposed rule, CMS stated that we
believe that transitioning to the new
2017071 versions of the transactions
already covered by the current Part D
[electronic] prescribing standard
(version 10.6 of the NCPDP SCRIPT)
will impose de minimis cost on the
industry as the burden in using the
updated standards is anticipated to be
the same as using the old standards for
the transactions currently covered by
the program. We believe that prescribers
and dispensers that are now prescribing
[electronically] largely invested in the
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hardware, software, and connectivity
necessary to prescribe [electronically].
We do not anticipate that the retirement
of NCPDP SCRIPT 10.6 in favor of
NCPDP SCRIPT 2017071 will result in
significant costs.
Similarly, Part D sponsors have been
required support real-time benefit tools
(RTBTs) since January 1, 2021, as
finalized in the ‘‘Modernizing Part D
and Medicare Advantage to Lower Drug
Prices and Reduce Out-of-Pocket
Expenses’’ final rule, which appeared in
the Federal Register May 23, 2019 (84
FR 23832). Because Part D sponsors
have invested in the hardware, software,
and connectivity necessary to utilize
RTBTs, we believe that adopting the
NCPDP Real-Time Prescription Benefit
(RTPB) standard version 13 will impose
de minimis cost on the industry and
that costs will be largely offset by the
advantages and efficiencies associated
with interoperability that a standard
brings.
The operations associated with
updates to standards that we propose in
this proposed rule are analogous to the
operations associated with updates to
standards in the prior rules described.
Therefore, the proposals in section III.B.
of this proposed rule are exempt from
the PRA.
3. ICRs Regarding to Improvements to
Drug Management Programs (§§ 423.100
and 423.153)
The following proposed changes will
be submitted to OMB for review under
control number 0938–TBD (CMS–
10874). At this time, the OMB control
number has not been determined, but it
will be assigned by OMB upon their
clearance of our proposed collection of
information request. We intend to
identify the new control number in the
subsequent final rule. The control
number’s expiration date will be issued
by OMB upon their approval of our final
rule’s collection of information request.
When ready, the expiration date can be
found on reginfo.gov.
Ordinarily, the proposed changes
would be submitted to OMB for review
under control number 0938–0964
(CMS–10141), where the current OMBapproved Part D drug management
program (DMP) information collection
and burden is located. However, based
on internal review, we are removing the
DMP information collection and related
burden from CMS–10141 and
submitting it under a new collection of
information request (OMB 0938–TBD,
CMS–10874). This change will
streamline clearance processes and
minimize duplicative administrative
burden for CMS and other stakeholders.
Although we are proposing to remove
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DMP burden from CMS–10141, that
collection will continue to include
burden associated with many other
aspects of the Part D program.
As described in section III.E. of this
proposed rule, we propose to amend
regulations regarding Part D DMPs for
beneficiaries at risk of abuse or misuse
of frequently abused drugs (FADs).
Specifically, we propose to amend the
definition of ‘‘exempted beneficiary’’ at
§ 423.100 by replacing the reference to
‘‘active cancer-related pain’’ with
‘‘cancer-related pain.’’ This proposed
change would reduce the overall burden
associated with sponsors providing
DMP case management and notices to
potentially at-risk beneficiaries (PARBs)
and at-risk beneficiaries (ARBs) because
some beneficiaries identified as PARBs
under the current definition would be
excluded under the amended definition.
Under § 423.153(a), all Part D plan
sponsors must have a DMP to address
overutilization of FADs for enrollees in
their prescription drug benefit plans.
Based on 2023 data, there are 319 Part
D parent organizations. The provisions
codified at § 423.153(f)(2) require that
Part D sponsors conduct case
management of beneficiaries identified
by the minimum overutilization
monitoring system (OMS) criteria
through contact with their prescribers to
determine if a beneficiary is at-risk for
abuse or misuse of opioids and/or
benzodiazepines. Case management
must include informing the
beneficiary’s prescriber(s) of the
beneficiary’s potential risk for misuse or
abuse of FADs and requesting
information from the prescribers
relevant to evaluating the beneficiary’s
risk, including whether they meet the
regulatory definition of exempted
beneficiary. Under current CMS
regulations at § 423.100, if a beneficiary
meets the definition of an exempted
beneficiary, the beneficiary does not
meet the definition of a PARB. For this
reason, exempted beneficiaries cannot
be placed in a Part D sponsor’s DMP.
In 2022, the OMS identified 43,915
PARBs meeting the minimum criteria
prior to applying exclusions and 30,411
after excluding exempted beneficiaries.
Thus, 13,504 beneficiaries (43,915 ¥
30,411) met the definition of exempted
beneficiary. Amending the definition of
‘‘exempted beneficiary’’ at § 423.100 by
replacing the reference to ‘‘active
cancer-related pain’’ with ‘‘cancerrelated pain’’ would result in 46
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additional enrollees meeting the
definition of exempted beneficiary, or
13,550 exempted beneficiaries total
(13,504 + 46). This yields 30,365 (43,915
¥ 13,550) instead of 30,411
beneficiaries requiring case management
under the amended definition.
We estimate it takes an average of 5
hours for a sponsor to conduct case
management for a PARB. We assume
certain components of case management
can be completed by staff of differing
specialization and credentialing. Of the
5 hours, we assume that 2 hours at
$124.44/hr would be conducted by a
pharmacist (such as initial review of
medication profiles, utilization, etc.), 2
hours at $38.70/hr would be conducted
by a pharmacy technician, and 1 hour
at $229.52/hr would be conducted by a
physician to work directly with
prescribers on discussing available
options and determining the best course
of action. The case management team
would require 5 hours at a cost of
$555.80 per PARB case managed ([2 hr
× $124.44/hr] + [2 hr * $38.70/hr] + [1
hr * $229.52/hr]). Therefore, the case
management team’s average hourly
wage is $111.16/hr ($555.80/5 hr). In
aggregate, we estimate annual burden
with the proposed changes for case
management is 151,825 hours (30,365
enrollees subject to case management *
5 hr/response) at a cost of $16,876,867
(30,365 enrollees * (5 hr * $111.16/hr);
see case management row in Table J3.
CMS 10141 included an estimate for the
current case management burden of
178,855 hours and, with the hourly
wage updated, a cost of $19,881,522; see
case management row in Table J2. Thus,
we calculate a savings of 27,033 hours
(178,855 ¥ 151,825) and $3,004,655
($19,955,671 ¥ $16,876,867) with this
current proposed burden; see case
management row in Table J4 and note
that in Table J4 we list savings as a
negative number.
As a result of case management, a
portion of PARBs may receive notice
from a plan sponsor, informing the
beneficiary of the sponsor’s intention to
limit their access to coverage of opioids
and/or benzodiazepines. Approximately
5 percent of PARBs identified by OMS
criteria receive an initial and either a
second notice or an alternate second
notice. Amending the definition of
‘‘exempted beneficiary’’ would reduce
the number of notices sent. Therefore, it
follows that 2 fewer PARBs would
receive notices (46 additional
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78591
individuals * 0.05) and there would be
4 fewer notices total (2 enrollees * 2
notices/enrollee). Approximately 1,518
(30,365 * 0.05) PARBs overall would
receive an initial and second notice (or
alternate second notice) annually. We
estimate it takes a pharmacy technician
at $38.70/hr approximately 5 minutes
(0.0833 hr) to send each notice and a
total of 10 minutes (0.1667 hr) per
enrollee to send both notices. In
aggregate, we estimate an annual burden
with the proposed changes for sending
notices of 253 hours (1,518 enrollees *
0.1667 hr) at a cost of $9,791 (253 hr *
$38.70/hr) to send both notices; see the
row for notification for enrollees in
Table J3. CMS 10141, presenting the
current burden, includes an estimated
notice burden of 1,319 hours and, with
the hourly wage updated, a cost of
$51,045; see the row for notification for
enrollees in Table J2. Thus, we calculate
a savings of 1,066 hours (1,319 ¥ 253)
and $41,254 ($51,045 ¥ $9,791) with
this current proposed burden; see the
row for notification for enrollees in
Table J4 and note that in Table J4 we list
savings as a negative number.
Amending the definition of
‘‘exempted beneficiary’’ would also
reduce the burden of disclosure of DMP
data to CMS based on the outcome of
case management of PARBs. Using
30,365 beneficiaries requiring DMP data
disclosure, we estimate that it would
take (on average) 1 minute (0.0167 hr)
at $38.70/hr for a sponsor’s pharmacy
technician to document the outcome of
case management and any applicable
coverage limitations in OMS and/or
MARx. In aggregate, we estimate an
annual burden with the proposed
changes for notification to CMS of 507
hours (30,365 PARBs * 0.0167 hr) at a
cost of $19,621 (507 hr * $38.70/hr); see
the row for notification to CMS in Table
J3. CMS–10141, presenting the current
burden, includes an estimated data
disclosure burden of 597 hours and,
with updated hourly wages, a cost of
$23,104; see the row for notification to
CMS of Table J2. Thus, we calculate a
savings of 90 hours (597 ¥ 507) and
$3,483 ($23,104 ¥ $19,621) with this
current proposed burden; see the row
for notification to CMS in Table J4 and
note that in Table J4 we list savings as
a negative number.
Table J2, presents information from
the current package, CMS–10141, with
wages adjusted to 2022 wages.
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TABLE J2: CURRENTLY APPROVED BURDEN ESTIMATES WITH UPDATED
WAGES
Regulatory
Citation
423.153([)(2)
423.153(£)(5-8)
423.153(f)(l5)
Number of
Respondents
Subiect
Conduct Case
Management
(Annualized)
Send
Notices
(Annualized)
Report to CMS
(Annualized)
Total
Table J3 presents the estimated
burden proposed in this rule which will
Number of
Responses
Time per
Response
(hr)
Labor
Cost
(hr)
Total
Time
Total Cost
306
35,771
5
178,855
111.16
19,881,522
306
7 911
0.1667
1 319
38.70
51,045
306
35,771
0.0167
597
38.70
23,104
306
79,453
Varies
180,771
Varies
19,955,671
be submitted with the new package,
CMS–10874, which uses the currently
approved burden from CMS–10141 as a
baseline.
TABLE J3: ESTIMATED BURDEN FROM THIS PROPOSED RULE
Subject
Number
of
Respond
ents
423.153(1)(2)
Conduct
Case
Managemen
t
(Annualized)
Send
Notices
(Annualized)
Report to
CMS
(Annualized)
423.153(1)(5-8)
423.153(1)(15)
Total
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In aggregate, these proposed changes
will result in an annual reduction of
cost of $3,049,392 and reduction of
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Time per
Response
(hr)
Total
Time
(hr)
Labor
Cost($/
hr)
Total
Proposed
Burden
319
Number of
Responses
(PARBs
after
exclusions)
30,365
5
151825
111.16
$16,876,867
319
1,518
0.1667
253
38.70
$9,791
319
30,365
0.0167
507
38.70
$19,621
319
62248
Varies
152 585
Varies
$16 906279
28,186 hours. The aggregate burden
change (reduction) is presented in table
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J4, and will be submitted with the new
package, CMS–10874.
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Citation
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78593
TABLE J4: BURDEN CHANGES *
Number
of
responses
Regulatory
Citation
423 .153(f)(2)
423.153(f)(58)
423.153(f)O5)
Time
per
response
(hr)
Total
Time
(hr)
Labor
Cost
($/hr)
Total
Proposed
Burden
(5,406)
5
(27,030)
111.16
(3,004,655)
Send Notices (annualized)
(6_393)
0.1667
(L066)
38.70
(4L254)
Report to CMS (annualized)
(5,406)
0.0167
(90)
38.70
(3,483.00)
(PARBs
Subiect
Conduct Case Management
(Annualized)
after
exclusion)
(28,186) Varies (3,049,392)
Total
* Table J4 is obtained by subtracting from Table J3 (burden of proposed regulation), Table J2 (current burden). For
example, for Case Management, -27,030=151,825 -171,855.
4. ICRs Regarding Additional Changes to
an Approved Formulary—Biosimilar
Biological Product Maintenance
Changes and Timing of Substitutions
(§§ 423.4, 423.100, and 423.120(e)(2))
In section III.F. of this proposal, we
are proposing a limited number of
changes to update regulatory text we
originally proposed in section III.Q.
Changes to an Approved Formulary of
the December 2022 proposed rule. In the
December 2022 proposed rule, we
proposed to reorganize current
regulatory text to incorporate and as
necessary conform with longstanding
sub-regulatory guidance and operations
with respect to changes to an approved
formulary and associated notice
provisions. We also proposed to permit
the immediate substitution of
interchangeable biological products.
The proposals discussed in section III.Q.
of the December 2022 proposed rule
have not been finalized and remain
under consideration.
Specifically, in section III.F. of this
proposed rule, we are now proposing to
update the regulatory text proposed in
December 2022 to the extent necessary
to permit Part D sponsors to treat
substitutions of biosimilar biological
products other than interchangeable
biological products as ‘‘maintenance
changes’’ under § 423.100 as proposed
in the December 2022 rule. We also are
proposing to revise paragraphs (1) and
(2) of the § 423.100 definition of
‘‘maintenance changes’’ to clarify that
certain substitutions need not take place
‘‘at the same time’’ but that Part D
sponsors can remove or make negative
changes to a brand name drug or
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reference product within a certain time
period after adding a corresponding
drug or a biosimilar biological product
other than an interchangeable biological
product to the formulary. Lastly, we are
proposing a few technical changes,
including in support of the above
specified proposals.
In section VII.B.10. of the December
2022 proposed rule (87 FR 79680), we
outlined ICRs regarding the proposed
provision ‘‘Changes to an Approved
Formulary.’’ We described the
methodology used to quantify burden,
labor, and non-labor costs incurred by
Part D plan sponsors related to making
changes to their approved Part D
formularies. The information collection
responses included: (1) submitting a
negative change request to CMS; (2)
updating the formulary in CMS’s Health
Plan Management System (HPMS); (3)
updating the formulary and providing
online notice of changes on the plan
website; and (4) providing direct written
notice to affected enrollees. The burden
estimates in the December 2022
proposed rule were based on actual
formulary changes submitted to CMS
since the ‘‘Changes to an Approved
Formulary’’ proposals set out to codify
existing guidance that Part D sponsors
had already been following.
We are not revising the December
2022 proposed rule’s burden estimates
for the purposes of this CMS–4205–P
proposal which permits formulary
substitutions of a biosimilar biological
product other than an interchangeable
biological product for the reference
product as a maintenance change. New
drugs and biological products are
approved or licensed by the FDA and
become available on the market at
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irregular intervals. Therefore, with
respect to this provision, we cannot
predict when new biosimilar biological
products will enter the market or to
what extent Part D sponsors will make
formulary substitutions as a result.
Several biosimilar biological products
entered the market in 2023,197 but CMS
has not seen a corresponding influx of
non-maintenance negative change
requests from Part D sponsors. It is
unclear whether Part D sponsors are not
requesting midyear formulary changes
due to concerns about patient and
provider hesitancy towards biosimilar
biological products, or if the current
policy that treats such formulary
changes as non-maintenance changes
disincentivizes Part D sponsors from
making midyear formulary changes that
will not apply to all enrollees currently
taking the reference product.
We will continue to base our burden
estimates on CMS’s internal data on
formulary changes from a recent
contract year, as described in section
VII.B.10. of the December 2022
proposed rule and will consider
comments received. We will revise our
estimates, as appropriate, based on
current data when finalizing the
proposals from the December 2022
proposed rule. The changes will also be
posted for public review under control
number 0938–0964 (CMS–10141) using
the standard non-rule PRA process
which includes the publication of 60and 30-day Federal Register notices.
The 60-day notice will publish soon
197 Billingsly A. Is There a Biosimilar for Humira?
Yes, Here Are 9 Humira Biosimilars Launching in
2023. GoodRxHealth. July 12, 2023. Available from:
https://www.goodrx.com/humira/biosimilars.
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after the publication of the CMS–4205–
F final rule.
5. ICRs Regarding Expanding
Permissible Data Use and Data
Disclosure for MA Encounter Data
(§ 422.310)
In section III.H. of this proposed rule,
we discuss two proposals to improve
access to MA encounter data for certain
purposes. We noted that our current
regulatory language limits CMS’s ability
to use and disclose MA encounter data
to States for activities in support of
administration or evaluation of the
Medicaid program, including care
coordination. Further, the regulation
delays when CMS may share MA
encounter data to State Medicaid
agencies for care coordination and
quality review and improvement
activities for the Medicaid program,
particularly with regard to dually
eligible individuals. Our proposals to
improve access to MA encounter data
include all the following:
• Adding ‘‘and Medicaid programs’’
to the current MA risk adjustment data
use purposes codified at
§ 422.310(f)(1)(vi) and (vii).
• Adding § 422.310(f)(3)(v) to allow
for risk adjustment data to be released
prior to reconciliation if the data will be
released to States for the purpose of
coordinating care for dually eligible
individuals.
Together, these proposals aim to
clarify and broaden the allowable data
uses for CMS and external entities (for
data disclosed in accordance with
§ 422.310(f)(2) and (3)). We discuss the
regulatory impact on CMS review and
fulfillment of new MA encounter data
requests in section XI., explaining that
we do not anticipate any significant
impact to CMS.
As discussed in sections III.H. and
XI., these proposed provisions would
allow States to voluntarily request MA
encounter data from CMS for certain
allowable purposes to support the
Medicaid program. Currently, States can
request MA encounter data to support
the administration of the Medicare
program or Medicare-Medicaid
demonstrations, and to conduct
evaluations and other analysis to
support the Medicare program
(including demonstrations). In addition,
we interpret the regulation as permitting
use and disclosure of the MA encounter
data for quality review and
improvement activities for Medicaid as
well as Medicare.
When determining the potential
burden of these proposals on States, we
considered our existing data sharing
program for States to request Medicare
data for initiatives related to their dually
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eligible population. We expect the
process to request MA encounter data
would be similar to the process that
States currently undertake to request
new Medicare FFS claims and events
data files or to update allowable data
uses. All States, including the District of
Columbia, maintain agreements with
CMS that cover operational data
exchanges related to the Medicare and
Medicaid program administration as
well as optional data requests for
Medicare claims and events data.
Therefore, States interested in
requesting MA encounter data would
not need to complete and submit a new
data agreement for MA encounter data;
instead, they would submit a use
justification for the new data request
and update their existing data
agreement form. We note that requesting
Medicare data is voluntary and that not
all States currently request Medicare
FFS claims or prescription drug events
data for coordinating care of dually
eligible beneficiaries, and of those States
that request Medicare data, not all States
request the same Medicare data files. As
with Medicare FFS claims and events
data, States would maintain the ability
to choose if and when they want to
request MA encounter data for existing
or newly expanded uses. We further
note that the process for States to submit
a request for data and for CMS to review
these requests are part of standard
operations for CMS and many States.
Additionally, we have technical
assistance support to help States
navigate the data request process and
help States maintain their data
agreements.
In the August 2014 final rule, when
we established several of the current
provisions around CMS disclosure of
MA encounter data, we explained that
we had determined that ‘‘the proposed
regulatory amendments would not
impose a burden on the entity
requesting data files.’’ (79 FR 50445).
Similarly, for the proposed refinements
to the approved data uses and the data
disclosure in this proposed rule, we do
not anticipate a significant change in
burden for States as a result of these
proposals, which clarify and expand
MA encounter data uses and timing of
data release. We solicit comment on our
analysis.
6. ICRs Regarding Standards for
Determining Whether a Special
Supplemental Benefit for the
Chronically Ill Has a Reasonable
Expectation of Improving the Health or
Overall Function of an Enrollee
(§ 422.102(f)(3)(iii) and (iv) and (f)(4))
The following proposed changes will
be submitted to OMB for review under
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control number 0938–0753 (CMS–R–
267).
As explained in section IV.B. of this
rule, due to increased offering of SSCBI,
we are proposing to: (1) require the MA
organization to establish, by the date on
which it submits its bid, a bibliography
of ‘‘relevant acceptable evidence’’
related to the item or service the MA
organization would offer as an SSBCI
during the applicable coverage year; (2)
require that an MA plan follow its
written policies (that must be based on
objective criteria) for determining
eligibility for an SSBCI when making
such determinations; (3) require the MA
plan to document denials of SSBCI
eligibility rather than approvals; and (4)
codify CMS’s authority to decline to
accept a bid due to the SSBCI the MA
organization includes in its bid and to
review SSBCI offerings annually for
compliance, taking into account the
evidence available at the time. We now
estimate burden.
Item (4) is a burden specific to CMS
and is therefore not subject to collection
of information requirements. We choose
to combine the burdens of: (1) and (2)
as the evidence gathered under (1) will
likely directly inform the criteria
established under (2).
In estimating the impact, we note the
following: (i) Not all contracts offer
SSBCI (only about 40 percent); (ii) not
all plan benefit packages (PBP) offer
them (only about 20 percent); (iii) the
distribution of the number of SSBCI per
PBP is highly skewed (for example, for
2023 the average is about 8 while the
median is 2); and (iv) both the median
and 3rd quartile of the number of SSBCI
per PBP reflect only a handful of SSBCI
offered.
Based on internal CMS data we are
using 10,000 SSBCI per year for the
three-year estimates required by the
Collection of Information requirements.
To comply with the requirements of the
provision that would require
bibliography, a staff member
knowledgeable in health should be
deployed. We are using a registered
nurse. Establishing a bibliography
requires research, including reading
papers and assessing their quality.
Because the bibliography would contain
only citations and copies of the
necessary information, and not any
narrative, we assume these activities
would take a day of work (8 hours),
which can refer to the aggregate activity
of 1 nurse working 8 hours or 2 nurses
working 4 hours each. A plan would
need to review and update its
bibliography annually. We assume that
updating an existing bibliography
would take less time than establishing
an initial bibliography. We estimate that
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it would take 8 hours each year to
update existing bibliographies.
To create a single line-item, we
estimate that it would take 8 hours at
$85.60/hr for a registered nurse to create
the bibliography for one plan. Thus, the
median burden per plan is 16 hours (8/
hr per SSBCI * a median of 2 SSBCI) at
a cost of $1,397 ($85.60/hr *16 hr). The
aggregate cost across all plans would be
80,000 hours (8 hours per SSBCI *
10,000 aggregate SSBCI) at a cost of
$6,848,000 (80,000 * $85.60/hr).
Regarding the requirement for plans
to document denials of SSCBI, it is
reasonable that plans already have this
information stored in their systems.
Thus, we assume that plans will need to
compile data already collected into a
report or other transmittable format. We
estimate that it would take 2 hours at
$98.84/hr for a programmer to complete
the initial software update. In aggregate,
we estimate a one-time burden of 1,548
hours (774 plans × 2 hr) at a cost of
$153,004 (1,548 hr × $98.84/hr).
7. ICRs Regarding Mid-Year Notice of
Unused Supplemental Benefits
(§§ 422.111 and 422.2267)
The following proposed changes will
be submitted to OMB for review under
control number 0938–0753 (CMS–R–
267).
As explained in section IV.C of this
proposed rule, per CMS regulations at
§ 422.101, MA organizations are
permitted to offer mandatory
supplemental benefits, optional
supplemental benefits, and special
supplemental benefits for the
chronically ill (SSBCI). The number of
supplemental benefit offerings has risen
significantly in recent years, as observed
through trends identified in CMS’s
annual PBP reviews. At the same time,
CMS has received reports that MA
organizations have observed low
utilization for many of these benefits by
their enrollees and it is unclear whether
plans are actively encouraging
utilization of these benefits by their
enrollees. Currently, there is no
requirement for MA organizations to
conduct outreach to enrollees to
encourage utilization of supplemental
benefits.
We have several concerns about this
low utilization of some supplemental
benefits. First, we are concerned that
beneficiaries may be making enrollment
decisions based on the allure of
supplemental benefits that are
extensively marketed by a given MA
plan during the annual election period
(AEP), but once enrolled in the plan the
beneficiaries do not fully utilize, or
utilize at all, those supplemental
benefits during the plan year. Such
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under-utilization of supplemental
benefits may hinder or nullify any
potential health benefit value offered by
these extra benefits. Additionally,
section 1854(b)(1)(C) of the Act requires
MA plans to provide the value of the
MA rebates to enrollees; per CMS
regulations at § 422.266, MA rebates
must be provided to enrollees in the
form of payment for supplemental
benefits (including reductions in cost
sharing for Part A and B benefits
compared to Original Medicare), or
payment of Part B or D premiums.
Therefore, CMS has an interest in
ensuring that the MA rebate is provided
to enrollees in a way that they can
benefit from the value of these rebate
dollars.
Hence, we are proposing to require
plans engage in targeted outreach to
inform enrollees of their unused
supplemental benefits they have not yet
accessed. This targeted outreach aims to
increase utilization of these benefits, as
it would increase enrollees’ awareness
of the supplemental benefits available to
them.
This proposed requirement would
still ensure that a minimum outreach
effort is conducted by MA organizations
to inform enrollees of supplemental
benefits available under their plans they
have not yet accessed. We propose that,
beginning January 1, 2026, MA
organizations must mail a mid-year
notice annually, but not sooner than
June 30 and not later than July 31 of the
plan year, to each enrollee with
information pertaining to each
supplemental benefit available through
the plan year that the enrollee has not
accessed, by June 30 of the plan year.
For each covered mandatory
supplemental benefit and optional
supplemental benefit (if elected) the
enrollee is eligible for but has not
accessed, the MA organization must list
in the notice the information about each
such benefit that appears in the
Evidence of Coverage (EOC). For SSBCI,
the notice must also include the
proposed new SSBCI disclaimer.
Finally, we are proposing that all
notices must include the scope of the
supplemental benefit(s), applicable costsharing, instructions on how to access
the benefit(s), applicable information on
use of any network providers
application information for each
available benefit consistent with the
format of the EOC, and a toll free
customer service number and, as
required, corresponding TTY number to
call if additional help is needed.
In estimating the burden of this
provision, we first note that plans
already keep track of utilization patterns
of benefits by enrollees. The primary
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78595
burden is therefore dissemination of
notices. In this regard there are three
burdens: (1) a one-time update to
software systems to produce reports; (2)
a one-time update of policies and
procedures; and (3) the printing and
sending of notices to beneficiaries.
• We estimate that a software
developer working at $127.82/hr would
take about 4 hours to update systems. In
aggregate we estimate a one-time burden
of 3,096 hours (774 prepaid contracts *
4 hr/contract) at a cost of $395,731
(3,096 hr * $127.82/hr).
• We estimate that a business
operations specialist working at $79.50/
hr would take 1 hour to update of
policies and procedures. In aggregate we
estimate a one-time burden of 774 hours
(774 prepaid contracts * 1 hour/
contract) at a cost of $61,533 (774 hr *
$79.50/hr).
• The major cost would be printing
and dissemination. There have been
several recent CMS rules in which such
printing and dissemination has been
estimated.
A recent estimate was presented in
proposed rule, ‘‘Medicare Program;
Contract Year 2024 Policy and
Technical Changes to the Medicare
Advantage Program, Medicare
Prescription Drug Benefit Program,
Medicare Cost Plan Program, Medicare
Parts A, B, C, and D Overpayment
Provisions of the Affordable Care Act
and Programs of All-Inclusive Care for
the Elderly; Health Information
Technology Standards and
Implementation Specifications,’’ CMS–
4201–P, (87 FR 79452) published on
December 27, 2022. We have checked
the prices listed there for paper and
toner and found them consistent with
current pricing.
• Cost of paper: We assume $3.50 for
a ream of 500 sheets. The cost for one
page is $0.007 ($3.50/500 sheets).
• Cost of toner: We assume a cost of
$70 for 10,000 pages. The toner cost per
page is $0.007 ($70/10,000 pages).
• Cost of postage: We estimate a bulk
rate mailing of $0.12 for 1,000 notices,
or $0.00012. We particularly solicit
stakeholder feedback on their
experience in bulk rates. We note that
the particular provision for which this
estimate was provided in CMS–4201,
DMP, had HIPPA requirements
necessitating first class postage.
However, notifications about the lack of
use of supplemental benefits would be
similar to EOBs which need not be sent
by first class postage.
We believe it reasonable that every
MA enrollee has at least one
supplemental benefit that they have not
used. Since PDPs do not provide
supplemental benefits, we would
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require 32 million mailings for the 32
million enrollees in prepaid contracts.
Thus, the expected price per page of
mailing is $0.01412 ($0.007 for paper
plus $0.007 for toner plus 0.00012 for
postage). The aggregate non-labor cost
for 32 million mailings of one page
would be $451,840 (32,000,000 *
$0.01412). We do not have a definite
basis for estimating the average number
of pages needed per enrollee. Some
enrollees may only require 1 page listing
1 to 3 benefits with all information
required by CMS. Some enrollees may
require more. We are estimating 3 pages
on average per enrollee but solicit
stakeholder feedback. Thus, the total
non-labor cost would be $1,355,520 (3
pages * $451,840/page).
8. ICRs Regarding New Requirements for
the Utilization Management Committee
(§ 422.137)
As discussed in section IV.D. of this
proposed rule, we are adding new
requirements related to the Utilization
Management (UM) Committee
established at § 422.137.
The following proposed changes will
be submitted to OMB for review under
control number 0938–0964 (CMS–
10141).
We are proposing at § 422.137(c)(5) to
require a member of the UM committee
have expertise in health equity.
Reviewing UM policies and procedures
is an important beneficiary protection,
and adding a committee member with
expertise in health equity will ensure
that policies and procedures are
reviewed from a health equity
perspective. We estimate that a
compliance officer working at $74.02/hr
would take 30 minutes for a one-time
update of the policies and procedures.
In aggregate, we estimate a one-time
burden of 483 hours (966 plans * 0.5 hr)
at a cost of $35,752 (483 hr * $74.02/hr).
The following proposed changes will
be submitted to OMB for review under
control number 0938–0964 (CMS–
10141).
We are proposing at § 422.137(d)(6) to
require the UM committee to conduct an
annual health equity analysis of the use
of prior authorization and publicly post
the results of the analysis to the plan’s
website. The analysis would examine
the impact of prior authorization, at the
plan level, on enrollees with one or
more of the following social risk factors:
(i) receipt of the low-income subsidy for
Medicare Part D, or being dually eligible
for Medicare and Medicaid, or (ii)
having a disability, as reflected in
CMS’s records regarding the basis for
Medicare Part A entitlement. To gain a
deeper understanding of the impact of
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prior authorization practices on
enrollees with the specified SRFs, the
proposed analysis must compare
metrics related to the use of prior
authorization for enrollees with the
specified SRFs to enrollees without the
specified SRFs. The metrics that must
be stratified and aggregated for all items
and services for this analysis are as
follows:
• The percentage of standard prior
authorization requests that were
approved.
• The percentage of standard prior
authorization requests that were denied.
• The percentage of standard prior
authorization requests that were
approved after appeal.
• The percentage of prior
authorization requests for which the
timeframe for review was extended, and
the request was approved.
• The percentage of expedited prior
authorization requests that were
approved.
• The percentage of expedited prior
authorization requests that were denied.
• The average and median time that
elapsed between the submission of a
request and a determination by the MA
plan, for standard prior authorizations.
• The average and median time that
elapsed between the submission of a
request and a decision by the MA plan
for expedited prior authorizations.
We estimate that a software and web
developer working at an hourly wage of
$120.14/hr would take 8 hours at a cost
of $961 (8 hr * $120.14/hr) for
developing the software necessary to
collect and aggregate the data required
to produce the report. In aggregate, we
estimate a one-time burden of 7,728 hr
(966 plans * 8 hr/plan) at a cost of
$928,442 (7,728 hr * $120.14/hr).
The following proposed changes will
be submitted to OMB for review under
control number 0938–0753 (CMS–R–
267).
Annually, the report must be
produced and posted to the plan’s
website. The health equity analysis and
public reporting must be easily
accessible, without barriers, including
but not limited to ensuring the
information is available: free of charge;
without having to establish a user
account or password; without having to
submit personal identifying information
(PII); to automated searches and direct
file downloads through a link posted in
the footer on the plan’s publicly
available website, and includes a txt file
in the root directory that includes a
direct link to the machine-readable file
of public reporting and health equity
analysis to establish and maintain
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automated access. We believe that
making this information more easily
accessible to automated searches and
data pulls and capturing this
information in a meaningful way across
MA organizations will help third parties
develop tools and researchers conduct
studies that further aid the public in
understanding the information. We
assume the plans’ programmers will
make this an automated process
accessing data already in the plans’
systems; hence, we estimate minimal
time to produce and inspect the report
prior to posting. We estimate a Business
Operations Specialist working at
$79.50/hr would take 0.1667 hr (10
minutes) to produce, inspect, and post
the report at a cost of $13 ($79.50/hr *
0.1667 hr). In the aggregate, we estimate
an annual burden of 161 hours (966
plans * 0.1667 hr/plan) at a cost of
$12,800 (161 hr * $79.50/hr).
9. ICRs Regarding Agent Broker
Compensation (§ 422.2274)
The following proposed changes will
be submitted to OMB for review under
control number 0938–0753 (CMS–R–
273).
Currently, agents and brokers are
compensated by MA plans at a base rate
with a maximum of $601 per enrollee,
plus administrative payments. In
section VI.B. of this proposed rule, we
are proposing to raise the maximum
compensation rate to a fixed amount
that covers two basic activities that
agents and brokers perform: (1) training
and testing; and (2) other necessary
administrative activities such as
recording and transcription. The
training and testing focus on the
information that agents and brokers may
or may not disclose about the Medicare
program and the plans they represent.
The training and testing involve the
transmission of information to agents
and brokers about Medicare rules.
Prior to stating our estimates, we
emphasize that there are numerous data
challenges in formulating an exact
amount of compensation. Therefore, we
especially invite stakeholder comments
on all our assumptions and conclusions.
More specifically, the estimates that
follow address three areas where we
have uncertainty: (1) the number of
agent and brokers actively working in
selling Medicare products; (2) the
number of new enrollees in nonemployer MA plans and PDPs; and (3)
the percent of new enrollments effected
by agent and brokers. Our assumptions
and supportive data are presented in
Table J5.
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TABLE JS: THREE ESTIMATES USED IN THE ANALYSIS
Estimate
100,000
Number of new enrollees per year for non-employer
MA plans and stand-alone prescription drug plans
2 million
Per cent of new enrollments effected by agent
brokers
50%
We now present estimates for the two
activities listed previously: (1) training
and testing per enrollee, and (2) other
necessary administrative activities such
as recording and transcription.
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a. Cost of Training
CMS requires that agents be certified,
as evidenced by attending training and
passing certain tests, in order to sell
Medicare products. Many agents and
brokers and many plans prefer the use
of a recognized certification
organization such as AHIP (https://
www.ritterim.com/blog/what-is-ahipcertification-and-how-do-i-get-it/#pdpebook) for training and testing. The
AHIP training and certification costs
$175. However, some plans provide a
discount of $50; and some plans will
pay for the training. The training allows
three attempts at passing. If the agent or
broker fails three times, some plans will
not recognize their certification even if
they eventually pass. For those plans
that do recognize continued attempts,
the agent must pay an additional $175.
Therefore, we believe it reasonable to
set the average cost of training at $125
and assume that most agents and
brokers pass within their first three
attempts (we lack data on this and invite
stakeholder comment). We are treating
the $125 as a non-labor business
expense (and invite comments on this
assumption). Finally, we note that this
$125 fee, corresponds to $12.50 per
enrollee, since we estimate there are 2
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Partially Suooortive Data
The Bureau of Labor Statistics occupational
handbook lists about 340,000 insurance agents
(including life insurance agents, auto insurance
agents etc.). We assume one third are involved with
health plans
(httns://www.bls.e:ov/oes/2022/mav/oes41302l.htm).
Published CMS data (h11,Qs://www.cms.gov/researchstatistics-data-and-fil:stems/statistics-trends-andreoorts/mcradvuartdenroldata) shows MA non
employer enrollment increasing steadily by 2 million
a year since 2020. It shows PDP enrollment
decreasing steadily by ½ million a year. This number
is an overestimate since it includes deaths, ignores
migrations from MA to FFS, ignores the downward
trend in PDPs and i!mores milmltions between olans.
We do not have any data on this. Furthermore, many
agents work for themselves and do not have to report
to CMS about the number of new enrollments they
effect. Traditionally we have used 50% when we do
not have data. Additionally, we are soliciting
stakeholder comment in this area.
million new enrollees, half of which (1
million enrollees) are affected by the
100,000 agent and brokers, implying
that on average each agent and broker
recruits 10 enrollees. Therefore, the
$125 cost when divided by the number
of enrollees gives a $12.50/enrollee cost
($125/10).
b. Burden Associated With
Transcription and Recording
We are estimating 30 minutes (0.5 hr)
to account for the time and expense of
recording and storing calls (and solicit
stakeholder comment on this
assumption). As already noted, based on
the occupational title ‘‘Insurance Sales
agents’’ we assume a mean hourly wage
of $37.00/hr. Thus, the fair market value
(FMV) per enrollee for transcription and
recording would be $18.50 ($37.00/hr *
0.5 hr).
c. Total Cost
Thus, the aggregate cost per enrollee
is $31 ($18.50 for transcription and
recording + $12.50 for training and
testing). The aggregate cost over all new
enrollees would be $31 million ($31/
enrollee × 1,000,000 new enrollees
affected annually).
We have focused on new enrollments,
since the cost of the administrative
activities discussed is predominantly
overhead not closely connected with
actual enrollments, and we are more
accurately able to track new
enrollments, so they serve as a better
basis for attaching these payments.
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10. ICRs Regarding Adding Proposed
New Rationale for an Exception From
the Network Adequacy Requirements in
§ 422.116(b) Through (e)
The following proposed changes will
be submitted to OMB for review under
control number 0938–1346 (CMS–
10636).
Historically, the industry has stated
that CMS’s current network adequacy
criteria under § 422.116 create
challenges for facility-based
Institutional Special Needs Plans (I–
SNP) because facility-based I–SNP
enrollees access services and seek care
in a different way than enrollees of
other plan types. Thus, we are
proposing to broaden our acceptable
rationales for facility-based I–SNPs
when submitting a network exception
under § 422.116(f). The first proposed
new basis for an exception request is
that a facility-based I–SNP is unable to
contract with certain specialty types
required under § 422.116(b) because of
the way enrollees in facility-based I–
SNPs receive care. Facility-based I–SNP
may also request an exception from the
network adequacy requirements in
§ 422.116(b) through (e) if: The I–SNP
covers Additional Telehealth Benefits
(ATBs) consistent with § 422.135 and
uses ATB telehealth providers of the
specialties listed in paragraph (d)(5) to
furnish services to enrollees; When
substituting ATB telehealth providers of
the specialties listed in paragraph (d)(5)
for in-person providers, the facility-
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based I–SNP would fulfill the network
adequacy requirements in § 422.116(b)
through (e); The I–SNP complies with
§ 422.135(c)(1) and (2) by covering inperson services from an out-of-network
provider at in-network cost sharing for
the enrollee who requests in-person
services instead of ATBs; and the I–SNP
provides substantial and credible
evidence that the enrollees of the
facility-based I–SNP receive sufficient
and adequate access to all covered
benefits.
To determine the potential burden
regarding this proposal, we considered
the one-time burden for MA
organizations to update policies. The
other burdens associated with this
provision involve updates to the HPMS
system, which is done by CMS and its
contractors and not subject to COI
review.
MA organizations that offer Facilitybased I–SNPs are already required to
conduct work related to network
adequacy reviews that happen during
the initial or service area expansion
application process, or every 3 years for
the triennial review. Further, MA
organizations that offer facility-based I–
SNPs should already have measures in
place to submit data to meet CMS
network adequacy review requirements
to CMS, so there is no additional
burden.
We understand that MA organizations
will need to update their policies and
procedures related to broadening our
acceptable rationales for facility-based
I–SNPs when submitting a network
exception. We estimate that a business
operations specialist working at $79.50/
hr would take 5 minutes (0.0833 hr) to
update policies and procedures related
to this task. In aggregate, we estimate a
one-time burden of 0.8 hour (10 facilitybased I–SNP contracts * 0.0833 hr) at a
cost $64 (0.8 hr * $79.50/hr).
11. ICRs Regarding Increasing the
Percentage of Dually Eligible Managed
Care Enrollees Who Receive Medicare
and Medicaid Services From the Same
Organization (§§ 422.503, 422.504,
422.514, 422.530, and 423.38)
At § 423.38(c)(4) we are proposing to
replace the current quarterly special
enrollment period (SEP) with a onetime-per month SEP for dually eligible
individuals and others enrolled in the
Part D low-income subsidy program to
elect a standalone PDP. At
§ 423.38(c)(35), we propose a new
integrated care SEP to allow dually
eligible individuals to elect an
integrated D–SNP on a monthly basis.
The burden associated with the current
quarterly dual/LIS SEP at § 423.38(c)(4)
is currently approved by OMB under
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control number 0938–0964 (CMS–
10141).
The proposed changes related to a
new integrated care SEP at
§ 423.38(c)(35) will be submitted to
OMB for review under control number
0938–0964 (CMS–10141).
In section VIII.C. of this proposed
rule, we propose amending
§§ 422.514(h), 422.503(b), 422.504(a),
and 422.530(c). Proposed § 422.514(h)
would require an MA organization’s
parent organization, where that MA
organization offers a D–SNP (and that
parent organization also contracts with
the State as a Medicaid managed care
organization (MCO) in the same service
area), to only offer one D–SNP for fullbenefit dually eligible individuals. The
proposed regulation at § 422.514(h)
would also require the affected D–SNP
to limit new enrollment to individuals
enrolling in, or in the process of
enrolling in, the affiliated Medicaid
MCO effective 2027, and further require
the D–SNP to limit all enrollment to
individuals enrolled in, or in the
process of enrolling in the affiliated
MCO effective 2030. A new contract
provision at § 422.503(b)(8) would
prohibit parent organizations from
offering a new D–SNP when that D–SNP
would result in noncompliance with the
proposed regulation at § 422.514(h).
Additionally, the proposed regulation at
§ 422.504(a)(20) would require
compliance with § 422.514(h). To
support parent organizations seeking to
consolidate D–SNPs, we also propose
§ 422.530(c)(4)(iii) that would provide a
new crosswalk exception to allow D–
SNP parent organizations to crosswalk
enrollees (within the same parent
organization and among consistent plan
types) where they are impacted by the
requirements at § 422.514(h). The
proposed changes related to MA
organizations that offer multiple D–
SNPs in a service area (§§ 422.514(h),
422.503(b), 422.504(a), and 422.530(c))
with a Medicaid MCO will be submitted
to OMB for review under control
number 0938–0753 (CMS–R–267).
a. MA Plan Requirements and Burden
We are proposing to redesignate
§ 423.38(c)(35) as § 423.38(c)(36) and
proposing a new integrated care special
enrollment period (SEP) at
§ 423.38(c)(35) that would allow
enrollment in any month into FIDE
SNPs, HIDE SNPs, and AIPs for those
dually eligible individuals who meet the
qualifications for such plans. The
proposed integrated care SEP at
§ 423.38(c)(35) would require plans to
update guidance and train staff. That
new burden would be limited to FIDE
SNPs, HIDE SNPs, and AIPs. We expect
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that plans would need one software
engineer working 4 hours to update
software and one business operations
specialist working 4 hours to update
plan policies and procedures and train
staff in the first year with no additional
burden in future years. In aggregate, we
estimate a one-time burden (for plan
year 2025) of 904 hours (113 plans * 8
hr/plan) at a cost of $93,709 (113 plans
× [(4 hr * $127.82/hr) + (4 hr * $79.50/
hr)]). We do not anticipate any new
burden to plans after the initial year.
This will be submitted to OMB for
review under control number 0938–
0964 (CMS–10141).
The proposed provisions at
§§ 422.514(h) and 422.530(c)(4)(iii)
would create burden for MA
organizations where they offer multiple
D–SNPs in a service area with a
Medicaid MCO. Impacted MA
organizations would need to non-renew
or (more likely) combine plans and
update systems as well as notify
enrollees of plan changes. We expect
that MA organizations would need two
software engineers working 4 hours to
update software in the first year with no
additional burden in future years and
one business operations specialist
working 4 hours to update plan policies
and procedures in the first year with no
additional burden in future years. In
aggregate, we estimate a one-time
burden (for plan year 2027) of 600 hours
(50 plans * 12 hr/plan) at a cost of
$67,028 (50 plans × [(8 hr * $127.82/hr)
+ (4 hr * $79.50/hr)]). This will be
submitted to OMB for review under
control number 0938–0753 (CMS–R–
267).
b. Medicare Enrollee Requirements and
Burden
Proposed amendments to
§ 423.38(c)(4) and (35) would affect the
circumstances in which individuals can
change plans. Individuals can complete
an enrollment form to effectuate such
changes, and we have previously
estimated that the forms take 0.3333
hours (20 min) to complete as cited
under OMB control number 0938–0964
(CMS–10141). However, Medicare
beneficiaries make enrollment choices
currently, and we do not expect the
overall volume of enrollment selections
to materially change if our proposals are
finalized. Therefore, we do not believe
the proposals at § 423.38(c)(4) and (35)
would impact the burden estimates that
are currently approved under 0938–
0964 (CMS–10141). Similarly, we are
not proposing any changes to that
collection’s currently approved forms.
In the section XI. of this proposed
rule, we describe the impacts related to
the expected enrollment shift from non-
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integrated MA–PDs into FIDE SNPs,
HIDE SNPs, and AIPs over time as more
D–SNPs align with Medicaid MCOs.
12. ICRs Regarding Contracting
Standards for Dual Eligible Special
Needs Plan (D–SNP) Look-Alikes
(§ 422.514)
The following proposed changes will
be submitted to OMB for review under
control number 0938–0753 (CMS–R–
267) consistent with burden on MA
plans identified as D–SNP look-alikes
under § 422.514(d) through (e) (see
section VIII.G. of this proposed rule).
As described in section VIII.G. of this
proposed rule, we propose lowering the
D–SNP look-alike threshold from 80
percent to 60 percent over a two-year
period. We propose a limitation on nonSNP MA plans with 70 or greater
percent dually eligible individuals for
CY 2025. For CY 2026, we are proposing
to reduce the threshold from 70 percent
to 60 percent or greater dually eligible
enrollment as a share of total
enrollment. This incremental approach
would minimize disruptions to dually
eligible individuals and allow plans and
CMS to operationalize these transitions
over a two-year period.
We would maintain processes to
minimize disruption for the enrollees in
plans affected by this proposed change.
We propose to apply the existing
transition processes and procedures at
§ 422.514(e) to non-SNP MA plans that
meet the proposed D–SNP look-alike
contracting limitation of 70 percent or
greater dually eligible individuals
effective plan year 2025 and 60 percent
or greater dually eligible individuals
effective plan year 2026. Consistent
with the initial years of implementation
of the D–SNP look-alike contract
limitations with the 80-percent
threshold, maintaining these transition
processes and procedures would help to
minimize disruption for current
enrollees as a result of the prohibition
on contract renewal for existing D–SNP
look-alikes. For plan year 2027 and
subsequent years, we propose to limit
the § 422.514(e) transition processes and
procedures to D–SNP look-alikes
transitioning dually eligible enrollees
into D–SNPs. Based on our experience
with D–SNP look-alike transitions
through plan year 2023, the vast
majority of enrollees transitioned to
other MA–PDs under the same parent
organization as the D–SNP look-alike.
Based on our review of D–SNP lookalike transition plans thus far, we expect
the experience for transitions effective
plan year 2024 to follow a similar
pattern.
MA organizations can utilize other
CMS processes to transition D–SNP
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look-alike enrollees to other MA plans.
For example, an MA organization can
utilize the CMS crosswalk process if it
is transitioning the full D–SNP lookalike enrollment to one non-SNP plan
benefit package (PBP) of the same type
offered by the same MA organization
under the same contract and the
requirements at § 422.530 for a
crosswalk are met. An MA organization
moving the entire enrollment of the D–
SNP look-alike PBP to another PBP of
the same type under the same contract
may structure this action as a
consolidation of PBPs and use the
crosswalk for consolidated renewal
process, under § 422.530(b)(1)(ii). An
MA organization may utilize the
crosswalk exception process, subject to
CMS approval, at § 422.530(c)(2) to
transition the entire enrollment of the
MA contract (including the D–SNP lookalike) to another MA contract (of the
same type) offered by another MA
organization with the same parent
organization as part of a contract
consolidation of separate MA contracts.
While multiple options exist for MA
organizations to transition D–SNP lookalike enrollees to other non-SNP MA
plans, these pathways are not available
for moving enrollees to D–SNPs.
Using data from the 2023 contract
year, we estimate that there are 30 nonSNP MA plans 198 that have enrollment
of dually eligible individuals of 70
percent through 79.9 percent of total
enrollment and 40 non-SNP MA
plans 199 that have enrollment of dually
eligible individuals of 60 percent
through 69.9 percent of total enrollment.
As of January 2023, the 30 non-SNP MA
plans have total enrollment of 53,334
enrollees and the 40 non-SNP MA plans
have 92,100 enrollees collectively. Of
the 30 non-SNP MA plans with 70–79.9
percent dually eligible enrollment, 28
are in States where for contract year
2023 there are D–SNPs or comparable
managed care plans and would be
subject to § 422.514(d).200 Of the 40
non-SNP MA plans with 60–69.9
percent dually eligible enrollment, all
are in States where for contract year
2023 there are D–SNPs or comparable
198 These 30 non-SNP MA plans are located in
Arizona, California, Connecticut, Idaho, Illinois,
Louisiana, Nevada, New Hampshire, New Mexico,
Oklahoma, Oregon, Pennsylvania, Tennessee,
Vermont, and Virginia.
199 These 40 non-SNP MA plans are located in
Arkansas, California, Connecticut, Georgia, Illinois,
Indiana, Iowa, Kansas, Kentucky, Maine,
Massachusetts, Michigan, Minnesota, Mississippi,
Missouri, Nevada, New Mexico, New York, Ohio,
Oklahoma, Oregon, Pennsylvania, Rhode Island,
and Tennessee.
200 The 2 non-SNP MA plans are located in New
Hampshire and Vermont, neither of which have a
D–SNP as of contract year 2023.
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78599
managed care plans and would be
subject to § 422.514(d). As of January
2023, these 68 plans have total
enrollment of 145,434 for contract year
2023. If these plans all have the same
enrollment pattern in 2024, MA
organizations would need to non-renew
for plan year 2025 those 28 plans that
exceed our proposed criteria to lower
the threshold to 70 percent for plan year
2025.201 Similarly, MA organizations
with plans that exceed our proposed
criteria to lower the threshold to 60
percent for plan year 2026 would need
to non-renew 40 plans for plan year
2026.202 Each MA organization would
have the opportunity to make an
informed decision to transition
enrollees into another MA–PD plan
(offered by it or by its parent
organization) by: (1) identifying, or
applying, or 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. Consistent with our
experience with D–SNP look-alikes nonrenewing for plan years 2021 through
2023, 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.
Plan year 2023 was the only plan year
when D–SNP look-alikes transitioned
enrollees to Traditional Medicare rather
than an MA plan under the same parent
organization. In plan year 2023, 9 of the
47 D–SNP look-alikes transitioned
approximately 3,300 enrollees to
Traditional Medicare, which accounted
for less than 2 percent of total enrollees
transitioned from D–SNP look-alikes.
The changes required of MA
organizations based on this proposed
rule would impact D–SNP look-alikes
and their enrollees (see section VIII.G. of
this proposed 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
and our experience with transitions of
D–SNP look-alikes through plan year
2023.
a. MA Plan Requirements and Burden
As indicated, the following proposed
changes will be submitted to OMB for
review under control number 0938–
0753 (CMS–R–267).
201 These 28 plans have total enrollment of 53,334
individuals as of January 2023.
202 These 40 plans have total enrollment of 92,100
individuals as of January 2023.
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
At § 422.514(e), we established 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
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.
This process 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 to the proposed ‘‘crosswalk
exception’’ procedures at § 422.530(a)
and (b); however, § 422.514(e) allows
the transition process to apply across
contracts or legal entities and from nonSNP to SNPs provided that the receiving
plan is otherwise of the same plan type
(for example, HMO or PPO) as the D–
SNP look-alike.
Based on the experience of D–SNP
look-alike transitions through plan year
2023, we believe 95 percent of D–SNP
look-alikes for plan years 2025 and 2026
would be able to move enrollees into
another MA–PD plan using the
transition process established at
§ 422.514(e) or existing crosswalk
functionality at § 422.530 and would
choose to transition enrollment for plan
years 2025 and 2026. All are in States
where for contract year 2023 there are
D–SNPs or comparable managed care
plans that would be subject to
§ 422.514(d). Therefore, we are
assuming the burden of 27 of the 28
non-SNP MA plans with 70–79.9
percent dually eligible enrollment and
offered in a State with a D–SNP would
transition enrollees for plan year 2025
(for a January 2025 effective date) and
38 of the 40 non-SNP MA plans with
60–69.9 percent dually eligible
enrollment would transition enrollees
for plan year 2026 (for a January 2026
effective date). Consistent with our
estimates from the June 2020 final rule,
we estimate each plan will take a onetime amount of 2 hours at $79.50/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
would not need to verify enrollees’
Medicaid eligibility. The 2-hour time
estimate would account for any
additional work to confirm enrollees’
Medicaid eligibility for D–SNP lookalikes transitioning eligible enrollees to
a D–SNP. Based on the previous
discussion, the estimates for the burden
for MA organizations to transition
enrollees to other MA–PD plans during
the 2025 to 2027 plan years is
summarized in Table J6.
TABLE J6: BURDEN FOR TRANSITIONING D-SNP LOOK-ALIKE ENROLLEES
INTOANOTHER MA-PD
Based on our experience through plan
year 2023, we expect the vast majority
of MA organizations with non-SNP MA
plans with dually eligible enrollment
between 60 and 80 percent of total
enrollment also have an MA–PD plan
with a premium of $0 or a D–SNP in the
same service area as the D–SNP lookalike. Based on 2023 plan year data, of
the 30 non-SNP MA plans with 70 to
79.9 percent dually eligible enrollment,
19 of these plans (63 percent) have a D–
SNP within the same service area or
nearly the same service area. Also based
on 2023 plan year data, of the 40 nonSNP MA plans with 60 to 69.9 percent
dually eligible enrollment, 24 of these
plans (60 percent) have a D–SNP within
the same service area or nearly the same
service area. An MA organization with
one of these non-SNP MA plans could
expand its service area for an existing
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Total Cost (using
$79.50/hr for a business
operations specialist) ($)
4,293
6,042
1,908
12.243
4,081 (12,243/3)
MA–PD plan or D–SNP. The MA
organizations with the non-SNP MA
plans between 60 and 79.9 percent
dually eligible enrollment already have
the opportunity to establish a D–SNP
and expand their service areas. Any
burden associated with these MA
organizations establishing new D–SNPs
and/or expanding their service areas
would already be captured under
currently approved burden under
control number 0938–0935 (CMS–
10237) for creating a new MA–PD plan
to receive non-SNP MA plan enrollees.
Per § 422.514(e)(2)(ii), in the Annual
Notice of Change (ANOC) that the MA
organization must send consistent with
§ 422.111(a), (d), and (e), the MA
organization would be required to
describe changes to the MA–PD plan
benefits and provide information about
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the MA–PD plan into which the
individual is enrolled.
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 date 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 by
OMB under control number 0938–1051
(CMS–10260).
We expect 1 plan for plan year 2025
and 2 plans for plan year 2026 would
be required to send affected enrollees a
written notice consistent with the nonrenewal notice requirements at
§ 422.506(a)(2) and described at
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ddrumheller on DSK120RN23PROD with PROPOSALS2
Year
2025
2026
2027
Total
Average
Time per
Response Total Time
(hr)
(hr)
2
54
2
76
2
24
6
154
2 (6/3)
51.334
(154/3)
Number of
Plans
27
38
12
77
25.667 (77/3)
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
§ 422.514(e)(4), as we anticipate—based
on our experience with transitions
through plan year 2023—not all D–SNP
look-alikes would be able to transition
their enrollees into another MA–PD
plan (or plans).
b. Enrollee Requirements and Burden
In 2027 and subsequent years, we
estimate that 12 plans per year would be
identified as D–SNP look-alikes under
§ 422.514(d). We base our estimate on
the fact that there are 12 D–SNP lookalikes for plan year 2024, which is the
first year following the phase in of the
80-percent threshold. We expect our
proposal to lower the threshold for
identifying D–SNP look-alikes from 80
percent to 60 percent would increase
the number of plans identified as D–
SNP look-alikes. However, we expect
this increase to be offset by a reduction
in D–SNP look-alikes due to our
proposed changes to the § 422.514(e)
transition process, which would limit
use of the § 422.514(e) transition process
to D–SNP look-alikes transitioning
dually eligible enrollees into D–SNPs.
Under our proposal, D–SNP look-alikes
transitioning effective for plan year 2025
and plan year 2026—including the
newly identified D–SNP look-alikes
based on the proposed threshold
lowered to 70 percent and then 60
percent—could continue to use the
existing transition process under
§ 422.514(e). Once the newly identified
D–SNP look-alikes at the lower
thresholds complete their transitions for
plan year 2025 and plan year 2026, the
§ 422.514(e) transition process could
only be used for D–SNP look-alike
transitioning enrollees into D–SNPs. We
believe this proposed limit would give
MA organizations a stronger incentive to
avoid creating D–SNP look-alikes, due
to the more limited opportunity for
these plans to transition enrollees to
non-D–SNPs. The proposed limit on the
§ 422.514(e) transitions would be
effective for plan year 2027 and
subsequent years. We believe that these
12 D–SNP look-alikes would non-renew
and transition their enrollment into a D–
SNP or other MA–PD plan. The annual
burden is summarized in Table J6. We
welcome comment on these
assumptions.
As indicated, the following proposed
changes will be submitted to OMB for
review under control number 0938–
0753 (CMS–R–267).
An individual transitioned from a D–
SNP look-alike to another MA–PD plan
may stay in the MA–PD plan receiving
the enrollment or, using the AEP or
another enrollment period (such as the
MA OEP), 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 Traditional
Medicare and enrollment in a standalone PDP. Because the enrollment
transition process is 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 MA open enrollment
period (OEP) (after January 1). Affected
individuals may also qualify for a
special enrollment period (SEP), such as
the SEP for plan non-renewals at
§ 422.62(b)(1) or the SEP for dually
eligible/LIS beneficiaries at
§ 423.38(c)(4), which this rule proposes
to revise as discussed in section VIII.C.
of this proposed rule. Based on our
experience with D–SNP look-alike
78601
transitions through plan year 2023, we
estimate that 99 percent of the 53,334
D–SNP look-alike enrollees (52,801
enrollees = 53,334 enrollees × 0.99) in
the 30 non-SNP MA plans with dually
eligible enrollment of 70 to 79.9 percent
and 99 percent of the 92,100 D–SNP
look-alike enrollees (91,179 enrollees =
92,100 enrollees × 0.99) in the 40 nonSNP MA plans with dually eligible
enrollment of 60 to 69.9 percent would
transition into another plan under the
same parent organization as the D–SNP
look-alike. Of these 143,980
transitioning enrollees (52,801 enrollees
+ 91,179 enrollees), our experience with
D–SNP look-alike transitions through
plan year 2023 suggests that 14 percent
would select a new plan or the
Traditional Medicare 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 in which they are currently
enrolled. For plan year 2025, we
estimate that 7,392 enrollees (52,801
transitioning D–SNP look-alike
enrollees * 0.14), would opt out of the
new plan into which the D–SNP lookalike transitioned them. For plan year
2026, we estimate that 12,765 enrollees
(91,179 transitioning D–SNP look-alike
enrollees * 0.14), would opt out of the
new plan into which the D–SNP lookalike transitioned them. Consistent with
the per response time estimate that is
currently approved by OMB under
control number 0938–0753 (CMS–R–
267), we continue to estimate that the
enrollment process requires 20 minutes
(0.3333 hr).
Based on the aforementioned
discussion, Table J7, summarizes the
hour and dollar burden for added
enrollments for years 2025 to 2027.
TABLE J7: BURDEN ON ENROLLEES FOR YEARS 2025-2027
Total
Average
Time /Enrollee
(hr)
0.3333
0.3333
0.3333
0.9999
0.3333
(0.9999/3)
Total Time
(hr)
2,464
4,255
1,163
7,882
2,627
(7,882/3)
Total Cost(@
$20. 71/hr) ($)*
51,029
88,121
24,085
163,235
54,412
(163,235/3)
*Had we used $29.76/hour the mean wage for occupational code 00-0000 representing all occupations, the
burden would change from $54,412 to $78,189 an increase of $23,777
As stated previously, we believe that
in 2027 and subsequent years, 12 plans
would be identified as D–SNP look-
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alikes and therefore this proposed rule
would have a much smaller impact on
MA enrollees after the initial period of
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implementation. Since the current 70
non-SNP MA plans with dually eligible
enrollment of 60.0 to 79.9 percent have
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Year
2025
2026
2027
Number of
Affected Enrollees
7,392
12,765
3,490
23,647
7,882
(23,647/3)
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145,434 enrollees in 70 plans, we
estimate 24,932 enrollees (145,434
enrollees * 12/70 plans) in 12 plans.
The burden is summarized in Table J6.
The average annual enrollee burden
over 3 years is also presented in Table
J6.
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13. ICRs Regarding Update to the MultiLanguage Insert Regulation (§§ 422.2267
and 423.2267)
The following proposed changes will
be submitted to OMB for review under
control number 0938–1421 (CMS–
10802).
The multi-language insert (MLI)
required at §§ 422.2267(e)(31) and
423.2267(e)(33) is a standardized
communications material that informs
enrollees and prospective enrollees that
interpreter services are available in
Spanish, Chinese, Tagalog, French,
Vietnamese, German, Korean, Russian,
Arabic, Italian, Portuguese, French
Creole, Polish, Hindi, and Japanese.
These are the 15 most common nonEnglish languages in the United States.
Additionally, §§ 422.2267(e)(31)(i) and
423.2267(e)(33)(i) require plans to
provide the MLI in any non-English
language that is the primary language of
at least 5 percent of the individuals in
a PBP service area but is not already
included on the MLI. These regulations
also provide that a plan may opt to
include the MLI in any additional
languages that do not meet the 5 percent
threshold, where it determines that
including the language would be
appropriate.
As discussed in section III.G. of this
proposed rule, we are proposing to
update §§ 422.2267(e)(31) and
423.2267(e)(33) to require that notice of
availability of language assistance
services and auxiliary aids and services
be provided in English and the 15
languages most commonly spoken by
individuals with limited English
proficiency in a State and must be
provided in alternate formats for
individuals with disabilities who
require auxiliary aids and services to
ensure effective communication. Thus,
under our proposal, MA organizations
and Part D sponsors would send the
Notice of Availability in English and the
15 most common non-English languages
in a State instead of the current MLI in
the 15 most common non-English
languages nationally. This proposed
policy is consistent with a proposed
rule that OCR published in August 2022
(87 FR 47824). We also expect that this
proposed policy would better align with
the Medicaid translation requirements
VerDate Sep<11>2014
20:26 Nov 14, 2023
Jkt 262001
at § 438.10(d)(2).203 We propose to
modify the language to note that this is
a model communication material rather
than a standardized communication
material because we are no longer
specifying the exact text that must be
used. Even though the MA organizations
and Part D sponsors could change the
Notice of Availability, we are not
accounting for such changes because we
do not expect any MA organizations or
Part D sponsors to make such changes.
We do not expect this proposed
policy to create any new collection of
information burden for MA
organizations or Part D sponsors since
the August 2022 proposed rule indicates
that OCR would provide the translated
language for the Notice of Availability
in the 15 most common non-English
languages in a State or States. Also, the
MA organizations and Part D sponsors
are already distributing the MLI and,
under this proposal, would instead
distribute the Notice of Availability, so
we do not anticipate any new burden
associated with printing or mailing. In
addition, the Notice of Availability
would be a one-page document that
would never be sent alone and therefore
does not create additional postage costs.
We expect some new burden for MA
organizations and Part D sponsors
operating plans across multiple States.
Rather than sending the same MLI with
the same 15 non-English language
translations to plans in any State, under
the proposed rule the plans under these
MA organizations or Part D sponsors
would need to send the Notice of
Availability with translations in the 15
most common non-English languages in
each State in which the plan operates.
Based on plan year 2023 data, we
estimate there are approximately 20 MA
parent organizations offering MA plans
in multiple States with approximately
3,900 PBPs and approximately 20 Part D
sponsors offering Part D plans in
multiple States with approximately
1,400 Part D plans. Since many of these
parent organizations have MA
organizations at the State level, we
estimate that these 20 parent
organizations have approximately 220
MA organizations covering PBPs by
State. Similarly, we estimate that the 20
Part D sponsors have approximately 50
parent organizations covering PBPs by
State. We believe the parent
203 We expect the 15 most common languages for
a given State to include any language required by
the Medicaid program at § 438.10(d)(2). Therefore,
our proposed rule would not impose additional
burden on fully integrated dual eligible special
needs plans and highly integrated dual eligible
special needs plans, as defined at § 422.2, and
applicable integrated plans, as defined at § 422.561,
to comply with regulations at §§ 422.2267(a)(4) and
423.2267(a)(4).
PO 00000
Frm 00128
Fmt 4701
Sfmt 4702
organizations would update systems
software and plan policies and
procedures as well as train staff at the
MA organization and Part D sponsor
level to cover all PBPs and Part D plans,
respectively, offered in a State. We
expect that MA organizations and Part
D sponsors would need one software
engineer working one hour to update
systems software in the first year with
no additional burden in future years and
one business operations specialist
working one hour to update plan
policies and procedures and train staff
in the first year with no additional
burden in future years. For MA
organizations, we estimate the burden
for plan year 2025 at 440 hours (220 MA
organizations * 2 hr/plan) at a cost of
$56,241 (440 hr * $127.82/hr) for a
software engineer to update systems to
ensure the Notice of Availability with
the correct State-specific languages is
distributed with other communications
and marketing materials. We estimate
the burden for MA organizations for
plan year 2025 to be 440 hours (220 MA
organizations * 2 hr/plan) at a cost of
$34,980 (440 hr * $79.50/hr) for a
business operations specialist to update
plan policies and procedures and train
staff. For Part D sponsors, we estimate
the burden for plan year 2025 at 100
hours (50 Part D sponsors * 2 hr/plan)
at a cost of $12,782 (100 hr * $127.82/
hr) for a software engineer to update
systems to ensure the Notice of
Availability with the correct Statespecific languages is distributed with
other communications and marketing
materials. We estimate the burden for
Part D sponsors for plan year 2025 to be
100 hours (50 Part D sponsors * 2 hr/
plan) at a cost of $7,950 (100 hr *
$79.50/hr) for a business operations
specialist to update plan policies and
procedures and train staff. We do not
anticipate any new burden to plans after
the initial year. We will submit this
burden to OMB for review under control
number 0938–1421 (CMS–10802).
We also note that, as part of the
current MLI required at
§§ 422.2267(e)(31) and 423.2267(e)(33),
MA organizations and Part D sponsors
must already include additional
languages that meet the 5 percent
service area threshold as required under
§§ 422.2267(a)(2) and 423.2267(a)(3).
Thus, MA organizations and Part D
sponsors must currently review the
most frequently used languages in a
service area beyond the top 15 national
languages. As a result, we do not believe
the burden will be greater than our
estimate note previously. We welcome
comment on our assumptions.
E:\FR\FM\15NOP2.SGM
15NOP2
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423.153(£)(2)
PO 00000
423.153(£)(5-8)
423.153(£)(15)
Frm 00129
422.102(f)(3)(iii) and (iv)
and (f)(4)
Network
Adequacy in
Behavioral
Health
DMP: Case
Mana!!ement
DMP: Enrollee
notification
DMP:CMS
Notification
SSBCI,
expectation of
health
0938-1346
(CMS-10636)
Respondents
Nwnberof
Responses
Time per
Response
(hours)
Total
Annnal
Time
(hours)
Labor
Cost of
Reporting
($/hr)
Total Cost
First Year
($)
Total Cost
Subsequent
Years($)
Fmt 4701
Sfmt 4725
E:\FR\FM\15NOP2.SGM
15NOP2
742
0.0833
62
79.50
4,929
0
319
(5,406)
5
(27,030)
111.16
(3,004,655)
(3,004,655)
319
(6,393)
0.1667
(1,066)
38.70
(41,254)
(41,254)
319
(5,406)
0.0167
(90)
38.70
(3,483)
(3,483)
0938-0753 (CMS-R267)
10,000
10,000
8
80,000
85.60
6,848,000
6,848,000
0938-0753 (CMS-R267)
774
774
2
1,548
98.84
153,004
0
0938-0753 (CMS-R267)
774
774
4
3,096
127.82
395,731
0
0938-0753 (CMS-R267)
774
774
1
774
79.50
61,533
0
0938-0753 (CMS-R267)
774
32,000,000
Non
Labor
Non
Labor
Non Labor
1,355,520
(Non
Labor)
1,355,520
(Non
Labor)
0938-0964
(CMS-10141)
966
966
0.5
483
74.02
35,752
0
0938-0964
(CMS-10141)
966
966
8
7,728
120.14
928,442
0
0938-0753 (CMS R
267)
966
966
0.1667
161
79.50
12,800
12,800
0938-0753 (CMS R
267)
966
100,000
NA
NA
31
31,000,000
31,000,000
0938-IBD (CMS10874)
0938-IBD (CMS10874)
0938-IBD (CMS10874)
422.102(f)(3)(iii) and (iv)
and (f)(4)
422.111 and 422.2267
422.111 and 422.2267
422.111 and 422.2267
422.137
SSBCI,
Documentation
Increased
Utilization of
Supplemental
Benefits,
Software
Uodates
Increased
Utilization of
Supplemental
Benefits,
Policv Updates
Increased
Utilization of
Supplemental
Benefits,
Mailings
UM
Conunittee,
uodate oolicies
UM
Committee,
422.137
422.2274
Annual Health
Equity
Analysis
UM
Committee,
Website
Posting
Agent Broker
C
78603
742
imorovement
422.137
EP15NO23.002
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(CMS ID No.)
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Jkt 262001
422.116(b)(2) and (dX2)
and (5)
Item
C. Summary of Proposed Information
Collection Requirements and Associated
Burden
20:26 Nov 14, 2023
Section(s) under Title 42
oftheCFR
BILLING CODE 4120–01–P
VerDate Sep<11>2014
TABLE JS: SUMMARY OF ANNUAL INFORMATION COLLECTION REQUIREMENTS AND BURDEN*
ddrumheller on DSK120RN23PROD with PROPOSALS2
78604
423.38(c)(35)
Jkt 262001
422.514(h) and
422.530(c)(4)(iii)
PO 00000
422.514(d) and (e)
Frm 00130
422.514(d) and (e)
Fmt 4701
Sfmt 4702
422.2267 and 423.2267
422.2267 and 423.2267
E:\FR\FM\15NOP2.SGM
422.2267 and 423.2267
422.2267 and 423.2267
15NOP2
Totals
I-SNPs
D-SNP; SEP
Pro!!l"ammers
D-SNP
Combining
Plans,
Pro!!l"ammer
D-SNPLookAlikes,
Transitioning
to other MA
PD, Plan
Burden
D-SNPLookAlikes,
Transitioning
to other MAPD, Enrollee
Burden••
Notice of
Availability;
Part C Update
ofSvstems
Notice of
Availability;
Part C Update
of Policies
Notice of
Availability;
Part D Update
of Systems
Notice of
Availability;
Part D Update
of Policies
0938-1346 (CMS10636)
0938-0964 (CMS10141)
10
10
0.0833
1
79.50
64
0
113
113
8
904
Varies
93,709
0
0938-0753 (CMS-R267).
50
50
12
600
Varies
67,208
0
0938-0753 (CMS-R267).
25.667***
27
2
51.334
79.50
4,081
4,081
0938-0753 (CMS-R267).
7882
7,882
0.3333
2,627
20.71
54,412
54,412
0938-1421 (CMS10802)
220
220
2
440
127.82
56,241
0
0938-1421 (CMS10802)
220
220
2
440
79.50
34,980
0
0938-1421 (CMS10802)
50
50
2
100
127.82
12,782
0
0938-1421 (CMS10802)
50
50
2
100
79.50
7,950
0
32,136,318
INSERT
Varies
70,928
Varies
38,077,501
36,225,414
* Agent broker dollar burden includes both labor and non-labor components as explained in the narrative
** Had we used $29.76/hourthe mean wage for occupational code 00-0000 representing all occnpations, the burden would change from $54,412 to $78,189 an increase of$23,777
*** The three-place accuracy is necessary to synchronize Table J6 with Table J8. Had we rounded the annual costs would not syuc.
EP15NO23.003
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20:26 Nov 14, 2023
BILLING CODE 4120–01–C
VerDate Sep<11>2014
422.116
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
D. Submission of PRA-Related
Comments
We have submitted a copy of this
proposed rule to OMB for its review of
the rule’s information collection
requirements. The requirements are not
effective until they have been approved
by OMB.
To obtain copies of the supporting
statement and any related forms for the
proposed collections discussed
previously, please visit the CMS website
at https://www.cms.gov/regulationsand-guidance/legislation/
paperworkreductionactof1995/pralisting, or call the Reports Clearance
Office at 410–786–1326.
We invite public comments on these
potential information collection
requirements. If you wish to comment,
please submit your comments
electronically as specified in the DATES
and ADDRESSES sections of this
proposed rule and identify the rule
(CMS–4205–P), the ICR’s CFR citation,
and the OMB control number.
ddrumheller on DSK120RN23PROD with PROPOSALS2
XI. Regulatory Impact Analysis
A. Statement of Need
The primary purpose of this proposed
rule is to amend the regulations for the
Medicare Advantage (Part C) program,
Medicare Prescription Drug Benefit (Part
D) program, Medicare cost plan
program, and Programs of All-Inclusive
Care for the Elderly (PACE). This
proposed rule includes several new
policies that would improve these
programs beginning with contract year
2025 as well as codify existing Part C
and Part D sub-regulatory guidance.
This proposed rule also includes
revisions to existing regulations in the
Risk Adjustment Data Validation
(RADV) audit appeals process and the
appeal process for quality bonus
payment determination that would take
effect 60 days after publication of a final
rule. Revisions to existing regulations
for the use and release of risk
adjustment data would also take effect
60 days after publication of a final rule.
Additionally, this proposed rule would
implement certain sections of the
following Federal laws related to the
Parts C and D programs:
• The Bipartisan Budget Act (BBA) of
2018.
• Consolidated Appropriations Act
(CAA) of 2023.
B. Overall Impact
We have examined the impacts of this
proposed rule as required by Executive
Order 12866 on Regulatory Planning
and Review (September 30, 1993),
Executive Order 13563 on Improving
Regulation and Regulatory Review
VerDate Sep<11>2014
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Jkt 262001
(January 18, 2011), Executive Order
14094 entitled ‘‘Modernizing Regulatory
Review’’ (April 6, 2023), the Regulatory
Flexibility Act (RFA) (September 19,
1980, Pub. L. 96–354), section 1102(b) of
the Social Security Act, section 202 of
the Unfunded Mandates Reform Act of
1995 (March 22, 1995; Pub. L. 104–4),
Executive Order 13132 on Federalism
(August 4, 1999) and the Congressional
Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). The Executive Order 14094,
entitled ‘‘Modernizing Regulatory
Review’’ (hereinafter, the Modernizing
E.O.), amends section 3(f)(1) of
Executive Order 12866 (Regulatory
Planning and Review). The amended
section 3(f) of Executive Order 12866
defines a ‘‘significant regulatory action’’
as an action that is likely to result in a
rule: (1) having an annual effect on the
economy of $200 million or more in any
1 year, or adversely affecting in a
material way the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, territorial, or
Tribal governments or communities; (2)
creating a serious inconsistency or
otherwise interfering with an action
taken or planned by another agency; (3)
materially altering the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or (4)
raising legal or policy issues for which
centralized review would meaningfully
further the President’s priorities or the
principles set forth in this Executive
order.
A regulatory impact analysis (RIA)
must be prepared for major rules with
significant regulatory action/s and/or
with significant effects as per section
3(f)(1) ($200 million or more in any 1
year). The total economic impact for this
proposed rule exceeds $200 million in
several years. Therefore, based on our
estimates, OMB’s Office of Information
and Regulatory Affairs has determined
this rulemaking is significant per
section 3(f)(1)) as measured by the $200
million or more in any one year and also
a major rule under Subtitle E of the
Small Business Regulatory Enforcement
Fairness Act of 1996 (also known as the
Congressional Review Act).
Accordingly, we have prepared a
Regulatory Impact Analysis that to the
PO 00000
Frm 00131
Fmt 4701
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78605
best of our ability presents the costs and
benefits of the rulemaking.
Cost of reviewing the rule. Using the
wage information from the BLS for
medical and health service managers
(Code 11–9111), we estimate that:
• The hourly cost per reviewer for
reviewing this proposed rule is $123.06
per hour, including overhead and fringe
benefits https://www.bls.gov/oes/
current/oes_nat.htm. Had a general
business operations specialist been used
(say for an entity without medical and
health service managers) the cost per
hour would be less than that for a
medical and health services manager.
Therefore, we are at most overestimating the cost per hour and will
use $123.06/hr.
• We estimate that there will be less
than 2,000 reviewers of this proposed
rule: There are currently less than 1,000
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, PBMs). We
expect that each organization will
designate one person to review the rule.
Therefore, a reasonable maximal
number is 2,000 total reviewers. We
note that other assumptions are
possible.
• The rule is about 150,000 words.
Average reading speeds vary from 180 to
240 words per minute. Since the rule is
technical and presumably notes are
being taken, we use the lower estimate.
Furthermore, since in addition to
notetaking, summaries would be
submitted to leadership we are lowering
the 180 words/minutes to 150.
Accordingly, we assume it would take
staff 17 hours to review this proposed
rule (150,000 words/150 words per
minute/60 minutes hour). This may be
an overestimate since each entity will
likely only read the provisions affecting
them and not the entire rule.
• Therefore, the estimated cost per
reviewing entity for reading this entire
rule is $2,100 (17 hr × $123.06/hr), and
the total cost over all entities for
reviewing this entire proposed rule is
$4.2 million ($2,100 × 2,000 reviewers).
However, we expect that many
reviewers, for example pharmaceutical
companies and PBMs, will not review
the entire rule but just the sections that
are relevant to them. Thus, it is very
likely that on average only half or a
quarter of the rule will be read resulting
in a range of $2 million to $5 million.
Note that this analysis assumes one
reader per contract. Some alternatives
include assuming one reader per parent
organization. Using parent organizations
instead of contracts will reduce the
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
number of reviewers. However, we
believe it is likely that review will be
performed by contract. The argument for
this is that a parent organization might
have local reviewers assessing potential
region-specific effects from this
proposed rule.
In accordance with the provisions of
Executive Order 12866, this proposed
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 impact on a
substantial number of small entities. For
purposes of the RFA, small entities
include small businesses, nonprofit
organizations, and small governmental
jurisdictions.
A wide range of policies are being
proposed in this rule. These policies
codify, modify, and update current
guidance governing MA organization
bid requirements.
This rule has several affected
stakeholders. They include: (1) MA
organizations such as HMOs, local and
regional PPOs, MSAs, PFFS and Part D
sponsors; (2) providers, including
institutional providers, outpatient
providers, clinical laboratories, and
pharmacies; and (3) enrollees. Some
descriptive data on these stakeholders
are provided in Table K–1.
TABLE K-1: STAKEHOLDERS AFFECTED BY THIS RULE, THEIR NAICS CODE,
AND THRESHOLD FOR SMALL BUSINESS STATUS
We are certifying that this proposed
rule does not have a significant
economic impact on a substantial
number of small entities. To explain our
position, we explain certain operational
aspects of the Medicare program.
Each year, MA plans submit a bid for
furnishing Part A and B benefits and the
entire bid amount is paid by the
government to the plan if the plan’s bid
is below an administratively set
benchmark. If the plan’s bid exceeds
that benchmark, the beneficiary pays the
difference in the form of a basic
premium (note that a small percentage
of plans bid above the benchmark,
whereby enrollees pay basic premium,
thus this percentage of plans is not
‘‘significant’’ as defined by the RFA and
as justified in this section of this
proposed rule).
MA plans can also offer extra benefits,
that is, benefits not covered under
Traditional Medicare Parts A and B,
called supplemental benefits. These
benefits are paid for through enrollee
premiums, rebate dollars or a
combination. Under the statutory
payment formula, if the bid submitted
by a Medicare Advantage plan for
furnishing Parts A and B benefits is
lower than the administratively set
benchmark, the government pays a
portion of the difference to the plan in
VerDate Sep<11>2014
20:26 Nov 14, 2023
Jkt 262001
NAICS Code*
456110
524114
621
621492
621111
622
623110
the form of a rebate. The rebate must be
used to provide supplemental benefits
(that is benefits not covered under
Traditional Medicare, including lower
cost sharing) and or/lower beneficiary
Part B or Part D premiums. Some
examples of these supplemental benefits
include vision, dental, and hearing,
fitness and worldwide coverage of
emergency and urgently needed
services.
To the extent that the government’s
payments to plans for the bid plus the
rebate exceeds costs in Traditional
Medicare, those additional payments
put upward pressure on the Part B
premium, which is paid by all Medicare
beneficiaries, including those in
Traditional Medicare who do not have
the additional health services available
in many MA plans.
Part D plans, including MA–PD plans,
submit bids and those amounts are paid
to plans through a combination
Medicare funds and beneficiary
premiums. In addition, for enrolled lowincome beneficiaries, Part D plans
receive special government payments to
cover most of the premium and cost
sharing amounts those beneficiaries
would otherwise pay.
Thus, the cost of providing services
by MA and Part D plans is funded by
a variety of government funding sources
PO 00000
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Sfmt 4702
Threshold for Small Business
(in millions of dollars)**
37.5
47
47
16
47
34
and in some cases by enrollee
premiums. As a result, MA and Part D
plans are not expected to incur burden
or losses since the private companies’
costs are being supported by the
government and enrolled beneficiaries.
This lack of expected burden applies to
both large and small health plans.
Small entities that must comply with
MA and Part D regulations, such as
those in this proposed rule, are expected
to include the costs of compliance in
their bids, thus avoiding additional
burden, since the cost of complying
with any final rule is funded by
payments from the government and, if
applicable, enrollee premiums.
For Direct Health and Medical
Insurance Carriers, NAICS 524114,
plans estimate their costs for the
upcoming year and submit bids and
proposed plan benefit packages. Upon
approval, the plan commits to providing
the proposed benefits, and CMS
commits to paying the plan either (1)
the full amount of the bid, if the bid is
below the benchmark, which is a ceiling
on bid payments annually calculated
from Traditional Medicare data; or (2)
the benchmark, if the bid amount is
greater than the benchmark.
If an MA plan bids above the
benchmark, section 1854 of the Act
requires the MA plan to charge enrollees
E:\FR\FM\15NOP2.SGM
15NOP2
EP15NO23.033
ddrumheller on DSK120RN23PROD with PROPOSALS2
Stakeholder
Pharmacy and Drug stores
Direct Health and Medical Insurance Carriers
Ambulatory Health Services
Dialysis Centers
Physician offices
Hospitals
Skilled Nursing Facilities
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a premium for that amount. Historically,
at most 2 percent of plans bid above the
benchmark, and they contain roughly 1
percent of all plan enrollees. The CMS
threshold for what constitutes a
substantial number of small entities for
purposes of the RFA is 3 to 5 percent.
Since the number of plans bidding
above the benchmark is 2 percent, this
is not considered substantial for
purposes of the RFA.
The preceding analysis only shows
that MA plans, whether small or large,
are not affected by this proposed rule
since a significant number of them (all
but at most 2 percent) will have their
costs subsidized by the Government.
Therefore, we next examine in detail
each of the other stakeholders and
explain how they can bear cost. Each of
the following are providers (inpatient,
outpatient, or pharmacy) that furnish
plan-covered services to plan enrollees
for:
• Pharmacies and Drug Stores, NAICS
446110;
• 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;
• Hospitals, NAICS 622, including
General Medical and Surgical Hospitals,
Psychiatric and Substance Abuse
Hospitals, and Specialty Hospitals; and
• SNFs, NAICS 623110.
Whether these providers are
contracted or, in the case of PPOs and
PFFS MA plans, not contracted with the
MA plan, their aggregate payment for
services is the sum of the enrollee cost
sharing and plan payments.
• For non-contracted providers,
§ 422.214 and sections 1852(k)(1) and
1866(a)(1)(O) of the Act require that a
non-contracted provider that furnishes
covered services to an MA enrollee
accept payment that is at least what the
provider would have been paid had the
services been furnished to a Medicare
FFS beneficiary.
• For contracted providers, § 422.520
requires that the payment is governed
by a mutually agreed upon contract
between the provider and the plan. CMS
is prohibited from requiring MA plans
to contract with a particular health care
provider or to use a particular price
structure for payment by section
1854(a)(6)(B)(iii) of the Act.
Consequently, for providers, there is
no additional cost burden above the
already existing burden in Traditional
Medicare. In other words, the provisions
of this proposed rule do not create a
significant burden for providers.
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Based on the previous discussion, the
Secretary certifies that this proposed
rule will not have a significant impact
on a substantial number of small
entities.
There are certain indirect
consequences of these provisions which
also create impact. We have already
explained that at least 98 percent of the
plans bid below the benchmark. Thus,
their estimated costs for the coming year
are fully paid by the Federal
Government. However, the government
additionally pays the plan an MA
‘‘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 or other
supplemental benefits, or to lower the
Part B or Part D premiums for enrollees.
(Supplemental benefits may also be paid
by enrollee premiums to the extent that
the MA rebate is not sufficient to cover
those costs.) However, as noted
previously, the number of MA plans
bidding above the benchmark to whom
this burden applies does not meet the
RFA criteria of a significant number of
plans.
It is possible that if the provisions of
this proposed rule would otherwise
cause MA plan bids to increase, plans
will reduce their profit margins, rather
than substantially change their benefit
package. This may be in part due to
market forces; a plan lowering
supplemental benefits may lose its
enrollees to competing plans that offer
these supplemental benefits. Thus, it
may, in certain cases, be advantageous
for a plan to reduce profit margins,
rather than reduce supplemental
benefits. Most likely an increase in bids
would result in a combination of
reduction in supplemental benefits and
reduction in profit margins (not 100
percent one or the other). Part of the
challenge in pinpointing the effects of
an increase in bids is that there are
many other factors combining with the
effects of proposed and final rules,
making it effectively impossible to
determine whether a particular policy
had a long-term effect on supplemental
benefits.
We also note that we do not have
definitive data on this. Plans do not
report to CMS the strategies behind their
bids. More specifically, when plans do
reduce supplemental benefits, we have
no way of knowing the cause for this
reduction, whether it be new provisions,
market forces, or other causes.
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D. Anticipated Effects
Many provisions of this proposed rule
have negligible impact either because
they are technical provisions,
clarifications, or are provisions that
codify existing guidance. Other
provisions have an impact that cannot
be quantified. Throughout the preamble,
we have noted when we estimated that
provisions have no impact either
because they are codifying already
existing practices, or, for example,
because contractors for CMS have
asserted that changes work within their
current contract without the need for
additional compensation. Additionally,
this Regulatory Impact Statement
discusses several provisions with either
zero impact or impact that cannot be
quantified. The remaining provisions’
effects are estimated in section XXX of
this proposed rule and in this RIA.
Where appropriate, when a group of
provisions have both paperwork and
non-paperwork impact, this Regulatory
Impact Statement cross-references
impacts from section XXX of this
proposed rule in order to arrive at total
impact.
1. Effects of Expanding Permissible Data
Use and Data Disclosure for MA
Encounter Data (§ 422.310)
In section III.H. of this proposed rule,
we discussed two proposals to improve
access to MA encounter data for certain
purposes. We noted that our current
regulatory language limits CMS’s ability
to use and disclose MA encounter data
for activities in support of
administration or evaluation of the
Medicaid program, including care
coordination. Further, the regulation
delays when CMS may share MA
encounter data to State Medicaid
agencies for care coordination and
quality review and improvement
activities for the Medicaid program,
particularly with regard to dually
eligible individuals. Our proposals to
improve access to MA data include the
following:
• Adding ‘‘and Medicaid programs’’
to the current MA risk adjustment data
use purposes codified at
§ 422.310(f)(1)(vi) and (vii).
• Adding a new § 422.310(f)(3)(v) to
allow for risk adjustment data to be
released prior to reconciliation if the
data will be released to State Medicaid
agencies for the purpose of coordinating
care for dually eligible individuals.
Together, these proposals aim to
clarify and broaden the allowable data
uses for CMS and external entities (for
data disclosed in accordance with
§ 422.310(f)(2) and (3)). These proposals
do not change the external entities
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allowed to request MA encounter data
from CMS.
As discussed in sections X and III.H.,
these proposed provisions would allow
external entities to voluntarily request
MA encounter data for allowable data
uses to support the Medicare program,
Medicaid program, and Medicare and
Medicaid combined purposes. There is
one area where this provision could
impact the burden to CMS: CMS
reviewing and fulfilling new MA
encounter data requests. However, in
the FY 2015 2015 Hospital Inpatient
Prospective Payment System (IPPS)/
Long-term Care Hospital Prospective
Payment System (LTCH PPS) final rule,
when we initially established CMS
disclosure of MA encounter data, we
explained that we had determined that
‘‘there are not any economically
significant effects of the proposed
provisions’’ (79 FR 50445). The same
applies for the proposed refinements to
the approved data uses and the data
disclosure in this proposed rule.
2. Increasing the Percentage of Dually
Eligible Managed Care Enrollees Who
Receive Medicare and Medicaid
Services From the Same Organization
(§§ 422.503, 422.504, 422.514, 422.530,
and 423.38)
We discussed collection of
information burden associated with this
provision in section X.B.11 of this
proposed rule. In this section, we
describe the impacts of our proposed
change to the dual/LIS SEP, new
integrated care SEP, and contract
limitations for non-integrated MA–PD
plans.
These proposals would impact dually
eligible and other LIS eligible
individuals that currently use the
quarterly dual/LIS SEP to change their
enrollment in MA–PD plans. We are
proposing to change the quarterly dual/
LIS SEP to a one-time-per month SEP
for dually eligible individuals and other
LIS eligible individuals to elect a
standalone PDP. The proposal would
allow individuals to switch PDPs or
leave their MA–PD plans for Traditional
Medicare (with a standalone PDP) in
any month. The proposed dual/LIS SEP
would no longer permit enrollment into
MA–PD plans or changes between MA–
PD plans (although such options would
remain available through other
enrollment periods and SEPs). In
addition, we propose a new integrated
care SEP that would allow enrollment in
any month into a FIDE SNP, HIDE SNP,
or AIP for dually eligible individuals
who meet the qualifications of such
plans.
Proposed §§ 422.504(a)(20) and
422.514(h) would establish a new
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requirement for an MA organization,
that, beginning in plan year 2027, when
an MA organization, its parent
organization, or an entity that shares a
corporate parent organization with the
MA organization, also contracts with a
State as a Medicaid MCO that enrolls
dually eligible individuals in the same
service area, that the MA organization’s
D–SNPs must limit new enrollment to
individuals enrolled in (or in the
process of enrolling in) the D–SNP’s
aligned Medicaid MCO. Additionally,
an MA organization (or its parent
organization or another MA
organization with the same parent
organization) in this situation would
only be able to offer one D–SNP for fullbenefit dually eligible individuals in the
same service area as that MA
organization’s affiliated Medicaid MCO
(with limited exceptions as described in
section VIII.C. of this proposed rule).
Further, beginning in plan year 2030,
such D–SNPs must only enroll (or
continue to enroll) individuals enrolled
in (or in the process of enrolling in) the
affiliated Medicaid MCO.
Full-benefit dually eligible
individuals enrolled in a D–SNP that
consolidate due to our proposals at
§§ 422.504(a)(20) and 422.514(h) would
be moved into a new plan. The
impacted enrollees would receive
materials about the plan consolidation
and materials associated with the new
plan. We believe the plan benefit
packages of the plans required to
consolidate to be similar if not the same
and do not expect impact to enrollees.
We expect there to be an enrollment
shift from MA–PDs into FIDE SNPs,
HIDE SNPs, or AIPs over time as more
D–SNPs align with Medicaid MCOs.
Starting in plan year 2027, we expect
new D–SNP enrollment to be limited
and then we expect integrated D–SNP
enrollment to accelerate in 2030 when
D–SNPs under a parent organization
with an affiliated Medicaid MCO would
need to disenroll individuals who are
not enrolled in both the D–SNP and
affiliated MCO.
We examined contract year 2023 bid
data for D–SNPs that enroll beneficiaries
in States that also use Medicaid
managed care to cover some or all
benefits for dually eligible individuals.
In general, the data shows that the more
integrated D–SNPs have higher per
capita MA rebates than those in less
integrated plans. MA rebates are used to
reduce beneficiary cost sharing, lower
beneficiary premiums, and provide
additional supplemental benefits. MA
rebates are calculated by multiplying
the difference in the risk-adjusted
benchmarks and the risk-adjusted bids
by a percentage called the rebate
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percentage. The Federal Government
retains the complement of the rebate
percentage (or 1¥rebate percentage)
multiplied by the difference in the riskadjusted benchmarks and bids. The
(risk-adjusted) bid-to-benchmark ratios,
in general, are smaller for the more
integrated plans versus the less
integrated plans. This suggests that the
more integrated D–SNPs can provide
Traditional Medicare benefits
(represented by the risk adjusted bid) at
a lower or more efficient level than the
less integrated D–SNPs. We have
assumed that this provision’s
requirement for greater alignment
between the D–SNP and the affiliated
Medicaid MCO will lead to greater
health benefit efficiencies and incur
Federal Government savings since the
Federal Government retains the
complement of the difference between
the submitted risk adjusted bids and
benchmarks.
In calculating our estimates, we
assumed savings would begin in 2027
when new D–SNPs enrollment would be
limited. We expect integrated D–SNP
enrollment and related savings to
accelerate in 2030 when D–SNPs under
a parent organization participating in
Medicaid managed care would need to
disenroll individuals who are not
enrolled in both the D–SNP and
affiliated Medicaid MCO under the
same parent organization. We estimated
that the other elements of this proposal
(including the proposed changes to the
SEP) would have a negligible impact.
To develop the savings projections,
we calculated the bid-to-benchmark
ratios for the integrated D–SNPs based
on the calendar year 2023 plan data and
applied them to the coordination-only
D–SNPs that we assume would convert
to aligned D–SNPs by 2030. We
assumed that a large percentage of the
coordination-only D–SNP enrollment
would convert to integrated D–SNPs by
2030. For trending purposes, we used
2023 bid data and 2023 enrollment data
as the starting point and trended those
data points by values found in the 2023
Medicare Trustees Report. We
calculated gross costs (savings are
represented by negative dollar amounts)
by multiplying the per member per
month expenditure differences by the
enrollment that is projected to switch to
aligned plans. Then, we calculated the
net cost by multiplying the gross costs
by the net of Part B premium amount
which averages between 85.1 percent
and 84.6 percent from 2025–2034. This
yields an overall annual estimate of net
Part C costs ranging from ¥$6 million
in contract year 2027 to ¥$207 million
in contract year 2034.
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TABLE K-2: ESTIMATED PART C COSTS (SAVINGS) PER YEAR($
MILLIONS) TO THE MEDICARE TRUST FUND FOR PROPOSALS TO INCREASE
THE PERCENTAGE OF DUALLY ELIGIBLE MANAGED CARE ENROLLEES WHO
RECEIVE l\iIEDICARE AND MEDICAID SERVICES FROM THE SAME
ORGANIZATION
Contmct Yea,·
BID+ RF.BATE P~IPM Difference
PROJECTED CO D-SNP
Enrollment Switchers to Aligned
Medicare and Medicaid MCOs
Gross Cost ($ millions):
Net of Part B Premilllll:
Net Cost($ millions):
2025
2026
-
-
85.1%
-
85.0%
-
We performed a similar comparison of
contract year 2023 bids for Part D on the
same MA plans and their associated
population. The data also suggests that
the more integrated D–SNPs had lower
combined bid and reinsurance amounts
for contract year 2023. As a result, we
also projected that there would be
efficiencies when D–SNPs aligned more
with the Medicaid MCOs. The observed
2023 difference (efficiency) in the
combined bid and reinsurance amounts
is projected with the corresponding D–
SNP trend assumed in the 2023
Medicare Trustees’ Report (not shown
2027
(13.10)
2028
(13.16)
2029
(13.02)
2030
(12.89)
2031
(12.93)
2032
(13.04)
81,567
119,630
1,303,863
1,334.476
(7)
(13)
84.9%
(6)
84.8%
(11)
(19)
84.8%
(16)
(202)
84.7%
(171)
(207)
84.7'':i,
(175)
41.578
in that report). The Part D gross savings
are the product of the efficiency and the
associated switchers from Table K–3.
Since the premiums for the Medicaid
beneficiaries are subsidized, there
would be no premium offset. As a
result, the net savings would be the
same as the gross savings. We estimated
the net costs would range from ¥$7
million in contract year 2027 to ¥$286
million in contract year 2034.
We also have reviewed the impact to
the Medicaid program and have
concluded that the Medicaid impacts
would be negligible. The majority of
States have a ‘‘lesser-of’’ policy, under
2033
(13.92)
2034
(14.51)
1,361,197
1,385,109
1,405,6%
(213)
84.6%
(180)
(231)
84.6%
(196)
(245)
84.6%
(207)
Total
(1.136)
(%1)
which the State caps its payment of
Medicare cost sharing so that the sum of
Medicare payment and cost-sharing
does not exceed the Medicaid rate for a
particular service. Under this proposed
policy, the Medicare payment and the
cost sharing are not expected to increase
resulting in non-significant impacts to
Medicaid payments. For Part D, given
that the Medicaid liability is limited to
the beneficiary cost sharing and that the
vast majority of dually eligible
individuals qualify for low-income cost
sharing, we anticipate no significant
impacts to Medicaid costs.
TABLE K-3: ESTIMATED PART D COSTS (SA VTNGS) PER YEAR($ MILLIONS) TO
THE MEDICARE TRUST FUND FOR PROPOSALS TO INCREASE THE
PERCENTAGE OF DUALLY ELIGIBLE MANAGED CARE ENROLLEES WHO
RECEIVE MEDICARE AND MEDICAID SERVICES FROM THE SAME
ORGANIZATION
2026
2025
0
-
0
-
In addition to the estimated savings
from limiting enrollment into certain D–
SNPs starting in plan year 2027, these
provisions require updates to a variety
of CMS manual systems.
The proposed change to § 423.38(c)(4)
and the proposed provision at
§ 423.38(c)(35) would create burden for
CMS to update MA–PD plan manual
chapters, the plan communication user
guide (PCUG), and model enrollment
notices. Additionally, the MARx system
would require coding changes for the
proposed amended dual/LIS SEP at
§ 423.38(c)(4) and proposed integrated
care SEP at § 423.38(c)(35). The CMS
call center 1–800–MEDICARE would
need training on the proposed SEPs to
be able to identify beneficiaries eligible
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2027
2028
2029
2030
2031
2032
2033
2034
(14.09)
(14.25)
(14.67)
(15.00)
(15.30)
(15.87)
(16.47)
(16.97)
(7)
0
(14)
0
(14)
(21)
0
(21)
(235)
0
(235)
(245)
0
(245)
(259)
0
(259)
(274)
0
(274)
(286)
0
(286)
(7)
for the SEPs. The updates and changes
would require two GS–13 staff 20 hours
to complete the necessary updates. We
estimate the burden for plan year 2025,
would be at 40 hours (2 GS–13 * 20 hrs)
at a cost of $2,433 (40 hrs * $60.83) for
two GS–13 staff to update manual
chapters, the PCUG, enrollment notices,
and complete coding for MARx. This is
a one-time cost that would not create
new burden in subsequent years.
The new provision at
§ 422.514(h)(3)(ii) would allow plans to
continue operating a PPO and HMO in
the same service area but not allow new
enrollments of full-benefit dually
eligible individuals into the plan (or
plans) that are not aligned with the
affiliated MCO as described
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Total
(1 341)
0
(1,341)
§ 422.514(h)(1). This provision would
not create new burden for CMS since
CMS would use its existing process to
suppress these plans from Medicare
Plan Finder.
The new provision at
§ 422.530(c)(4)(iii) allowing a crosswalk
exception for plans consolidating their
D–SNPs would create burden for CMS.
The coding to create the crosswalk
exception would require one GS–13 10
hours to complete the necessary
updates. The burden for plan year 2025,
is estimated at 10 hours (1 GS–13 * 10
hrs) at a cost of $608.30 (10 hrs *
$60.83) for a GS–13 to complete coding
for crosswalk exceptions. This is a onetime cost that would not create new
burden in subsequent years. The burden
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Net Cost($ millions):
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associated with crosswalks and plan
consolidation could create additional
burden such as breaking plans into
different PBPs or having fewer PBPs to
manage in the future. We cannot
estimate these actions and associated
burden but generally believe they would
cancel each other out.
3. Effects of Additional Changes to an
Approved Formulary—Biosimilar
Biological Product Maintenance
Changes and Timing of Substitutions
(§§ 423.4, 423.100, and 423.120(e)(2))
We do not estimate any impact on the
Medicare Trust Fund as a result of the
proposal to treat substitutions of
biosimilar biological products other
than interchangeable biological
products as a maintenance change. New
biosimilar biological products are
approved or licensed by the FDA and
become available on the market at
irregular intervals. Therefore, with
respect to this provision, we cannot
predict when new biosimilar biological
products will enter the market or to
what extent Part D sponsors will make
formulary substitutions as a result.
Several biosimilar biological products
entered the market in 2023,204 but CMS
has not seen a corresponding influx of
non-maintenance negative change
requests from Part D sponsors. It is
unclear whether Part D sponsors are not
requesting midyear formulary changes
due to concerns about patient and
provider hesitancy towards biosimilar
biological products, or if the current
policy that treats such formulary
changes as non-maintenance changes
disincentivizes Part D sponsors from
making midyear formulary changes that
will not apply to all enrollees currently
taking the reference product. The
introduction of biosimilar biological
products to the market is relatively
recent compared to generic small
molecule drugs. We believe there is a
potential for savings to the Medicare
Trust Fund in the long term as
acceptance of biosimilar biological
products grows and increased
competition drives down costs;
however, a number cannot be estimated
right now.
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4. Mid-Year Notice of Unused
Supplemental Benefits
This proposal would require plans to
notify enrollees about any supplemental
benefit they have not used during the
first half-year of the contract year. We
lack data to quantify the effects of this
204 Billingsly A. Is There a Biosimilar for Humira?
Yes, Here Are 9 Humira Biosimilars Launching in
2023. GoodRxHealth. July 12, 2023. Available from:
https://www.goodrx.com/humira/biosimilars.
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provision. Therefore, we present a
qualitative analysis below. The
provision has 3 impacts on plans and
the MA program.
One impact is the burden to plans to
notify enrollees. This burden has been
quantified in the Collection of
Information in section X. of this
proposed rule. The burden consists of:
(1) a system update to identify
supplemental benefits not utilized by
enrollees; and (2) the burden to notify
enrollees.
The second impact relates to the
intent of the provision, which is to
increase utilization of benefits when
appropriate. This would initially
involve a cost to both enrollees for their
share of cost sharing, and to the plans
for providing the benefit. In assessing
the impact, there are several dimensions
of impact for which we lack data: (1)
how many plans offer these
supplemental benefits; (2) which
supplemental benefits are not being
utilized at all by some enrollees; (3) for
each plan offering supplemental
benefits, how many enrollees do and do
not utilize these benefits; (4) how many
more enrollees would utilize these
benefits as a result of the notification;
and (5) what is the range and
distribution of the cost to provide these
supplemental benefits.
The third impact relates to savings
expected from increased utilization.
Normally, such savings are considered
consequences of a provision and not
typically analyzed in an RIA. We use
dental and gym benefits to show several
complications and possibilities in this
analysis.
Enrollees who use their preventive
supplemental dental benefits may
uncover problems early, thus preventing
unnecessary complications. For
example, the filling of cavities may
prevent a costlier root canal later. Also
note that the filling may happen in one
plan while the costlier root canal that
was prevented refers to a possible event
several years later possibly in another
plan (or out of pocket for the enrollee).
An interesting subtlety of this
example is that enrollees who have
preventive dental checkups may do so
annually or semi-annually. The effect of
the notification might be to increase
annual checkups to semi-annual
checkups. It is harder to quantify the
savings from such a change in
frequency.
From discussions with plans, we
know that enrollees may incur the cost
of a gym membership benefit without
utilizing it. The intent of the provision
would be to increase gym utilization. In
the case of gym benefits the savings
from increased prevention is
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challenging to analyze since different
frequencies of gym attendance have
different effects on health. An enrollee,
for example, who decides to visit the
gym only once because of the
notification might not have any
significant health benefits generating
savings; even enrollees who switch to
monthly visits may not experience
savings. The savings on enrollees who
decide to continue gym visit on a
regular basis might arise from varied
consequences since increased exercise
has the potential to ‘‘reduce risk of
chronic conditions like obesity, type 2
diabetes, heart disease, many types of
cancer, depression and anxiety, and
dementia.’’ 205
In summary, this is the type of
provision that has a savings impact that
can be analyzed only after several years
of experience with the provision.
We solicit public comment on the
economic cost and benefits of this
proposal.
5. Agent Broker Compensation
(§ 422.2274)
In this rule we are proposing to: (1)
generally prohibit contract terms
between MA organizations and agents,
brokers, or other TMPOs that may
interfere with the agent’s or broker’s
ability to objectively assess and
recommend the plan which best fits a
beneficiary’s health care needs; (2) set a
single agent and broker compensation
rate for all plans, while revising the
scope of what is considered
‘‘compensation;’’ and (3) eliminate the
regulatory framework which currently
allows for separate payment to agents
and brokers for administrative services.
We are also proposing to make
conforming edits to the agent broker
compensation rules at § 423.2274.
The proposed changes to the MA and
Part D agent broker compensation
regulations at 42 CFR 422.2274 and
423.2274 have potential economic
effects on agents/brokers, plans, and
Medicare beneficiaries. Since we lack
the data to quantify these effects, we
discuss them qualitatively. Agents and
brokers may lose certain excess
payments that would be prohibited
under the proposed regulation; on the
other hand, they would receive an
increased FMV calculation for
compensation per enrollment. A typical
agent or broker might work on behalf of
many insurance companies and their
associated plans, including commercial,
Medicare, Medicaid, Medigap etc. A
reduction in net payment for Medicare
Advantage enrollments may cause
205 https://www.cdc.gov/chronicdisease/
resources/infographic/physical-activity.htm#.
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agents or brokers to reapportion their
time and focus instead on other areas of
the industry, resulting in decreased MA
plan enrollment; however, we believe
this impact would swiftly be offset by
increased marketing and other
adjustments made by the MA plans, as
discussed below.
Another effect on agents and brokers
from this provision is the requirement of
uniform payment to agents and brokers
and the resulting increased
transparency. More specifically, agents
and brokers who might have been
receiving excess payments for targeting
certain plans will no longer be
financially incentivized to target these
plans resulting in a more equitable
distribution of efforts.
Plans are already spending a standard
amount of $601 per new enrollee on
agents and brokers. We do not believe
the increased compensations of $31
extra (about a 5 percent increase) per
agent per enrollee would have any
significant financial impact on plans
given the proposal to prohibit excess
payments in the form of administrative
payments.
On the other hand, if some agents and
brokers withdraw or lower efforts for
Medicare Advantage and Part D plans,
resulting in possibly lower enrollment,
plans may increase money allocated to
outreach and advertising. Overall, we do
not expect a decrease in enrollment
because of the agent and broker
compensation provisions since plans
meticulously monitor enrollment trends
and possess a variety of vehicles to
counteract any significant changes.
Indeed, in assessing the impact of the
agent broker compensation provision it
is important to emphasize that people
join plans because of outreach from a
wide variety of sources and therefore no
single source is critical.
We solicit public comment on the
economic cost and benefits of this
proposal.
6. Enhancing Enrollees’ Right To Appeal
an MA Plan’s Decision To Terminate
Coverage for Non-Hospital Provider
Services (§ 422.626)
In § 422.626, we are proposing to (1)
require the QIO instead of the MA plan,
to review untimely fast-track appeals of
an MA plan’s decision to terminate
services in an HHA, CORF, or SNF; and
(2) fully eliminate the provision
requiring the forfeiture of an enrollee’s
right to appeal a termination of services
decision when they leave the facility or
end home health, CORF, or home-based
hospice services before the proposed
terminate date.
Currently, there is no data collected
on the volume of fast-track appeals
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conducted by MA plans for untimely
requests. The QIO conducts appeals for
FFS fast-track appeals for untimely
requests but does not formally collect
data on appeals based on untimely
requests from MA enrollees. Thus, the
following estimates are speculative
given the lack of precise data on the
number of the fast-track appeals for
untimely FFS requests.
Anecdotal data from the QIOs
conducting these fast-track appeals
indicates that approximately 2.5 percent
of all fee-for-service (FFS) fast-track
appeal requests are untimely. In CY
2021 (most recent year available), there
were 190,031 MA fast-track appeals to
the QIO. Thus, we estimate that
approximately 4,751 fast track appeals
will be shifted from MA plans to the
QIO (0.025 × 190,031).
The shift of these untimely appeals
from the QIOs to the MA plans will
result in an increased burden. There is
an estimated per case cost for QIOs to
conduct these appeals (per the Financial
Information and Vouchering System
(FIVS) from 5/1/2019–7/31/2023), while
MA plans are not specifically
reimbursed for this activity. The average
QIO appeal of this type takes 1.69 hours
at $85.18/hr.
In aggregate we estimate an annual
burden of 8,029 hours (4,751 responses
* 1.69 hr/response) at a cost of $683,910
(8,029 hr × $85.18/hr).
We are unable to estimate how many
new QIO reviews will be conducted
under the proposed provision at
§ 422.626(a)(3) to eliminate the
provision requiring the forfeiture of an
enrollee’s right to appeal a termination
of services decision when they leave the
skilled nursing facility or end home
health, CORF, or home-based hospice
services before the proposed
termination date. No entity tracks how
many appeals are not conducted
because the enrollee stopped the
services at issue before the last day of
coverage. Further, because this
provision has never existed for FFS, we
have no basis from which to derive an
estimate.
E. Alternatives Considered
In this section, CMS includes
discussions of alternatives considered.
Several provisions of this proposed rule
reflect a codification of existing policy
where we have evidence, as discussed
in the appropriate preamble sections,
that the codification of this existing
policy would not affect compliance. In
such cases, the preamble typically
discusses the effectiveness metrics of
these provisions for public health. Also,
in these cases, traditional categories of
alternative analysis such as different
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compliance dates, different enforcement
methods, different levels of stringency,
as outlined in section C of OMB’s
Circular A–4, are not fully relevant
since the provision is already being
complied with adequately.
Consequently, alternative analysis is not
provided for these provisions.
1. Contracting Standards for Dual
Eligible Special Needs Plan Look-Alikes
(§ 422.514)
We are proposing to lower the
threshold for D–SNP look-alikes from 80
percent to 60 percent over a 2-year
period. We considered an alternative
proposal to lower the D–SNP look-alike
threshold to 60 percent in 1 year,
allowing an earlier phase-out of these
non-SNP MA plans. But we are
proposing the more incremental
approach to minimize disruptions to
dually eligible individuals and allow
plans and CMS more time to
operationalize these transitions.
We are considering and soliciting
comment on an alternative to our
proposal that would eliminate the
proposed 70 percent threshold for plan
year 2025 but would involve additional
conditions and changes related to the
transition authority. Specifically, this
alternative would—
• Apply the 60 percent threshold
beginning in plan year 2026;
• Permit use of the transition
authority into non-SNP MA plans (as
currently permitted under § 422.514(e))
for plan year 2025; and
• Limit use of transition authority
under § 422.514(e) to transition D–SNP
look-alike enrollees into D–SNPs for
plan year 2026 and subsequent plan
years.
Relative to our proposal, this
alternative would give plans with dually
eligible individual enrollment between
70 and 80 percent of total enrollment
based on January 2024 enrollment data
one additional year to apply for a new
D–SNP or service area expansion to an
existing D–SNP, such that these plans
could transition enrollees into a D–SNP
for plan year 2026. The alternative
would balance the additional year using
the existing 80 percent enrollment
threshold to identify prohibited D–SNP
look-alikes with an earlier limitation on
the § 422.514(e) transition authority to
enrollees transitioning into non-SNPs.
We solicit comment on whether this
alternative is a better balance of the
goals of our policy to prohibit
circumvention of the requirements for
D–SNPs and to encourage and
incentivize enrollment in integrated
care plans.
Among the factors we would consider
in adopting the alternative instead of
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our proposal is the extent to which
plans with 70 percent or more dually
eligible enrollment in plan year 2024
expect to be able to establish a D–SNP
in the same service area as the D–SNP
look-alike if given an additional year
(that is, 2026) to transition enrollees.
Based on 2023 plan year data,
approximately two-thirds of the MA
organizations with non-SNP MA plans
with between 70 and 80 percent dually
eligible individuals already have a D–
SNP under the same MA organization
with the vast majority of those D–SNPs
having a service area that covers the
service area as the non-SNP MA plan.
The other approximately one-third of
the MA organizations with non-SNP MA
plans with between 70 and 80 percent
dually eligible individuals do not have
a D–SNP in the same service area in
plan year 2023. If given an additional
year, these MA organizations would
have more time in which to establish
D–SNPs in the same service areas as
non-SNP MA plans and transition the
enrollees into a D–SNP.
F. Accounting Statement and Table
As required by OMB Circular A–4
(available at https://
obamawhitehouse.archives.gov/omb/
circulars_a004_a-4/) in Table K–4, we
have prepared an accounting statement
showing the costs and transfers
associated with the provisions of this
proposed rule for calendar years 2025
through 2034. Table K4 is based on
Tables K–5a and Table K5-b which list
savings and costs by provision and year.
Tables K4, K5a and K5b with costs
listed as positive numbers and savings
listed as positive numbers. As can be
seen, the net annualized savings of this
proposed rule is between $150 and $200
million per year. The net savings reflect
a mixture of several provisions that save
and cost. Minor seeming discrepancies
in totals in Tables K4, K5a, and K5b
reflect use of underlying spreadsheets,
rather than intermediate rounded
amounts. A breakdown of these costs of
this proposed rule by provision may be
found in Tables K5a and K5b.
TABLE K4: ACCOUNTING TABLE ($ MILLIONS)*
Item
Annualized at
3%
Annualized
at7%
Period
Net Annualized
Monetized Savings
176.3
155.0
CYs 2025-2034
Annualized
Monetized Savings
216.5
195.2
CYs 2025-2034
Annualized
Monetized Cost
40.2
40.2
CYs 2025-2034
Who is affected
MA Organizations, Part D Sponsors,
Contractors for the Federal Government,
MA Enrollees Agents and Brokers,
MA Organizations, Part D Sponsors,
Contractors for the Federal Government,
MA Enrollees, Agents and Brokers,
MA Organizations, Part D Sponsors,
Contractors for the Federal Government,
MA Enrollees, Agents and Brokers,
..
* The savmgs and cost are expressed with positive numbers. For example, at 3%, this proposed rule armually saves
$216.5 million but costs $40.2 million resulting in a net savings of $176.3 million.
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20:26 Nov 14, 2023
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savings and negative numbers reflect
cost). The provisions increasing
enrollment for D–SNPS Part C and Part
D—effect the Medicare Trust Fund. In
these rows, positive numbers reflect
reduced dollar spending to the Trust
Fund, that is savings. The savings (and
costs) in these tables are true costs and
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savings reflecting increases or decreases
in consumption of services and goods.
Tables K5a and K5b combine related
provisions. For example, all provisions
related to the utilization management
committee in the COI summary table are
combined into one-line item in the RIA.
BILLING CODE 4120–01–P
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The following Tables K5a and K5b
summarize costs, and savings by
provision and year, and forms a basis for
the accounting Table K4. In Tables K5a
and K5b, costs and savings are
expressed as positive numbers (except
in the row with header ‘‘Aggregate
savings’’ where positive numbers reflect
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Total Savings
Total Costs
Aggregate Total
Savings of the Medicare Trust Fnnd
Increased enrollment in U-SNPs, Part C
Increased enrollment in D-SNPs, Part D
Increased enrollment in D-SNPs, Paverwork
Dlv!P
SSBCI
Increased Utilization of Supplementary Benefits
Ulvl Committee
Enhanced Appeal Rights
Agent Broker
D-SNP Look-Alikes
Notice of Availability
*Table K5a is continued in Table K5b.
2025
Savin!!S
3.0
2025
Costs
2025
Transfers
2026
Savin!!S
3.0
41.8
(38.7)
2026
Costs
2026
Transfers
39.9
(36.9)
3.0
7.0
1.8
0.9
0.7
31.0
0.1
0.1
2027
Costs
2028
Savin!!S
27.9
39.9
2028
Costs
2029
Savin2s
40.0
39.9
(12.0)
0.0
5.5
7.0
10.9
13.9
15.9
21.1
3.0
3.0
2029
Costs
39.9
(24.3)
-
0.2
3.0
2027
Savin!!S
15.6
3.0
6.8
1.4
6.8
1.4
6.8
1.4
6.8
1.4
0.7
31.0
0.1
0.7
31.0
0.1
0.7
31.0
0.1
0.7
31.0
0.1
15NOP2
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20:26 Nov 14, 2023
TABLE K5a: SAVINGS AND COSTS (millions $) BY PROVISION AND YEAR (YEARS 2025 - 2029) *
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Total Savings
Total Costs
Aggregate Total
Savings of the Medicare Trust Fund
Increased Enrollment in D-S"\/Ps, Part C
Increased Enrollment in D-S"\/Ps, Part D
Increased Enrollment in D-SNPs, Panerwork
DMP
SSBCI
Increased Utilization of SuppJementarv Benefits
UM Committee
Enhanced Appeal Rights
Agent Broker
D-SNP Look-Alikes
Notice of Availabilitv
*Continued from Table K5a.
2030
2030
2031
2031
2032
2032
2033
2033
2034
2034
Savin!!S
Costs
Savin!!S
Costs
Savin!!S
Costs
Savin!!S
Costs
Savin!!S
Costs
408.7
423.4
39.9
442.5
39.9
472.4
39.9
496.3
39.9
39.9
368.7
383.5
402.5
432.5
456.3
170.8
234.8
175.3
245.0
180.3
259.2
195.7
273.7
206.9
286.3
Raw 10-Year
Totals
2,329.80
401.3
1,931.6
3.0
3.0
3.0
3.0
3.0
6.8
1.4
6.8
1.4
6.8
1.4
6.8
1.4
6.8
1.4
0.7
31.0
0.1
0.7
31.0
0.1
0.7
31.0
0.1
0.7
31.0
0.1
0.7
31.0
0.1
961.4
1,340.9
0.2
30.5
68.6
14.0
0.9
6.8
310.0
0.6
0.1
NOTES:
15NOP2
I. Except for the row with "aggregate total", positive numbers in the cost colunms reflect costs while positive numbers in the savings colurun reflect savings. The aggregate colurun subtracts the costs
from the savings and therefore lists the difference as a negative number when the aggregate effect is a cost and as a positive when it is a savings.
2. Two of the line items effect the Trust Fund "Increased Enrollment in D-SNPs, Part C", and "Increased Enrollment in D-SNPs, Part D". Over 10 years they save, $961, and $1,341 million respectively.
3. When the aggregate ofline items for a provision is below $50,000, for example the paperwork burden of$4,929 associated with the provision for network adequacy of behavioral health, or the cost to
CMS staff to perform certain tasks listed in this section, they were not included in the table (since they do not have an effect on numbers). However, when the aggregate of several provisions rounded to
at least $0.1 million it was included.
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20:26 Nov 14, 2023
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TABLE K5b: SAVINGS AND COSTS (millions$) BY PROVISION AND YEAR (YEARS 2030- 2034)*
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Proposed Rules
G. Conclusion
In aggregate this proposed rule saves
significantly. Two provisions reduce
spending by the Medicare Trust Fund:
(1) the effect on Part C plans from the
provisions designed to increase
enrollment D–SNPs; and (2) the effect
on Part D plans from these D–SNP
provisions. Over a 10-year period they
reduce spending of the Medicare Trust
Fund of $28, $961, and $1,341 million
respectively. The provisions for the
Drug Management Program should
reduce paperwork burden by $3 million
annually saving $30 million over 10
years. The agent broker provision is
expected to cost $31 million and $310
million over 10 years.
XII. Response to Comments
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, 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.
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42 CFR Part 423
1. The authority citation for part 417
continues to read as follows:
■
Authority: 42 U.S.C. 1302 and 1395hh, and
300e, 300e–5, and 300e–9, and 31 U.S.C.
9701.
Subpart L—Medicare Contract
Requirements
2. Section 417.472 is amended by
adding paragraph (l) to read as follows:
■
§ 417.472
Basic contract requirements.
*
*
*
*
*
(l) Resolution of complaints in the
complaints tracking module. The HMO
or CMP must comply with requirements
of §§ 422.125 and 422.504(a)(15) of this
chapter to, through the CMS complaints
tracking module as defined in
§ 422.125(a), address and resolve
complaints received by CMS against the
HMO or CMP within the required
timeframes. References to the MA
organization or MA plan in those
regulations shall be read as references to
the HMO or CMP.
*
*
*
*
*
PART 422—MEDICARE ADVANTAGE
PROGRAM
■
Authority: 42 U.S.C. 1302, 1306, 1395w–21
through 1395w–28, and 1395hh.
4. Section 422.2 is amended by
revising the definition of ‘‘Basic
benefits’’ to read as follows:
■
42 CFR Part 460
Aged, Citizenship and naturalization,
Civil rights, Health, Health care, Health
records, Individuals with disabilities,
Medicaid, Medicare, Religious
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PART 417—HEALTH MAINTENANCE
ORGANIZATIONS, COMPETITIVE
MEDICAL PLANS, AND HEALTH CARE
PREPAYMENT PLANS
3. The authority citation for part 422
is revised to read as follows:
Administrative practice and
procedure, Health facilities, Health
maintenance organizations (HMO),
Incorporation by reference, Medicare,
Penalties, Privacy, Reporting and
recordkeeping requirements.
20:26 Nov 14, 2023
45 CFR Part 170
Computer technology, Health, Health
care, Health insurance, Health records,
Hospitals, Incorporation by reference,
Laboratories, Medicaid, Medicare,
Privacy, Public health, Reporting and
recordkeeping requirements, Security
measures.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services proposes to amend
42 CFR chapter IV and the Department
of Health and Human Services proposes
to amend 45 CFR part 170 as set forth
below:
Title 42
Because of the large number of public
comments that we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and, when we proceed
with a subsequent document, we will
respond to the comments in the
preamble to that document. In
accordance with requirements this
major rule has been reviewed by OMB.
Chiquita Brooks-LaSure,
Administrator of the Centers for
Medicare & Medicaid Services,
approved this document on October 24,
2023.
VerDate Sep<11>2014
discrimination, Reporting and
recordkeeping requirements, Sex
discrimination.
§ 422.2
Definitions.
*
*
*
*
*
Basic benefits means Part A and Part
B benefits except—
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78615
(1) Hospice services; and
(2) Beginning in 2021, organ
acquisitions for kidney transplants,
including costs covered under section
1881(d) of the Act.
*
*
*
*
*
■ 5. Section 422.52 is amended by:
■ a. Revising paragraph (b)(2);
■ b. Redesignating paragraph (f) as
paragraph (f) introductory text; and
■ c. Adding paragraph (f)(1) and
reserved paragraph (f)(2).
The revision and additions read as
follows:
§ 422.52 Eligibility to elect an MA plan for
special needs individuals.
*
*
*
*
*
(b) * * *
(2) Meet the eligibility requirements
for that specific SNP, including any
additional eligibility requirements
established in the State Medicaid
agency contract (as described at
§ 422.107(a)) for dual eligible special
needs plans; and
*
*
*
*
*
(f) * * *
(1) For enrollments into a SNP that
exclusively enrolls individuals that
have severe or disabling chronic
conditions (C–SNP), the organization
must contact the applicant’s current
physician to confirm that the applicant
has the qualifying condition(s). The
organization must obtain this
information in one of the following two
ways described in paragraph (f)(1)(i) or
(ii) of this section:
(i) Contact the physician or
physician’s office and obtain
verification of the condition(s) prior to
enrollment in a form and manner
authorized by CMS from the applicant’s
primary care provider or specialist
treating the qualifying condition(s).
(ii) Through an assessment with the
enrollee using a pre-enrollment
qualification assessment tool (PQAT)
where the assessment and the
information gathered are verified (as
described in paragraph (f)(1)(iii) of this
section) before the end of the first
month of enrollment in the C–SNP. Use
of a PQAT requires the following:
(A) The PQAT must do all of the
following in paragraphs (f)(1)(i)(A)(1)
through (4) of this section:
(1) Include clinically appropriate
questions relevant to the chronic
condition(s) on which the C–SNP
focuses.
(2) Gather sufficient reliable evidence
of having the applicable condition using
the applicant’s past medical history,
current signs or symptoms, and current
medications.
(3) Include the date and time of the
assessment completion if done face-to-
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face with the applicant, or the receipt
date if the C–SNP receives the
completed PQAT by mail or by
electronic means (if available).
(4) Include a signature line for and be
signed by a physician to confirm the
individual’s eligibility for C–SNP
enrollment.
(B) The C–SNP conducts a postenrollment confirmation of each
enrollee’s information and eligibility
using medical information (medical
history, current signs or symptoms,
diagnostic testing, and current
medications) provided by the enrollee’s
primary care physician or the specialist
treating the chronic condition.
(C) The C–SNP must include the
information gathered in the PQAT and
used in this verification process in its
records related to or about the enrollee
that are subject to the confidentiality
requirements in § 422.118.
(D)(1) The C–SNP tracks the total
number of enrollees and the number
and percent by condition whose postenrollment verification matches the preenrollment assessment.
(2) Data and supporting
documentation are made available upon
request by CMS.
(E) If the organization does not obtain
verification of the enrollees’ required
chronic condition(s) by the end of the
first month of enrollment in the C–SNP,
the organization must—
(1) Disenroll the enrollee as of the end
of the second month of enrollment; and
(2) Send the enrollee notice of the
disenrollment within the first 7 calendar
days of the second month of enrollment.
(F) The organization must maintain
the enrollment of the individual if
verification of the required condition(s)
is obtained at any point before the end
of the second month of enrollment.
(iii) To complete the PQAT, the C–
SNP is required to have the individual’s
current physician (primary care
physician or specialist treating the
qualifying condition) or a physician
employed or contracted by the plan
administer the PQAT directly with the
enrollee or provide confirmation (with
or without the presence of the enrollee)
that the information in the document
supports a determination that the
individual is eligible for the C–SNP. The
enrollee’s physician must sign the
completed PQAT.
(2) [Reserved]
■ 6. Section 422.60 is amended by
revising paragraph (a)(1) and adding
paragraphs (a)(3) and (h) to read as
follows:
§ 422.60
Election process.
(a) * * *
(1) Except for the limitations on
enrollment in an MA MSA plan
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20:26 Nov 14, 2023
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provided by § 422.62(d)(1) and except as
specified in paragraphs (a)(2) and (3) of
this section, each MA organization must
accept without restriction (except for an
MA RFB plan as provided by § 422.57)
individuals who are eligible to elect an
MA plan that the MA organization offers
and who elect an MA plan during initial
coverage election periods under
§ 422.62(a)(1), annual election periods
under § 422.62(a)(2), and under the
circumstances described in
§ 422.62(b)(1) through (4).
*
*
*
*
*
(3) Dual eligible special needs plans
must limit enrollments to those
individuals who meet the eligibility
requirements established in the State
Medicaid agency contract, as specified
at § 422.52(b)(2).
*
*
*
*
*
(h) Authorized representatives. As
used in this subpart, an authorized
representative is an individual who is
the legal representative or otherwise
legally able to act on behalf of an
enrollee, as the law of the State in
which the beneficiary resides may
allow, in order to execute an enrollment
or disenrollment request.
(1) The authorized representative
would constitute the ‘‘beneficiary’’ or
the ‘‘enrollee’’ for the purpose of making
an election.
(2) Authorized representatives may
include court-appointed legal guardians,
persons having durable power of
attorney for health care decisions, or
individuals authorized to make health
care decisions under State surrogate
consent laws, provided they have the
authority to act for the beneficiary in
this capacity.
■ 7. Section 422.62 is amended by
revising paragraphs (a)(1)(i) and (a)(4) to
read as follows:
§ 422.62
plan.
Election of coverage under an MA
(a) * * *
(1) * * *
(i) The last day of the second month
after the month in which they are first
entitled to Part A and enrolled in Part
B; or
*
*
*
*
*
(4) Open enrollment period for
institutionalized individuals. After
2005, an individual who is eligible to
elect an MA plan and who is
institutionalized, as defined in § 422.2,
is not limited (except as provided for in
paragraph (d) of this section for MA
MSA plans) in the number of elections
or changes he or she may make.
(i) Subject to the MA plan being open
to enrollees as provided under
§ 422.60(a)(2), an MA eligible
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institutionalized individual may at any
time elect an MA plan or change his or
her election from an MA plan to
Original Medicare, to a different MA
plan, or from Original Medicare to an
MA plan.
(ii) The open enrollment period for
institutionalized individuals ends on
the last day of the second month after
the month the individual ceases to
reside in one of the long-term care
facility settings described in the
definition of ‘‘institutionalized’’ in
§ 422.2.
*
*
*
*
*
■ 8. Section 422.68 is amended by
adding paragraph (g) to read as follows:
§ 422.68 Effective dates of coverage and
change of coverage.
*
*
*
*
*
(g) Beneficiary choice of effective
date. If a beneficiary is eligible for more
than one election period, resulting in
more than one possible effective date,
the MA organization must allow the
beneficiary to choose the election period
that results in the individual’s desired
effective date.
(1) To determine the beneficiary’s
choice of election period and effective
date, the MA organization must attempt
to contact the beneficiary and must
document its attempts.
(2) If the MA organization is unable to
obtain the beneficiary’s desired
enrollment effective date, the MA
organization must assign an election
period using the following ranking of
election periods:
(i) ICEP/Part D IEP
(ii) MA–OEP
(iii) SEP
(iv) AEP
(v) OEPI
(3) If the MA organization is unable to
obtain the beneficiary’s desired
disenrollment effective date, the MA
organization must assign an election
period that results in the earliest
disenrollment.
■ 9. Section 422.100 is amended by
adding paragraph (o) to read as follows:
§ 422.100
General requirements.
*
*
*
*
*
(o) Cost sharing standards for D–SNP
PPOs. Beginning on or after January 1,
2026, a MA organization offering a local
PPO plan or regional PPO plan that is
a dual eligible special needs plan must
establish cost sharing for out-of-network
services that—
(1) Complies with the limits described
in paragraph (f)(6) of this section with
the exception that references to the
MOOP amounts refer to the total
catastrophic limits under § 422.101(d)(3)
for local PPOs and MA regional plans;
and
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(2) Complies with the limits described
in paragraph (j)(1) of this section with
the exception that references to the
MOOP amounts that refer to the total
catastrophic limits under § 422.101(d)(3)
for local PPOs and MA regional plans
and, for regional PPO dual eligible
special needs plans, excluding
paragraph (j)(1)(i)(C)(2) and the last
sentence of paragraph (j)(1)(i)(E) of this
section.
■ 10. Section 422.102 is amended by:
■ a. Revising paragraph (f)(1)(i)(A)(2);
■ b. Redesignating paragraph (f)(3) as
paragraph (f)(4);
■ c. Adding a new paragraph (f)(3);
■ d. Revising newly redesignated
paragraph (f)(4) introductory text and
(f)(4)(iii) and (iv); and
■ e. Adding paragraph (f)(5).
The additions and revision read as
follows:
§ 422.102
Supplemental benefits.
ddrumheller on DSK120RN23PROD with PROPOSALS2
*
*
*
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*
(f) * * *
(1) * * *
(i) * * *
(A) * * *
(2) Has a high risk of hospitalization
or other adverse health outcomes; and
*
*
*
*
*
(3) MA organization responsibilities.
An MA organization that includes an
item or service as SSBCI in its bid must
be able to demonstrate through relevant
acceptable evidence that the item or
service has a reasonable expectation of
improving or maintaining the health or
overall function of a chronically ill
enrollee. By the date on which an MA
organization submits its bid, the MA
organization must establish a written
bibliography of relevant acceptable
evidence concerning the impact that the
item or service has on the health or
overall function of its recipient. For
each citation in the written
bibliography, the MA organization must
include a working hyperlink to or a
document containing the entire source
cited.
(i) Relevant acceptable evidence
includes large, randomized controlled
trials or prospective cohort studies with
clear results, published in a peerreviewed journal, and specifically
designed to investigate whether the item
or service impacts the health or overall
function of a population, or large
systematic reviews or meta-analyses
summarizing the literature of the same.
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(ii) An MA organization must include
in its bibliography all relevant
acceptable evidence published within
the 10 years prior to the June
immediately preceding the coverage
year during which the SSBCI will be
offered.
(iii) If no evidence of the type
described in paragraphs (f)(3)(i) and (ii)
of this section exists for a given item or
service, then MA organization may cite
case studies, Federal policies or reports,
internal analyses, or any other
investigation of the impact that the item
or service has on the health or overall
function of its recipient as relevant
acceptable evidence in the MA
organization’s bibliography.
(iv) The MA organization must make
its bibliography of relevant acceptable
evidence available to CMS upon
request.
(4) Plan responsibilities. An MA plan
offering SSBCI must do all of the
following:
*
*
*
*
*
(iii)(A) Have and apply written
policies based on objective criteria for
determining a chronically ill enrollee’s
eligibility to receive a particular SSBCI;
and
(B) Document the written policies
specified in paragraph (f)(4)(iii)(A) of
this section and the objective criteria on
which the written policies are based.
(iv) Document each determination
that an enrollee is not eligible to receive
an SSBCI and make this information
available to CMS upon request.
(5) CMS review of SSBCI offerings in
bids. (i) CMS may decline to approve an
MA organization’s bid if CMS
determines that the MA organization
has not demonstrated, through relevant
acceptable evidence, that an SSBCI has
a reasonable expectation of improving
or maintaining the health or overall
function of the chronically ill enrollees
that the MA organization is targeting.
(ii) CMS may annually review the
items or services that an MA
organization includes as SSBCI in its
bid for compliance with all applicable
requirements, taking into account
updates to the relevant acceptable
evidence applicable to each item or
service.
(iii) This provision does not limit
CMS’s authority to review and negotiate
bids or to reject bids under section
1854(a) of the Act and subpart F of this
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78617
part nor does it limit CMS’s authority to
review plan benefits and bids for
compliance with all applicable
requirements.
■ 11. Section 422.111 is amended by
adding paragraph (l) to read as follows:
§ 422.111
Disclosure requirements.
*
*
*
*
*
(l) Mid-year notice of unused
supplemental benefits. Beginning
January 1, 2026, MA organizations must
send notification annually, no sooner
than June 30 and no later than July 31,
to each enrollee with unused
supplemental benefits consistent with
the requirements of § 422.2267(e)(42).
■ 12. Section 422.116 is amended by:
■ a. Adding paragraph (b)(2)(xiv);
■ b. In table 1 to paragraph (d)(2),
adding an entry for ‘‘Outpatient
Behavioral Health’’ following the entry
for ‘‘Orthopedic Surgery’’;
■ c. Adding paragraph (d)(5)(xv);
■ d. Revising paragraph (f)(1)
introductory text; and
■ e. Adding paragraphs (f)(2)(iv) and
(f)(3).
The additions and revisions read as
follows:
§ 422.116
Network adequacy.
*
*
*
*
*
(b) * * *
(2) * * *
(xiv) Outpatient Behavioral Health,
which can include Marriage and Family
Therapists (as defined in section
1861(lll) of the Act), Mental Health
Counselors (as defined in section
1861(lll) of the Act), Opioid Treatment
Programs (as defined in section 1861(jjj)
of the Act), Community Mental Health
Centers (as defined in section
1861(ff)(3)(B) of the Act), or those of the
following who regularly furnish or will
regularly furnish behavioral health
counseling or therapy services
including, but not limited to,
psychotherapy or prescription of
medication for substance use disorders:
physician assistants, nurse practitioners
and clinical nurse specialists (as defined
in section 1861(aa)(5) of the Act);
addiction medicine physicians; or
outpatient mental health and substance
use treatment facilities.
*
*
*
*
*
(d) * * *
(2) * * *
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TABLE 1 TO PARAGRAPH (d)(2)
Large metro
Provider/Facility type
Max time
Max time
20
*
10
40
*
*
Outpatient Behavioral Health ......................
*
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(d) * * *
(5) * * *
(xv) Outpatient Behavioral Health,
described in paragraph (b)(2)(xiv) of this
section.
*
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(f) * * *
(1) An MA plan may request an
exception to network adequacy criteria
in paragraphs (b) through (e) of this
section when either paragraph (f)(1)(i) or
(ii) of this section is met:
(i)(A) 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; and
(B) 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; or
(ii)(A) A facility-based InstitutionalSpecial Needs Plan (I–SNP) is unable to
contract with certain specialty types
required under paragraph (b) of this
section because of the way enrollees in
facility-based I–SNPs receive care; or
(B) A facility-based I–SNP provides
sufficient and adequate access to basic
benefits through additional telehealth
benefits (in compliance with § 422.135)
when using telehealth providers of the
specialties listed in paragraph (d)(5) of
this section in place of in-person
providers to fulfill network adequacy
standards in paragraphs (b) through (e)
of this section.
(2) * * *
(iv) As applicable, the facility-based
I–SNP submits:
(A) Evidence of the inability to
contract with certain specialty types
required under this section due to the
way enrollees in facility-based I–SNPs
receive care; or
(B) Substantial and credible evidence
that sufficient and adequate access to
basic benefits is provided to enrollees
using additional telehealth benefits (in
compliance with § 422.135) furnished
by providers of the specialties listed in
paragraph (d)(5) of this section and the
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Max
distance
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Micro
Max
distance
Max time
*
Rural
Max time
Max
distance
40
*
60
50
*
25
55
*
CEAC
Max
distance
*
*
Max time
Max
distance
*
110
100
*
facility-based I–SNP covers out-ofnetwork services furnished by a
provider in person when requested by
the enrollee as provided in
§ 422.135(c)(1) and (2), with in-network
cost sharing for the enrollee.
(3) Any MA organization that receives
the exception provided for facility-based
I–SNPs must agree to offer only facilitybased I–SNPs under the MA contract
that receives the exception.
■ 13. Section 422.125 is added to read
as follows:
(3) All other complaints. The MA
organization must resolve all other
complaints within 30 calendar days of
the assignment date.
(c) Timeline for contacting individual
filing a complaint. Regardless of the
type of complaint received, the MA
organization must contact the
individual who filed a complaint within
3 calendar days of the assignment date.
■ 14. Section 422.137 is amended by
adding paragraphs (c)(5) and (d)(6) and
(7) to read as follows:
§ 422.125 Resolution of complaints in
Complaints Tracking Module.
§ 422.137 Medicare Advantage Utilization
Management Committee.
(a) Definitions. For the purposes of
this section, the terms have the
following meanings:
Assignment date is the date CMS
assigns a complaint to a particular MA
organization in the Complaints Tracking
Module.
Complaints Tracking Module means
an electronic system maintained by
CMS to record and track complaints
submitted to CMS about Medicare
health and drug plans from beneficiaries
and others.
Immediate need complaint means a
complaint involving a situation that
prevents a beneficiary from accessing
care or a service for which they have an
immediate need. This includes when
the beneficiary currently has enough of
the drug or supply to which they are
seeking access to last for 2 or fewer
days.
Urgent complaint means a complaint
involving a situation that prevents a
beneficiary from accessing care or a
service for which they do not have an
immediate need. This includes when
the beneficiary currently has enough of
the drug or supply to which they are
seeking access to last for 3 to 14 days.
(b) Timelines for complaint
resolution—(1) Immediate need
complaints. The MA organization must
resolve immediate need complaints
within 2 calendar days of the
assignment date.
(2) Urgent complaints. The MA
organization must resolve urgent
complaints within 7 calendar days of
the assignment date.
*
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*
*
*
*
(c) * * *
(5) Beginning January 1, 2025, include
at least one member with expertise in
health equity. Expertise in health equity
includes, but is not limited to,
educational degrees or credentials with
an emphasis on health equity;
experience conducting studies
identifying disparities amongst different
population groups; experience leading
organization-wide policies, programs, or
services to achieve health equity; or
experience leading advocacy efforts to
achieve health equity.
(d) * * *
(6) Beginning in 2025, annually
conduct a health equity analysis of the
use of prior authorization.
(i) The final report of the analysis
must be approved by the member of the
committee with expertise in health
equity before it is publicly posted.
(ii) The analysis must examine the
impact of prior authorization on
enrollees with one or more of the
following social risk factors:
(A) Receipt of the low-income subsidy
or being dually eligible for Medicare
and Medicaid.
(B) Having a disability. Disability
status is determined using the variable
original reason for entitlement code
(OREC) for Medicare using the
information from the Social Security
Administration and Railroad Retirement
Board record systems.
(iii) The analysis must use the
following metrics, calculated for
enrollees with the specified social risk
factors and enrollees without the
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specified social risk factors, to conduct
the analysis at the plan level using data
from the prior contract year:
(A) The percentage of standard prior
authorization requests that were
approved, aggregated for all items and
services.
(B) The percentage of standard prior
authorization requests that were denied,
aggregated for all items and services.
(C) The percentage of standard prior
authorization requests that were
approved after appeal, aggregated for all
items and services.
(D) The percentage of prior
authorization requests for which the
timeframe for review was extended, and
the request was approved, aggregated for
all items and services.
(E) The percentage of expedited prior
authorization requests that were
approved, aggregated for all items and
services.
(F) The percentage of expedited prior
authorization requests that were denied,
aggregated for all items and services.
(G) The average and median time that
elapsed between the submission of a
request and a determination by the MA
plan, for standard prior authorizations,
aggregated for all items and services.
(H) The average and median time that
elapsed between the submission of a
request and a decision by the MA plan
for expedited prior authorizations,
aggregated for all items and services.
(7) By July 1, 2025, and annually
thereafter, publicly post the results of
the health equity analysis of the
utilization management policies and
procedures on the plan’s website
meeting the following requirements:
(i) In a prominent manner and clearly
identified in the footer of the website.
(ii) Easily accessible to the general
public, without barriers, including but
not limited to ensuring the information
is accessible:
(A) Free of charge.
(B) Without having to establish a user
account or password.
(C) Without having to submit personal
identifying information.
(iii) In a machine-readable format
with the data contained within that file
being digitally searchable and
downloadable.
(iv) Include a .txt file in the root
directory of the website domain that
includes a direct link to the machinereadable file to establish and maintain
automated access.
■ 15. Section 422.164 is amended by:
■ a. Revising paragraphs (g)(1)(iii)
introductory text and (g)(1)(iii)(A);
■ b. Removing and reserving paragraphs
(g)(1)(iii)(B) and (F);
■ c. Revising paragraph (g)(1)(iii)(H);
■ d. Removing and reserving paragraphs
(g)(1)(iii)(I) and (J);
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e. Revising paragraphs (g)(1)(iii)(K)(2)
and (g)(1)(iii)(O); and
■ f. Adding paragraph (h)(3).
The revisions and addition read as
follows:
■
§ 422.164 Adding, updating, and removing
measures.
*
*
*
*
*
(g) * * *
(1) * * *
(iii) For the appeals measures, CMS
uses statistical criteria to estimate the
percentage of missing data for each
contract using data from MA
organizations, the independent review
entity (IRE), or CMS administrative
sources to determine whether the data at
the IRE are complete. CMS uses scaled
reductions for the Star Ratings for the
applicable appeals measures to account
for the degree to which the IRE data are
missing.
(A)(1) The data reported by the MA
organization on appeals, including the
number of reconsiderations requested,
denied, upheld, dismissed, or otherwise
disposed of by the MA organization, and
data from the IRE or CMS administrative
sources, that align with the Star Ratings
year measurement period are used to
determine the scaled reduction.
(2) If there is a contract consolidation
as described at § 422.162(b)(3), the data
described in paragraph (g)(1)(iii)(A)(1)
of this section are combined for the
consumed and surviving contracts
before the methodology provided in
paragraphs (g)(1)(iii)(B) through (H) and
(K) through (O) of this section is
applied.
*
*
*
*
*
(H) The Part C calculated error is
determined using 1 minus the quotient
of the total number of cases received by
the IRE and the total number of cases
that should have been forwarded to the
IRE. The total number of cases that
should have been forwarded to the IRE
is determined by the sum of the
partially favorable (adverse)
reconsiderations and unfavorable
(adverse) reconsiderations for the
applicable measurement year.
*
*
*
*
*
(K) * * *
(2) The number of cases not
forwarded to the IRE is at least 10 for
the measurement year.
*
*
*
*
*
(O) CMS reduces the measure rating
to 1 star for the applicable appeals
measure(s) if CMS does not have
accurate, complete, and unbiased data
to validate the completeness of the Part
C appeals measures.
*
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*
(h) * * *
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78619
(3) Beginning with the 2025
measurement year (2027 Star Ratings),
an MA organization may request that
CMS review its contract’s administrative
data for Patient Safety measures
provided that the request is received by
the annual deadline set by CMS for the
applicable Star Ratings year.
*
*
*
*
*
■ 16. Section 422.166 is amended by
revising paragraph (f)(2)(i)(B) and
adding paragraphs (f)(3)(viii)(A) and (B)
to read as follows:
§ 422.166
Calculation of Star Ratings.
*
*
*
*
*
(f) * * *
(2) * * *
(i) * * *
(B) To determine a contract’s final
adjustment category, contract
enrollment is determined using
enrollment data for the month of
December for the measurement period
of the Star Ratings year.
(1) For the first 2 years following a
consolidation, for the surviving contract
of a contract consolidation involving
two or more contracts for health or drug
services of the same plan type under the
same parent organization, the
enrollment data for the month of
December for the measurement period
of the Star Ratings year are combined
across the surviving and consumed
contracts in the consolidation.
(2) The count of beneficiaries for a
contract is restricted to beneficiaries
that are alive for part or all of the month
of December of the applicable
measurement year.
(3) A beneficiary is categorized as LIS/
DE if the beneficiary was designated as
full or partially dually eligible or
receiving a LIS at any time during the
applicable measurement period.
(4) Disability status is determined
using the variable original reason for
entitlement (OREC) for Medicare using
the information from the Social Security
Administration and Railroad Retirement
Board record systems.
*
*
*
*
*
(3) * * *
(viii) * * *
(A) In the case of contract
consolidations involving two or more
contracts for health or drug services of
the same plan type under the same
parent organization, CMS calculates the
HEI reward for the surviving contract
accounting for both the surviving and
consumed contract(s). For the first year
following a consolidation, the HEI
reward for the surviving contract is
calculated as the enrollment-weighted
mean of the HEI reward of the
consumed and surviving contracts using
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enrollment from July of the most recent
measurement year used in calculating
the HEI reward. A reward value of zero
is used in calculating the enrollmentweighted mean for contracts that do not
meet the minimum percentage of
enrollees with the SRF thresholds or the
minimum performance threshold
specified at paragraph (f)(3)(vii) of this
section.
(B) For the second year following a
consolidation when calculating the HEI
score for the surviving contract, the
patient-level data used in calculating
the HEI score will be combined from the
consumed and surviving contracts and
used in calculating the HEI score.
*
*
*
*
*
■ 17. Section 422.260 is amended by
revising paragraph (c)(2)(vii) to read as
follows:
to support activities or authorized uses
under paragraph (f)(1)(vii) of this
section.
*
*
*
*
*
■ 19. Section 422.311 is amended by:
■ a. Revising paragraphs (a) and
(c)(5)(ii)(B);
■ b. Removing paragraph (c)(5)(ii)(C);
■ c. Revising paragraph (c)(5)(iii);
■ d. Adding paragraph (c)(5)(iv);
■ e. Revising paragraphs (c)(6)(i)(A) and
(c)(6)(iv)(B);
■ f. Adding paragraph (c)(6)(v);
■ g. Revising paragraph (c)(7)(ix);
■ h. Revising paragraphs (c)(8)(iii),
(c)(8)(iv) introductory text, (c)(8)(iv)(A),
and (c)(8)(vi); and
■ i. Adding paragraphs (c)(8)(vii) and
(c)(9).
The revisions and additions read as
follows:
§ 422.260 Appeals of quality bonus
payment determinations.
§ 422.311 RADV audit dispute and appeal
processes.
*
*
*
*
*
(c) * * *
(2) * * *
(vii) After the hearing officer’s
decision is issued to the MA
organization and the CMS
Administrator, the hearing officer’s
decision is subject to review and
modification by the CMS Administrator
within 10 business days of issuance. If
the Administrator does not review and
issue a decision within 10 business
days, the hearing officer’s decision is
final and binding.
*
*
*
*
*
■ 18. Section 422.310 is amended by:
■ a. Revising paragraphs (f)(1)(vi) and
(vii);
■ b. Adding reserved paragraph
(f)(3)(iv); and
■ c. Adding paragraph (f)(3)(v).
The revisions and addition read as
follows:
§ 422.310
Risk adjustment data.
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(f) * * *
(1) * * *
(vi) To conduct evaluations and other
analysis to support the Medicare and
Medicaid programs (including
demonstrations) and to support public
health initiatives and other health carerelated research;
(vii) For activities to support the
administration of the Medicare and
Medicaid programs;
*
*
*
*
*
(3) * * *
(iv) [Reserved]
(v) CMS determines that releasing
data to State Medicaid agencies before
reconciliation for the purpose of
coordinating care for dually eligible
individuals is necessary and appropriate
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(a) Risk adjustment data validation
(RADV) audits. In accordance with
§§ 422.2 and 422.310(e), the Secretary
conducts RADV audits to ensure riskadjusted payment integrity and
accuracy.
(1) Recovery of improper payments
from MA organizations is conducted in
accordance with the Secretary’s
payment error extrapolation and
recovery methodologies.
(2) CMS may apply extrapolation to
audits for payment year 2018 and
subsequent payment years.
*
*
*
*
*
(c) * * *
(5) * * *
(ii) * * *
(B) Whether the MA organization
requests a payment error calculation
appeal, the issues with which the MA
organization disagrees, and the reasons
for the disagreements. MA organizations
will forgo their medical record review
determination appeal if they choose to
file only a payment error calculation
appeal because medical record review
determinations need to be final prior to
adjudicating a payment error calculation
appeal.
(iii) For MA organizations that intend
to appeal both the medical record
review determination and the RADV
payment error calculation, an MA
organization’s request for appeal of its
RADV payment error calculation may
not be filed and will not be adjudicated
until:
(A) The administrative appeal process
for the RADV medical record review
determinations filed by the MA
organization has been exhausted; or
(B) The MA organization does not
timely request a RADV medical record
review determination appeal at the
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hearing stage and/or the CMS
Administrator review stage, as
applicable.
(iv) An MA organization whose
medical record review determination
appeal has been completed as described
in paragraph (c)(5)(iii) of this section
has 60 days from the date of issuance of
a revised RADV audit report, based on
the final medical record review
determination, to file a written request
with CMS for a RADV payment error
calculation appeal. This request for
RADV payment error calculation appeal
must clearly specify where the
Secretary’s RADV payment error
calculation was erroneous, what the MA
organization disagrees with, and the
reasons for the disagreements.
(6) * * *
(i) * * *
(A) Any and all HCC(s) that the
Secretary identified as being in error
that the MA organization wishes to
appeal.
*
*
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*
(iv) * * *
(B) The reconsideration official’s
decision is final unless it is reversed or
modified by a final decision of the
hearing officer as defined at paragraph
(c)(7)(x) of this section.
*
*
*
*
*
(v) Computations based on
reconsideration official’s decision. (A)
Once the reconsideration official’s
medical record review determination
decision is considered final in
accordance with paragraph (c)(6)(iv)(B)
of this section, the Secretary
recalculates the MA organization’s
RADV payment error and issues a
revised RADV audit report superseding
all prior RADV audit reports to the
appellant MA organization.
(B) For MA organizations appealing
the RADV payment error calculation
only, once the reconsideration official’s
payment error calculation decision is
considered final in accordance with
paragraph (c)(6)(iv)(B) of this section,
the Secretary recalculates the MA
organization’s RADV payment error and
issues a revised RADV audit report
superseding all prior RADV audit
reports to the appellant MA
organization.
*
*
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*
*
(7) * * *
(ix) Computations based on Hearing
Officer’s decision. (A) Once the hearing
officer’s medical record review
determination decision is considered
final in accordance with paragraph
(c)(7)(x) of this section, the Secretary
recalculates the MA organization’s
RADV payment error and issues a
revised RADV audit report superseding
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all prior RADV audit reports to the
appellant MA organization.
(B) For MA organizations appealing
the RADV payment error calculation
only, once the hearing officer’s payment
error calculation decision is considered
final in accordance with paragraph
(c)(7)(x) of this section, the Secretary
recalculates the MA organization’s
RADV payment error and issues a
revised RADV audit report superseding
all prior RADV audit reports to the
appellant MA organization.
*
*
*
*
*
(8) * * *
(iii) After reviewing a request for
review, the CMS Administrator has the
discretion to elect to review the hearing
officer’s decision or to decline to review
the hearing officer’s decision. If the
CMS Administrator does not decline to
review or does not elect to review
within 90 days of receipt of either the
MA organization or CMS’s timely
request for review (whichever is later),
the hearing officer’s decision becomes
final.
(iv) If the CMS Administrator elects to
review the hearing decision—
(A) The CMS Administrator
acknowledges the decision to review the
hearing decision in writing and notifies
CMS and the MA organization of their
right to submit comments within 15
days of the date of the issuance of the
notification that the Administrator has
elected to review the hearing decision;
and
*
*
*
*
*
(v) The CMS Administrator renders
his or her final decision in writing
within 60 days of the date of the
issuance of the notice acknowledging
his or her decision to elect to review the
hearing officer’s decision.
(vi) The decision of the hearing officer
is final if the CMS Administrator—
(A) Declines to review the hearing
officer’s decision; or
(B) Does not decline to review or elect
to review within 90 days of the date of
the receipt of either the MA
organization or CMS ’s request for
review (whichever is later); or
(C) Does not make a decision within
60 days of the date of the issuance of the
notice acknowledging his or her
decision to elect to review the hearing
officer’s decision.
*
*
*
*
*
(vii) Computations based on CMS
Administrator decision. (A) Once the
CMS Administrator’s medical record
review determination decision is
considered final in accordance with
paragraph (c)(8)(vi) of this section, the
Secretary recalculates the MA
organization’s RADV payment error and
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issues a revised RADV audit report
superseding all prior RADV audit
reports to the appellant MA
organization.
(B) For MA organizations appealing
the RADV payment error calculation
only, once the CMS Administrator’s
payment error calculation decision is
considered final in accordance with
paragraph (c)(8)(vi) of this section, the
Secretary recalculates the MA
organization’s RADV payment error and
issues a revised and final RADV audit
report superseding all prior RADV audit
reports to the appellant MA
organization.
(9) Final agency action. In cases when
an MA organization files a payment
error calculation appeal subsequent to a
medical record review determination
appeal that has completed the
administrative appeals process, the
medical record review determination
appeal final decision and the payment
error calculation appeal final decision
will not be considered a final agency
action until the payment error
calculation appeal has completed the
administrative appeals process and a
final revised audit report superseding
all prior RADV audit reports has been
issued to the appellant MA
organization.
■ 20. Section 422.502 is amended by:
■ a. Revising paragraphs (b)(1)(i)(A)
through (C); and
■ b. Removing paragraphs
(b)(1)(i)(E)(2)(A) and (B).
The revisions read as follows.
§ 422.502 Evaluation and determination
procedures.
*
*
*
*
*
(b) * * *
(1) * * *
(i) * * *
(A) Was under intermediate sanction
under subpart O of this part or a
determination by CMS to prohibit the
enrollment of new enrollees in
accordance with § 422.2410(c), with the
exception of a sanction imposed under
§ 422.752(d).
(B) Failed to maintain a fiscally sound
operation consistent with the
requirements of § 422.504(a)(14).
(C) Filed for or is currently in Federal
or State bankruptcy proceedings.
*
*
*
*
*
■ 21. Section 422.503 is amended by
adding paragraph (b)(8) to read as
follows:
§ 422.503
General provisions.
*
*
*
*
*
(b) * * *
(8) Not newly offer a dual eligible
special needs plan that would result in
noncompliance with § 422.514(h).
*
*
*
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22. Section 422.504 is amended by
revising paragraph (a)(15) and adding
paragraphs (a)(20) and (21) to read as
follows.
■
§ 422.504
Contract provisions.
*
*
*
*
*
(a) * * *
(15) As described in § 422.125,
address and resolve complaints received
by CMS against the MA organization in
the Complaints Tracking Module.
*
*
*
*
*
(20) To comply with the requirements
established in § 422.514(h).
(21) Not to establish additional MA
plans that are not facility-based ISNPs to
contracts described in § 422.116(f)(3).
*
*
*
*
*
■ 23. Section 422.510 is amended by
adding paragraph (e) to read as follows:
§ 422.510
Termination of contract by CMS.
*
*
*
*
*
(e) Intermediate sanctions imposed
with CMS termination. If CMS makes a
determination to terminate a MA
organization’s contract under paragraph
(a) of this section, CMS also imposes the
intermediate sanctions at § 422.750(a)(1)
and (3) in accordance with the following
procedures:
(1) The sanction goes into effect 15
days after the termination notice is sent.
(2) The MA organization has a right to
appeal the intermediate sanction in the
same proceeding as the termination
appeal specified in paragraph (d) of this
section.
(3) A request for a hearing does not
delay the date specified by CMS when
the sanction becomes effective.
(4) The sanction remains in effect—
(i) Until the effective date of the
termination; or
(ii) If the termination decision is
overturned on appeal, when a final
decision is made by the hearing officer
or Administrator.
■ 24. Section 422.514 is amended by:
■ a. Revising paragraphs (d)(1)
introductory text, (d)(1)(ii), (d)(2)
introductory text, and (d)(2)(ii);
■ b. In paragraph (e)(1)(i), removing the
phrase ‘‘Specialized MA Plan for
Special Needs Individuals’’ and adding
in its place the phrase ‘‘specialized MA
plan for special needs individuals’’;
■ c. In paragraph (e)(1)(iii), removing
the phrase ‘‘chapter; and’’ and adding in
its place ‘‘chapter;’’;
■ d. In paragraph (e)(1)(iv), removing
the phrase ‘‘of this section.’’ and adding
in its place ‘‘of this section; and’’; and
■ e. Adding paragraphs (e)(1)(v) and (h).
The revisions and additions read as
follows:
§ 422.514
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(d) * * *
(1) Enter into or renew a contract
under this subpart for a MA plan that—
*
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(ii) Projects enrollment in its bid
submitted under § 422.254 in which
enrollees entitled to medical assistance
under a State plan under title XIX
constitute a percentage of the plan’s
total enrollment that meets or exceeds
one of the following:
(A) For plan year 2024, 80 percent.
(B) For plan year 2025, 70 percent.
(C) For plan year 2026 and subsequent
years, 60 percent.
(2) Renew a contract under this
subpart for an MA plan that—
*
*
*
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*
(ii) 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, has
actual enrollment, as determined by
CMS using the January enrollment of
the current year in which enrollees who
are entitled to medical assistance under
a State plan under title XIX, constitute
a percentage of the plan’s total
enrollment that meets or exceeds one of
the following:
(A) For renewals for plan year 2024,
80 percent.
(B) For renewals for plan year 2025,
70 percent.
(C) For renewals for plan year 2026
and subsequent years, 60 percent.
(e) * * *
(1) * * *
(v) For transitions for plan year 2027
and subsequent years, is a dual eligible
special needs plan as defined in § 422.2.
*
*
*
*
*
(h) Rule on dual eligible special needs
plans in relation to Medicaid managed
care. (1) Beginning in 2027, where an
MA organization offers a dual eligible
special needs plan and the MA
organization, its parent organization, or
any entity that shares a parent
organization with the MA organization
also contracts with a State as a Medicaid
managed care organization (MCO) (as
defined in § 438.2 of this chapter) that
enrolls dually eligible individuals as
defined in § 423.772 of this chapter,
during the effective dates and in the
same service area (even if there is only
partial overlap of the service areas) of
that Medicaid MCO contract, the MA
organization—
(i) May only offer, or have a parent
organization or share a parent
organization with another MA
organization that offers, one D–SNP for
full-benefit dually eligible individuals,
except as permitted in paragraph (h)(3)
of this section; and
(ii) Must limit new enrollment in the
D–SNP to individuals enrolled in, or in
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the process of enrolling in, the Medicaid
MCO.
(2) Beginning in 2030, such D–SNPs
may only enroll (or continue to enroll)
individuals enrolled in (or in the
process of enrolling in) the Medicaid
MCO, except that such D–SNPs may
continue to implement deemed
continued eligibility requirements as
described in § 422.52(d).
(3)(i) If a State Medicaid agency’s
contract with the MA organization
limits enrollment for certain groups into
D–SNPs (such as by age group or other
criteria), the MA organization, its parent
organization or an entity that shares a
parent organization with the MA
organization may offer one or more
additional D–SNPs for full-benefit
dually eligible individuals in the same
service area in accordance with the
group (or groups) eligible for D–SNPs
based on provisions of the contract with
the State Medicaid agency under
§ 422.107 of this chapter.
(ii) If the MA organization, its parent
organization or an entity that shares a
parent organization with the MA
organization offers more than one D–
SNP of any type (HMOs and/or PPOs),
and one or more of the plans is subject
to paragraph (h)(1) of this section, the
plan (or plans) not subject to paragraph
(h)(1) of this section may continue if
they no longer accept new enrollment of
full-benefit dually eligible individuals
in the same service area as the plan (or
plans) subject to paragraph (h)(1) of this
section.
■ 25. Section 422.516 is amended by
revising paragraphs (a) introductory text
and (a)(2) to read as follows:
§ 422.516 Validation of Part C reporting
requirements.
(a) Required information. Each MA
organization must have an effective
procedure to develop, compile,
evaluate, and report to CMS, to its
enrollees, and to the general public, at
the times and in the manner that CMS
requires, and while safeguarding the
confidentiality of the doctor-patient
relationship, information with respect to
the following:
*
*
*
*
*
(2) The procedures related to and
utilization of its services and items.
*
*
*
*
*
■ 26. Section 422.530 is amended by
adding paragraph (c)(4)(iii) to read as
follows:
§ 422.530
Plan crosswalks.
*
*
*
*
*
(c) * * *
(4) * * *
(iii) For contract year 2027 and
subsequent years, where one or more
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MA organizations that share a parent
organization seek to consolidate D–
SNPs in the same service area down to
a single D–SNP under one MA–PD
contract to comply with requirements at
§§ 422.514(h) and 422.504(a)(20), CMS
permits enrollees to be moved between
different contracts.
*
*
*
*
*
■ 27. Section 422.582 is amended by
revising paragraph (b) to read as follows:
§ 422.582 Request for a standard
reconsideration.
*
*
*
*
*
(b) Timeframe for filing a request.
Except as provided in paragraph (c) of
this section, a request for
reconsideration must be filed within 60
calendar days after receipt of the written
organization determination notice.
(1) The date of receipt of the
organization determination is presumed
to be 5 calendar days after the date of
the written organization determination,
unless there is evidence to the contrary.
(2) For purposes of meeting the 60calendar day filing deadline, the request
is considered as filed on the date it is
received by the plan or delegated entity
specified in the MA organization’s
written organization determination.
*
*
*
*
*
■ 27. Section 422.584 is amended by
revising the paragraph (b) heading and
adding paragraphs (b) introductory text
and (b)(3) and (4) to read as follows:
§ 422.584 Expediting certain
reconsiderations.
*
*
*
*
*
(b) Procedure and timeframe for filing
a request. A request for reconsideration
must be filed within 60 calendar days
after receipt of the written organization
determination notice.
*
*
*
*
*
(3) The date of receipt of the
organization determination is presumed
to be 5 calendar days after the date of
the written organization determination,
unless there is evidence to the contrary.
(4) For purposes of meeting the 60calendar day filing deadline, the request
is considered as filed on the date it is
received by the plan or delegated entity
specified in the MA organization’s
written organization determination.
*
*
*
*
*
■ 28. Section 422.626 is amended by:
■ a. Revising paragraph (a)(2); and
■ b. Removing paragraph (a)(3).
The revision reads as follows:
§ 422.626 Fast-track appeals of service
terminations to independent review entities
(IREs).
(a) * * *
(2) If an enrollee makes an untimely
request to an IRE, the IRE accepts the
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request and makes a determination as
soon as possible, but the timeframe
under paragraph (d)(5) of this section
and the financial liability protection
under paragraph (b) of this section do
not apply.
*
*
*
*
*
■ 29. Section 422.633 is amended by
revising paragraph (d)(1) to read as
follows:
§ 422.633
Integrated reconsiderations.
*
*
*
*
*
(d) * * *
(1) Timeframe for filing. An enrollee
has 60 calendar days after receipt of the
adverse organization determination
notice to file a request for an integrated
reconsideration with the applicable
integrated plan.
(i) The date of receipt of the adverse
organization determination is presumed
to be 5 calendar days after the date of
the integrated organization
determination notice, unless there is
evidence to the contrary.
(ii) For purposes of meeting the 60calendar day filing deadline, the request
is considered as filed on the date it is
received by the applicable integrated
plan.
*
*
*
*
*
■ 30. Section 422.2267 is amended by:
■ a. Revising paragraph (e)(31) and
paragraph (e)(34) introductory text;
■ b. Redesignating paragraph (e)(34)(iii)
as paragraph (e)(34)(v);
■ c. Redesignating paragraph (e)(34)(ii)
as paragraph (e)(34)(iii);
■ d. Adding a new paragraph (e)(34)(ii);
■ e. Revising newly redesignated
paragraph (e)(34)(iii);
■ f. Adding paragraph (e)(34)(iv);
■ g. Revising newly redesignated
paragraph (e)(34)(v); and
■ h. Adding paragraph (e)(42).
The revisions and additions read as
follows:
§ 422.2267
content.
Required materials and
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(e) * * *
(31) Notice of availability of language
assistance services and auxiliary aids
and services (notice of availability). This
is a model communications material
through which MA organizations must
provide a notice of availability of
language assistance services and
auxiliary aids and services that, at a
minimum, states that the MA
organization provides language
assistance services and appropriate
auxiliary aids and services free of
charge.
(i) This notice of availability of
language assistance services and
auxiliary aids and services must be
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provided in English and at least the 15
languages most commonly spoken by
individuals with limited English
proficiency of the relevant State and
must be provided in alternate formats
for individuals with disabilities who
require auxiliary aids and services to
ensure effective communication.
(ii) If there are additional languages in
a particular service area that meet the 5percent service area threshold,
described in paragraph (a)(2) of this
section, beyond the languages described
in paragraph (e)(31)(i) of this section,
the notice of availability of language
assistance services and auxiliary aids
and services must also be translated into
those languages. MA organizations may
also opt to translate the notice in any
additional languages that do not meet
the 5-percent service area threshold,
where the MA organization determines
that this inclusion would be
appropriate.
(iii) The notice must be provided with
all required materials under this
paragraph (e).
(iv) The notice may be included as a
part of the required material or as a
standalone material in conjunction with
the required material.
(v) When used as a standalone
material, the notice may include
organization name and logo.
(vi) When mailing multiple required
materials together, only one notice is
required.
(vii) The notice may be provided
electronically when a required material
is provided electronically as permitted
under paragraph (d)(2) of this section.
*
*
*
*
*
(34) SSBCI disclaimer. This is model
content and must be used by MA
organizations that offer CMS-approved
SSBCI as specified in § 422.102(f). In the
SSBCI disclaimer, MA organizations
must include the information required
in paragraphs (e)(34)(i) through (iii) of
this section. MA organizations must—
*
*
*
*
*
(ii) List the chronic condition(s) the
enrollee must have to be eligible for the
SSBCI offered by the MA organization.
(A) If the number of condition(s) is
five or fewer, then list all condition(s).
(B) If the number of conditions is
more than five, then list the top five
conditions, as determined by the MA
organization.
(iii) Convey that even if the enrollee
has a listed chronic condition, the
enrollee will not necessarily receive the
benefit because coverage of the item or
service depends on the enrollee being a
‘‘chronically ill enrollee’’ as defined in
§ 422.102(f)(1)(i)(A) and on the MA
organization’s coverage criteria for a
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specific SSBCI item or service required
by § 422.102(f)(4).
(iv) Meet the following requirements
for the SSBCI disclaimer in ads:
(A) For television, online, social
media, radio, or other voice-based ads,
either read the disclaimer at the same
pace as or display the disclaimer in the
same font size as the advertised phone
number or other contact information.
(B) For outdoor advertising (as
defined in § 422.2260), display the
disclaimer in the same font size as the
advertised phone number or other
contact information.
(v) Include the SSBCI disclaimer in all
marketing and communications
materials that mention SSBCI.
*
*
*
*
*
(42) Mid-year supplemental benefits
notice. This is a model communications
material through which plans must
inform each enrollee of the availability
of any supplemental benefit the enrollee
has not begun to use by June 30 of the
plan year.
(i) The notice must be sent on an
annual basis, no earlier than June 30 of
the plan year, and no later than July 31
of the plan year.
(ii) The notice must include the
following content:
(A) Mandatory supplemental benefits.
For each mandatory supplemental
benefit an enrollee has not used, the MA
organization must include the same
information about the benefit that is
provided in the Evidence of Coverage.
(B) Optional supplemental benefits.
For each optional supplemental benefit
an enrollee has not used, the MA
organization must include the same
information about the benefit that is
provided in the Evidence of Coverage.
(C) SSBCI. For plans that include
SSBCI—
(1) The MA organization must include
an explanation of SSBCI available under
the plan (including eligibility criteria
and limitations and scope of the covered
items and services) and must include
point-of-contact information for
eligibility assessments, including
providing point-of-contact information
(which can be the customer service line
or a separate dedicated line), with
trained staff that enrollees can contact to
inquire about or begin the SSBCI
eligibility determination process and to
address any other questions the enrollee
may have about the availability of
SSBCI under their plan;
(2) When an enrollee has been
determined eligible for SSBCI but has
not used SSBCI, the MA organization
must include a description of the
unused SSBCI for which the enrollee is
eligible, and must include a description
of any limitations on the benefit; and
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(3) The disclaimer specified at
paragraph (e)(34) of this section.
(D) Additional notice information.
The information about all supplemental
benefits listed in the notice must
include all of the following:
(1) Scope of benefit.
(2) Applicable cost-sharing.
(3) Instructions on how to access the
benefit.
(4) Any applicable network
information.
(5) Supplemental benefits listed
consistent with the format of the EOC.
(6) A customer service number, and
required TTY number, to call for
additional help.
■ 31. Section 422.2274 is amended by:
■ a. In paragraph (a)—
■ i. Revising paragraph (i) of the
definition of ‘‘Compensation’’; and
■ ii. Revising the definition of ‘‘Fair
market value (FMV)’’; and
■ b. Revising paragraphs (c)(5), (d)(1)(ii),
(d)(2) introductory text, (d)(3)
introductory text, and (e)(1) and (2).
The revisions read as follows:
§ 422.2274 Agent, broker, and other thirdparty requirements.
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(a) * * *
Compensation. (i) Includes monetary
or non-monetary remuneration of any
kind relating to the sale, renewal, or
services related to a plan or product
offered by an MA organization
including, but not limited to the
following:
(A) Commissions.
(B) Bonuses.
(C) Gifts.
(D) Prizes or Awards.
(E) Payment of fees to comply with
State appointment laws, training,
certification, and testing costs.
(F) Reimbursement for mileage to, and
from, appointments with beneficiaries.
(G) Reimbursement for actual costs
associated with beneficiary sales
appointments such as venue rent,
snacks, and materials.
(H) Any other payments made to an
agent or broker that are tied to
enrollment, related to an enrollment in
an MA plan or product, or for services
conducted as a part of the relationship
associated with the enrollment into an
MA plan or product.
*
*
*
*
*
Fair market value (FMV) means, for
purposes of evaluating agent or broker
compensation under the requirements of
this section only, the amount that CMS
determines could reasonably be
expected to be paid for an enrollment or
continued enrollment into an MA plan.
(i) Beginning January 1, 2021, the
national FMV is $539, the FMV for
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Connecticut, Pennsylvania, and the
District of Columbia is $607, the FMV
for California and New Jersey is $672,
and the FMV for Puerto Rico and the
U.S. Virgin Islands is $370.
(ii) Beginning in 2025, the FMV will
be increased to account for
administrative payments included
under the compensation rate, beginning
at $31 and updated annually in
compliance with this section.
(iii) For subsequent years, FMV is
calculated by adding the current year
FMV and the produce of the current
year FMV and MA growth percentage
for aged and disabled beneficiaries,
which is published for each year in the
rate announcement issued in
accordance with § 422.312.
*
*
*
*
*
(c) * * *
(5) Ensure that no provision of a
contract with an agent, broker, or other
TPMO has a direct or indirect effect of
creating an incentive that would
reasonably be expected to inhibit an
agent or broker’s ability to objectively
assess and recommend which plan best
fits the health care needs of a
beneficiary.
*
*
*
*
*
(d) * * *
(1) * * *
(ii) MA organizations are limited to
the compensation amounts outlined in
this section.
(2) Initial enrollment year
compensation. For each enrollment in
an initial enrollment year, MA
organizations may pay compensation at
FMV.
*
*
*
*
*
(3) Renewal compensation. For each
enrollment in a renewal year, MA plans
may pay compensation at a rate of 50
percent of FMV.
*
*
*
*
*
(e) * * *
(1) For plan years through 2024,
Payments for services other than
enrollment of beneficiaries (for example,
training, customer service, agent
recruitment, operational overhead, or
assistance with completion of health
risk assessments) must not exceed the
value of those services in the
marketplace.
(2) Beginning in 2025, administrative
payments are included in the
calculation of enrollment-based
compensation.
*
*
*
*
*
PART 423—VOLUNTARY MEDICARE
PRESCRIPTION DRUG BENEFIT
32. The authority citation for part 423
continues to read as follows:
■
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Authority: 42 U.S.C. 1302, 1306, 1395w–
101 through 1395w–152, and 1395hh.
33. Section 423.4 is amended by
adding definitions for ‘‘Biosimilar
biological product’’ and
‘‘Interchangeable biological product’’ in
alphabetical order to read as follows:
■
§ 423.4
Definitions.
*
*
*
*
*
Biosimilar biological product means a
biological product licensed under
section 351(k) of the Public Health
Service Act (42 U.S.C. 262(k)) that, in
accordance with section 351(i)(2) of the
Public Health Service Act (42 U.S.C.
262(i)(2)), is highly similar to the
reference product, notwithstanding
minor differences in clinically inactive
components, and has no clinically
meaningful differences between the
biological product and the reference
product, in terms of the safety, purity,
and potency of the product.
*
*
*
*
*
Interchangeable biological product
means a product licensed under section
351(k) of the Public Health Service Act
(42 U.S.C. 262(k)) that FDA has
determined meets the standards
described in section 351(k)(4) of the
Public Health Service Act (42 U.S.C.
262(k)(4)).
*
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*
■ 34. Section 423.32 is amended by
adding paragraph (h) to read as follows:
§ 423.32
Enrollment process.
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*
(h) Authorized representatives. As
used in this subpart, an authorized
representative is an individual who is
the legal representative or otherwise
legally able to act on behalf of an
enrollee, as the law of the State in
which the beneficiary resides may
allow, in order to execute an enrollment
or disenrollment request.
(1) The authorized representative
would constitute the ‘‘beneficiary’’ or
the ‘‘enrollee’’ for the purpose of making
an election.
(2) Authorized representatives may
include court-appointed legal guardians,
persons having durable power of
attorney for health care decisions, or
individuals authorized to make health
care decisions under State surrogate
consent laws, provided they have the
authority to act for the beneficiary in
this capacity.
■ 34. Section 423.38 is amended by:
■ a. Revising paragraph (c)(4)(i);
■ b. Redesignating paragraph (c)(35) as
paragraph (c)(36); and
■ c. Adding new paragraph (c)(35).
The revision and addition read as
follows:
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§ 423.38
Enrollment periods.
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(c) * * *
(4) * * *
(i) Except as provided in paragraph
(c)(4)(ii) of this section, the individual is
a full-subsidy eligible individual or
other subsidy-eligible individual as
defined in § 423.772, who is making a
one-time-per month election into a PDP.
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*
(35) The individual is making a onetime-per month election into a fully
integrated dual eligible special needs
plan as defined in § 422.2 of this
chapter, a highly integrated dual eligible
special needs plan as defined in § 422.2,
or an applicable integrated plan as
defined in § 422.561 of this chapter.
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■ 35. Section 423.40 is amended by
adding paragraph (f) to read as follows:
§ 423.40
Effective dates.
ddrumheller on DSK120RN23PROD with PROPOSALS2
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(f) Beneficiary choice of effective date.
If a beneficiary is eligible for more than
one election period, resulting in more
than one possible effective date, the Part
D plan sponsor must allow the
beneficiary to choose the election period
that results in the individual’s desired
effective date.
(1) To determine the beneficiary’s
choice of election period and effective
date, the Part D plan sponsor must
attempt to contact the beneficiary and
must document its attempts.
(2) If the Part D plan sponsor is unable
to obtain the beneficiary’s desired
enrollment effective date, the Part D
plan sponsor must assign an election
period using the following ranking of
election periods:
(i) ICEP/Part D IEP.
(ii) MA–OEP.
(iii) SEP.
(iv) AEP.
(v) OEPI.
(3) If the Part D plan sponsor is unable
to obtain the beneficiary’s desired
disenrollment effective date, the Part D
plan sponsor must assign an election
period that results in the earliest
disenrollment.
■ 36. Section 423.100 is amended by:
■ a. Adding in alphabetical order a
definition for ‘‘Corresponding drug’’;
■ b. Revising paragraph (3) of the
definition of ‘‘Exempted beneficiary’’;
and
■ c Adding in alphabetical order a
definition for ‘‘Maintenance change’’.
The additions and revision read as
follows:
§ 423.100
Definitions.
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*
Corresponding drug means,
respectively, a generic or authorized
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generic of a brand name drug, an
interchangeable biological product of a
reference product, or an unbranded
biological product marketed under the
same biologics license application
(BLA) as a brand name biological
product.
Exempted beneficiary * * *
(3) Is being treated for cancer-related
pain; or
*
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*
Maintenance change means one of the
following negative formulary changes
with respect to a covered Part D drug:
(1) Making any negative formulary
changes to a drug within 90 days of
adding a corresponding drug to the
same or a lower cost-sharing tier and
with the same or less restrictive prior
authorization (PA), step therapy (ST), or
quantity limit (QL) requirements (other
than immediate substitutions that meet
the requirements of § 423.120(e)(2)(i)).
(2) Making any negative formulary
changes to a reference product within
90 days of adding a biosimilar biological
product other than an interchangeable
biological product of that reference
product to the same or a lower costsharing tier and with the same or less
restrictive PA, ST, or QL requirements.
(3) Removing a non-Part D drug.
(4) Adding or making more restrictive
PA, ST, or QL requirements based upon
a new FDA-mandated boxed warning.
(5) Removing a drug deemed unsafe
by FDA or withdrawn from sale by the
manufacturer if the Part D sponsor
chooses not to treat it as an immediate
negative formulary change.
(6) Removing a drug based on long
term shortage and market availability.
(7) Making negative formulary
changes based upon new clinical
guidelines or information or to promote
safe utilization.
(8) Adding PA to help determine Part
B versus Part D coverage.
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*
■ 37. Section 423.120 (as proposed to be
amended at 87 FR 79727, December 27,
2022) is amended by revising paragraph
(e)(2)(i) to read as follows:
§ 423.120
Access to covered Part D drugs.
*
*
*
*
*
(e) * * *
(2) * * *
(i) Immediate substitutions. A Part D
sponsor may make negative formulary
changes to a brand name drug, a
reference product, or a brand name
biological product within 30 days of
adding a corresponding drug to its
formulary on the same or lower cost
sharing tier and with the same or less
restrictive formulary prior authorization
(PA), step therapy (ST), or quantity limit
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78625
(QL) requirements, so long as the Part D
sponsor previously could not have
included such corresponding drug on its
formulary when it submitted its initial
formulary for CMS approval consistent
with paragraph (b)(2) of this section
because such drug was not yet available
on the market, and the Part D sponsor
has provided advance general notice as
specified in paragraph (f)(2) of this
section.
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■ 38. Section 423.129 is added to read
as follows:
§ 423.129 Resolution of complaints in
complaints tracking module.
(a) Definitions. For the purposes of
this section, the following terms have
the following meanings:
Assignment date is the date CMS
assigns a complaint to a particular Part
D sponsor in the Complaints Tracking
Module.
Complaints Tracking Module is an
electronic system maintained by CMS to
record and track complaints submitted
to CMS about Medicare health and drug
plans from beneficiaries and others.
Immediate need complaint is a
complaint involving a situation that
prevents a beneficiary from accessing
care or a service for which they have an
immediate need. This includes when
the beneficiary currently has enough of
the drug or supply to which they are
seeking access to last for 2 or fewer
days.
Urgent complaint is a complaint
involving a situation that prevents a
beneficiary from accessing care or a
service for which they do not have an
immediate need. This includes when
the beneficiary currently has enough of
the drug or supply to which they are
seeking access to last for 3 to 14 days.
(b) Timelines for complaint
resolution—(1) Immediate need
complaints. The Part D sponsor must
resolve immediate need complaints
within 2 calendar days of the
assignment date.
(2) Urgent complaints. The Part D
sponsor must resolve urgent complaints
within 7 calendar days of the
assignment date.
(3) All other complaints. The Part D
sponsor must resolve all other
complaints within 30 calendar days of
the assignment date.
(c) Timeline for contacting individual
filing a complaint. Regardless of the
type of complaint received, the Part D
sponsor must contact the individual
who filed a complaint within 3 calendar
days of the assignment date.
■ 39. Section 423.153 is amended by:
■ a. Removing the phrase ‘‘paragraph
(f)(8)(ii)’’ and adding in its place
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‘‘paragraphs (f)(8)(ii) and (iii)’’ in
paragraph (f)(8)(i) introductory text;
■ b. Revising paragraph (f)(8)(i)(A);
■ c. Redesignating paragraph (f)(8)(ii) as
paragraph (f)(8)(iii); and
■ d. Adding a new paragraph (f)(8)(ii).
The revision and addition read as
follows:
§ 423.153 Drug utilization management,
quality assurance, medication therapy
management programs (MTMPs), drug
management programs, and access to
Medicare Parts A and B claims data
extracts.
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*
(f) * * *
(8) * * *
(i) * * *
(A) Within 3 days of the date the
sponsor makes the relevant
determination.
*
*
*
*
*
(ii) In the case of a beneficiary who is
determined by a Part D sponsor to be
exempt, the sponsor must provide the
alternate second notice within 3 days of
the date the sponsor makes the relevant
determination, even if such
determination is made less than 30 days
from the date of the initial notice
described in paragraph (f)(5) of this
section.
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*
■ 40. Section 423.160 is amended by:
■ a. Revising paragraphs (a)(2) and (3),
(b), and (c); and
■ b. Removing the section-level
authority citation.
The revisions read as follows:
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 423.160 Standards for electronic
prescribing.
(a) * * *
(2) Except as provided in paragraph
(a)(3) of this section, prescribers and
dispensers that transmit, directly or
through an intermediary, prescriptions
and prescription-related information
using electronic media (including
entities transmitting prescriptions or
prescription-related information where
the prescriber is required by law to issue
a prescription for a patient to a nonprescribing provider, such as a nursing
facility, that in turn forwards the
prescription to a dispenser), must
comply with the applicable standards in
paragraph (b) of this section when eprescribing for covered Part D drugs for
Part D eligible individuals.
(3)(i) Entities transmitting
prescriptions or prescription-related
information must utilize the NCPDP
SCRIPT standard, consistent with
paragraph (b)(1) of this section, in all
instances other than temporary/
transient network transmission failures.
(ii) Electronic transmission of
prescriptions or prescription-related
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20:26 Nov 14, 2023
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information by means of computergenerated facsimile is only permitted in
instances of temporary/transient
transmission failure and communication
problems that would preclude the use of
the NCPDP SCRIPT Standard adopted
by this section.
(iii) Entities may use either HL7
messages or the NCPDP SCRIPT
Standard to transmit prescriptions or
prescription-related information
internally when the sender and the
recipient are part of the same legal
entity. If an entity sends prescriptions
outside the entity (for example, from an
HMO to a non-HMO pharmacy), it must
use the adopted NCPDP SCRIPT
Standard or other applicable adopted
standards. Any pharmacy within an
entity must be able to receive electronic
prescription transmittals for Medicare
beneficiaries from outside the entity
using the adopted NCPDP SCRIPT
Standard. This exemption does not
supersede any HIPAA requirement that
may require the use of a HIPAA
transaction standard within an
organization.
*
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*
(b) Standards—(1) Prescriptions,
electronic prior authorization, and
medication history. The communication
of a prescription or prescription-related
information must comply with a
standard in 45 CFR 170.205(b)
(incorporated by reference, see
paragraph (c) of this section) for the
following transactions, as applicable to
the version of the standard in use:
(i)(A) GetMessage.
(B) Status.
(C) Error.
(D) RxChangeRequest and
RxChangeResponse.
(E) RxRenewalRequest and
RxRenewalResponse.
(F) Resupply.
(G) Verify.
(H) CancelRx and CancelRxResponse.
(I) RxFill.
(J) DrugAdministration.
(K) NewRxRequest.
(L) NewRx.
(M) NewRxResponseDenied.
(N) RxTransferInitiationRequest.
(O) RxTransfer.
(P) RxTransferConfirm.
(Q) RxFillIndicatorChange.
(R) Recertification.
(S) REMSInitiationRequest and
REMSInitiationResponse.
(T) REMSRequest and
REMSResponse.
(U) RxHistoryRequest and
RxHistoryResponse.
(V) PAInitiationRequest and
PAInitiationResponse.
(W) PARequest and PAResponse.
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(X) PAAppealRequest and
PAAppealResponse.
(Y) PACancelRequest and
PACancelResponse.
(Z) PANotification.
(ii) [Reserved]
(2) Eligibility. Eligibility inquiries and
responses between the Part D sponsor
and prescribers and between the Part D
sponsor and dispensers must comply
with 45 CFR 162.1202.
(3) Formulary and benefits. The
National Council for Prescription Drug
Programs Formulary and Benefits
Standard, Implementation Guide,
Version 3, Release 0 (Version 3.0), April
2012 (incorporated by reference, see
paragraph (c) of this section) or comply
with a standard in 45 CFR 170.205(u)
(incorporated by reference, see
paragraph (c) of this section) for
transmitting formulary and benefits
information between prescribers and
Medicare Part D sponsors. Beginning
January 1, 2027, transmission of
formulary and benefit information
between prescribers and Medicare Part
D sponsors must comply with a
standard in