Rule2022-07642
Medicare Program; Maximum Out-of-Pocket (MOOP) Limits and Service Category Cost Sharing Standards
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 14, 2022
Effective
June 13, 2022
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule with comment period (FC) will finalize the two remaining proposals from the proposed rule titled "Medicare and Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly" which appeared in the Federal Register on February 18, 2020 (February 2020 proposed rule). The two proposals being finalized here from the February 2020 proposed rule include the maximum out-of-pocket (MOOP) limits for Medicare Parts A and B services and cost sharing limits for Medicare Parts A and B services, including service category cost sharing limits and per member per month actuarial equivalence cost sharing. In addition, CMS is requesting comments in section III of this FC on new or different ways to update and change cost sharing limits in future years for service categories subject to the regulations, including mental health services.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 72 (Thursday, April 14, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 72 (Thursday, April 14, 2022)]
[Rules and Regulations]
[Pages 22290-22428]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-07642]
[[Page 22289]]
Vol. 87
Thursday,
No. 72
April 14, 2022
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Part 422
Medicare Program; Maximum Out-of-Pocket (MOOP) Limits and Service
Category Cost Sharing Standards; Final Rule
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules
and Regulations
[[Page 22290]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 422
[CMS-4190-FC4]
RIN 0938-AT97
Medicare Program; Maximum Out-of-Pocket (MOOP) Limits and Service
Category Cost Sharing Standards
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: This final rule with comment period (FC) will finalize the two
remaining proposals from the proposed rule titled ``Medicare and
Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription Drug
Benefit Program, Medicaid Program, Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the Elderly'' which appeared in the
Federal Register on February 18, 2020 (February 2020 proposed rule).
The two proposals being finalized here from the February 2020 proposed
rule include the maximum out-of-pocket (MOOP) limits for Medicare Parts
A and B services and cost sharing limits for Medicare Parts A and B
services, including service category cost sharing limits and per member
per month actuarial equivalence cost sharing. In addition, CMS is
requesting comments in section III of this FC on new or different ways
to update and change cost sharing limits in future years for service
categories subject to the regulations, including mental health
services.
DATES:
Effective date: These regulations are effective on June 13, 2022.
Applicability date: The provisions in this rule will apply to
coverage beginning January 1, 2023.
Comment date: To be assured consideration, comments on section III.
of this FC must be received at one of the addresses provided below, by
July 13, 2022.
ADDRESSES: In commenting, please refer to file code CMS-4190-FC4.
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 <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-4190-FC4, P.O. Box 8013, Baltimore, MD
21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-4190-FC4, 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: Cali Diehl, (410) 786-4053 or
<a href="/cdn-cgi/l/email-protection#1152707d783f557874797d51727c623f7979623f767e67"><span class="__cf_email__" data-cfemail="dc9fbdb0b5f298b5b9b4b09cbfb1aff2b4b4aff2bbb3aa">[email protected]</span></a>.
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: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments.
CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public comments that make
threats to individuals or institutions or suggest that the individual
will take actions to harm the 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
identical or nearly identical to other comments.
Table of Contents
I. Executive Summary and Background
A. Executive Summary
B. Background
II. Codifying Existing Part C and D Program Policy
A. Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and
B Services (Sec. Sec. 422.100 and 422.101)
B. Service Category Cost Sharing Limits for Medicare Parts A and
B Services and per Member per Month Actuarial Equivalence Cost
Sharing (Sec. Sec. 422.100 and 422.113)
III. Request for Comment Regarding the Methodology for CMS To Update
and Change Service Category Cost Sharing Limits (Sec.
422.100(f)(6)(i), (iii), and 422.100(j)(1))
IV. Collection of Information Requirements
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact on Small Businesses--Regulatory Flexibility Analysis
(RFA)
D. Executive Order 13132 (Federalism)
E. Consultation and Coordination With Indian Tribal Governments
F. National Environmental Policy Act (NEPA)
G. Anticipated Effects of Maximum Out-of-Pocket (MOOP) Limits
for Medicare Parts A and B Services (Sec. Sec. 422.100 and 422.101)
and Service Category Cost Sharing Limits for Medicare Parts A and B
Services and per Member per Month Actuarial Equivalence Cost Sharing
(Sec. Sec. 422.100 and 422.113)
H. Alternatives Considered
I. Accounting Statement
J. Conclusion
I. Executive Summary and Background
A. Executive Summary
1. Purpose
This final rule with comment period (FC) makes policy changes in
alignment with federal laws related to the Medicare Advantage (MA or
Part C) program from the 21st Century Cures Act (Pub. L. 114-255). The
rule also includes regulatory changes to strengthen and improve the
Part C program by codifying in regulation several CMS policies
previously adopted through the annual Call Letter and other guidance
documents to interpret and implement rules regarding benefits in MA
plans.
In this FC, we are addressing the two remaining proposals from the
February 2020 proposed rule that were not addressed in the June 2020
final rule (85 FR 33796) and the January 2021 final rule (86 FR 5864):
(1) Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and B
Services (Sec. Sec. 422.100 and 422.101); and (2) Service Category
Cost Sharing Limits for Medicare Parts A and B Services and per Member
per Month Actuarial Equivalence Cost Sharing (Sec. Sec. 422.100 and
422.113). The changes to the proposals we are finalizing in this FC
range from minor edits, reorganizations, corrections, and
clarifications to substantive modifications based on the comments
received, operational considerations (such as, changes stemming from
the timing of this FC), and additional implementation of
antidiscrimination requirements (such as, to support equitable access
to plans for beneficiaries with high health needs). In
[[Page 22291]]
so doing, this FC addresses the following needs for federal regulatory
action:
<bullet> The provisions relating to MOOP and cost sharing limits
improve the operation of the MA program by making updates to reflect
changes in Medicare FFS data projections (thereby ensuring the
government program does not use outdated data) and clarifying existing
policies (thereby answering questions regulated parties may have).
Given the context of these provisions is a federal program, a federal
regulatory approach is appropriate with respect to these provisions.
<bullet> The provisions also codify subregulatory guidance, which
is an improvement in that regulated parties and CMS will have greater
clarity regarding the application of these policies as a rule. Given
the context of these provisions is a federal program, a federal
regulatory approach is appropriate with respect to these provisions.
2. Summary of the Major Provisions
a. Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and B
Services (Sec. Sec. 422.100 and 422.101)
Section 1852(b)(1) of the Act prohibits discrimination by MA
organizations on the basis of health status-related factors and directs
that CMS may not approve an MA plan if CMS determines that the design
of the plan and its benefits are likely to substantially discourage
enrollment by certain MA eligible individuals. In a 2010 final rule,
under the authority of sections 1852(b)(1)(A), 1856(b)(1), and
1857(e)(1) of the Act, CMS added Sec. Sec. 422.100(f)(4) and (5) and
422.101(d)(2) and (3), effective for coverage in 2011, to require all
MA plans (including employer group waiver plans (EGWPs) and special
needs plans (SNPs)) to establish limits on enrollee out-of-pocket cost
sharing for Parts A and B services that do not exceed the annual limits
set by CMS (75 FR 19709 and 19711). Setting MOOP limits is an important
step to ensure plan designs are not discriminatory and protect
beneficiaries from significant changes in out-of-pocket costs
regardless of the MA plan they choose. MA EGWPs must follow all
relevant MA regulations and guidance unless CMS has specifically waived
a requirement using its statutory authority under section 1857(i) of
the Act. Section 1858(b)(2) of the Act requires a limit on in-network
and out-of-pocket expenses for enrollees in Regional Preferred Provider
Organization (RPPO) MA plans. MA Local PPO (LPPO) plans, under Sec.
422.100(f)(5), and RPPO plans, under section 1858(b)(2) of the Act and
Sec. 422.101(d)(3), are required to have two maximum out-of-pocket
(MOOP) limits (also called catastrophic limits) calculated by CMS
annually, including--(1) an in-network limit; and (2) a total
catastrophic (combined) limit that includes both in-network and out-of-
network items and services covered under Parts A and B. Relying on the
same statutory authority, we proposed amendments to the regulations at
Sec. 422.100(f)(4) and (5) and Sec. 422.101(d)(2) and (3) to specify
how these MOOP limits will be set for 2022 and subsequent years. In
addition, our proposals made adjustments to current policy based on
statutory changes that are relevant to how CMS calculates benefit
category cost sharing limits.
We proposed to codify our current practices for setting MOOP limits
with some revisions, including explicitly addressing authority to set
up to three different MOOP limits. In addition, we proposed to conduct
a multiyear transition of end-stage renal disease (ESRD) costs into the
methodology for setting MOOP limits. Section 1851(a)(3) of the Act, as
amended by section 17006 of the 21st Century Cures Act, amended the
Medicare statute to permit Medicare beneficiaries with diagnoses of
ESRD to enroll in MA plans beyond the previous enrollment limitations,
beginning in contract year 2021. Enrollment impacts from section 17006
of the Cures Act are addressed in sections III.A., VII.B.3., and
VIII.D.1. of the June 2020 final rule (85 FR 33796). Before the
amendments made by the Cures Act were effective for contract year 2021,
individuals diagnosed with ESRD could not enroll in a MA plan, subject
to limited exceptions. Generally, those exceptions included the
following circumstances: An individual that developed ESRD while
enrolled in a MA plan could remain in that plan; an ESRD individual
enrolled in a plan which was terminated or discontinued had a one-time
opportunity to join another plan; or, an individual could enroll in a
special needs plan that had obtained a waiver to enroll individuals
with ESRD. We explained that the data we use to calculate the MOOP
limits should also incorporate the out-of-pocket expenditures of
beneficiaries with diagnoses of ESRD, which we are referring to in this
FC as ``ESRD costs,'' to reflect this statutory change. Finally, we
proposed safeguards to protect against excessive changes in the MOOP
limit during and after the ESRD cost transition.
We are finalizing these MOOP proposals generally as proposed with
changes to apply the provisions beginning in contract year 2023 rather
than 2022, make modifications to be responsive to comments (including
adoption of a transition schedule), and improve and clarify the
methodology. A complete discussion of changes from the February 2020
proposed rule is available in section II.A. of this FC.
b. Service Category Cost Sharing Limits for Medicare Parts A and B
Services and per Member per Month Actuarial Equivalence Cost Sharing
(Sec. Sec. 422.100 and 422.113)
Section 1852 of the Act imposes a number of requirements that apply
to the cost sharing and benefit design of MA plans. First, section
1852(a)(1)(B) of the Act specifies that MA plans may not charge
enrollees higher cost sharing than is charged under original Medicare
for chemotherapy administration services (which we have implemented as
including Part B--chemotherapy/radiation drugs integral to the
treatment regimen), skilled nursing care, and renal dialysis services.
This provision is currently reflected in Sec. Sec. 417.454(e) (for
cost plans) and 422.100(j) (for MA plans). We proposed to restructure
paragraph (j) and codify additional cost sharing limits for other
services. We did not propose to change cost plan cost sharing
standards. In addition, after publication of the February 2020 proposed
rule, the Families First Coronavirus Response Act (Pub. L. 116-127)
amended section 1852 of the Act to prohibit MA plans from charging
enrollees higher cost sharing than is charged under original Medicare
for COVID-19 testing and testing-related services identified in section
1833(cc)(1) for which payment would be payable under a specified
outpatient payment provision described in section 1833(cc)(2) during
the period from March 18, 2020 through to the end of the emergency
period described in section 1135(g)(1)(B) (namely, the COVID-19 public
health emergency). The Coronavirus Aid, Relief, and Economic Security
Act (Pub. L. 116-136) amended section 1852(a)(1)(B) to require MA plans
have cost sharing that does not exceed cost sharing in Original
Medicare for a COVID-19 vaccine and its administration described in
section 1861(s)(10)(A) of the Act.
Second, section 1852(a)(1)(B)(i) of the Act provides that the MA
organization must cover, subject to limited exclusions, the benefits
under Parts A and B (that is, basic benefits as defined in Sec.
422.100(c)) with cost sharing that does not exceed or is at least
actuarially equivalent to cost sharing in original Medicare in the
aggregate; this is repeated in a bid requirement under
[[Page 22292]]
section 1854(e)(4) of the Act. We have addressed and implemented this
requirement in several regulations, including Sec. Sec. 422.101(e),
422.102(a)(4), and 422.254(b)(4).
Third, section 1852(a)(1)(B)(iv) of the Act authorizes CMS to add
to the list of items and services for which MA cost sharing may not
exceed the cost sharing levels in original Medicare.
Fourth, section 1852(b)(1) of the Act prohibits discrimination by
MA organizations on the basis of health status-related factors and
directs that CMS may not approve an MA plan if CMS determines that the
design of the plan and its benefits are likely to substantially
discourage enrollment by certain MA eligible individuals. The
requirements under Sec. 422.100(f)(4) and (5) that impose MOOP limits
on MA plans are based on this anti-discrimination provision by
requiring MA local plans to have limits on out of pocket spending by
enrollees in order to ensure that beneficiaries with high health needs
are not dissuaded from enrolling in an MA plan; while the requirements
under Sec. 422.101(d)(2) and (3) implement the statutory catastrophic
limits imposed on regional MA plans under section 1858(b) of the Act,
those limits similarly protect enrollees with high health needs and
avoid discouraging them from enrollment in MA plans. Paragraph (f)(6)
provides that cost sharing must not be discriminatory by imposing cost
sharing limits. Imposing limits on cost sharing for covered services is
an important way to ensure that the cost sharing aspect of an MA plan
design does not discriminate against or discourage enrollment of
beneficiaries who have high health care needs and who need specific
services. CMS issued annual limits on cost sharing for covered services
and guidance addressing discriminatory cost sharing, as applied to
specific benefits and to categories of benefits, in the annual Call
Letter (prior to 2020) and in bidding instructions. In addition,
Chapter 4 of the Medicare Managed Care Manual (MMCM) has contained
long-standing polices regarding discriminatory cost sharing based on
the requirements under paragraphs (f)(4) and (5).
We proposed to codify our current and longstanding practice and
methodology for interpreting and applying the limits on MA cost
sharing, with some modifications. Our cost sharing proposal as a whole,
in combination with the MOOP limit proposal in section VI.A. of the
February 2020 proposed rule, aimed to provide MA organizations
incentives to offer plans with favorable benefit designs for
beneficiaries. As noted in the February 2020 proposed rule,
organizations must also comply with applicable Federal civil rights
laws that prohibit discrimination, including those that prohibit
discrimination on the basis of race, color, national origin, sex
(including sexual orientation and gender identity), age, and
disability, such as section 1557 of the Affordable Care Act, Title VI
of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act
of 1973, and the Age Discrimination Act of 1975. None of the proposals
in the February 2020 proposed rule limited application of such anti-
discrimination requirements. Overall, our proposal aimed to clarify how
we use the most relevant and appropriate information to determine
whether specific cost sharing is discriminatory and to calculate
standards and thresholds above which we believe cost sharing is
discriminatory. We shared our intent to communicate, similar to our
current practice prior to bid submission, how we apply the proposed
methodologies each year, such as through HPMS memoranda, as
appropriate. We solicited comment on the following cost sharing
proposals:
<bullet> Codifying a long-standing interpretation of the current
anti-discrimination provision of section 1852(b)(1) that payment of
less than 50 percent of the total MA plan financial liability
discriminates against enrollees who need those services;
<bullet> Establishing a range of cost sharing limits for basic
benefits furnished on an in-network basis based on the MOOP type
established by the MA plan;
<bullet> Codifying the methodology used to calculate the limits for
MA cost sharing for inpatient hospital acute and psychiatric services
and incorporate ESRD costs into that methodology;
<bullet> Updating the cost sharing limits for emergency and post-
stabilization services and codifying a new rule for cost sharing limits
for urgently needed services;
<bullet> Codifying and adding specific benefits for which MA plans
may not charge enrollees higher cost sharing than is charged under
original Medicare; and
<bullet> Codifying our existing policy regarding the specific
benefit categories for which an MA plan must not exceed the cost
sharing in original Medicare on a PMPM actuarially equivalent basis.
The changes to the cost sharing proposals we are finalizing in this
FC range from minor edits, corrections, and clarifications to
substantive modifications based on the comments received, operational
considerations (such as, changes stemming from the timing of this FC),
and improvements to the methodology. CMS's goal in finalizing the cost
sharing proposals as described in this FC is to adopt standards and
require compliance that further antidiscriminatory requirements (such
as, by supporting equitable access to plans for beneficiaries with high
health needs). A complete discussion of changes from the February 2020
proposed rule is available in section II.B. of this FC.
3. Summary of Costs and Benefits
BILLING CODE 4120-01-P
[[Page 22293]]
[GRAPHIC] [TIFF OMITTED] TR14AP22.000
[[Page 22294]]
[GRAPHIC] [TIFF OMITTED] TR14AP22.001
BILLING CODE 4120-01-C
B. Background
We received approximately 44 timely pieces of correspondence
containing multiple comments for the provisions implemented in this FC
from the February 2020 proposed rule. Comments were submitted by health
plans, provider associations, beneficiary and other advocacy
organizations, and pharmaceutical companies.
We are finalizing the policies from the February 2020 proposed rule
in more than one final rule. The first final rule
[[Page 22295]]
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'' appeared in the
Federal Register on June 2, 2020 (85 FR 33796) (June 2020 final rule),
and contained a subset of regulatory changes that impacted MA
organizations and Part D sponsors more immediately. The second 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'' appeared
in the Federal Register on January 19, 2021 (86 FR 5864) (January 2021
final rule), and contained the majority of the remaining provisions
from the February 2020 proposed rule. This FC addresses the two
remaining provisions from the February 2020 proposed rule.
The changes to the proposals we are finalizing in this FC range
from minor edits, reorganizations, corrections, and clarifications to
substantive modifications based on the comments received, operational
considerations (such as, changes stemming from the timing of this FC),
and improvements to the methodology. CMS's goal in finalizing the cost
sharing proposals as described in this FC is to adopt standards and
require compliance that further antidiscriminatory requirements (such
as, by supporting equitable access to plans for beneficiaries with high
health needs). Summaries of the public comments received and our
responses to those public comments are set forth in the various
sections of this FC under the appropriate headings. We also note that
some of the public comments received for the provisions implemented in
this FC were outside of the scope of the February 2020 proposed rule.
Summaries of the out-of-scope public comments made in relation to the
provisions in this FC are provided in the various sections of this FC
under the appropriate headings.
The Code of Federal Regulations (CFR) will be updated consistent
with the respective effective date of each provision. Because CMS is
finalizing these regulations as applicable for the contract year and
coverage beginning January 1, 2023, the requirements in this FC will
apply to MA bid submissions occurring in calendar year 2022 for
contracts effective January 1, 2023.
II. Codifying Existing Part C and D Program Policy
A. Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and B
Services (Sec. Sec. 422.100 and 422.101)
Section 1852(b)(1) of the Act prohibits discrimination by MA
organizations on the basis of health status-related factors and directs
that CMS may not approve an MA plan if CMS determines that the design
of the plan and its benefits are likely to substantially discourage
enrollment by certain MA eligible individuals. Under the authority of
sections 1852(b)(1)(A), 1856(b)(1), and 1857(e)(1) of the Act, CMS
added Sec. Sec. 422.100(f)(4) and (5) and 422.101(d)(2) and (3),
effective for coverage in 2011, to require all MA plans (including
employer group waiver plans (EGWPs) and special needs plans (SNPs)) to
establish limits on enrollee out-of-pocket cost sharing for Parts A and
B services that do not exceed the annual limits established by CMS (75
FR 19709 through 19711). MA EGWPs must follow all relevant MA
regulations and guidance unless CMS has specifically waived a
requirement under its section 1857(i) of the Act statutory authority.
Section 1858(b)(2) of the Act requires a limit on in-network and out-
of-pocket expenses for enrollees in Regional Preferred Provider
Organization (RPPO) MA plans. In addition, MA Local PPO (LPPO) plans,
under Sec. 422.100(f)(5), and RPPO plans, under section 1858(b)(2) of
the Act and Sec. 422.101(d)(3), are required to have two maximum out-
of-pocket (MOOP) limits (also called catastrophic limits) established
by CMS annually, including (a) an in-network and (b) a total
catastrophic (combined) limit that includes both in-network and out-of-
network items and services covered under Parts A and B. Relying on the
same authority, we proposed amendments to the regulations at Sec. Sec.
422.100(f)(4) and (5) and 422.101(d)(2) and (3) to specify how these
MOOP limits (``MOOP amounts'' when referring to the limit established
by an MA plan) will be set for 2022 and subsequent years. In addition,
our proposals considered statutory changes that are relevant to how CMS
sets cost sharing limits.
Under our current policy, MA organizations are responsible for
tracking out-of-pocket spending incurred by the enrollee (that is, cost
sharing includes deductibles, coinsurance, and copayments, pursuant to
Sec. 422.2) and to alert enrollees and contracted providers when the
MOOP limit is reached. Health Maintenance Organization-Point of Service
(POS) plans may offer out-of-network benefits as supplemental benefits,
but are not required to have these services contribute to the in-
network MOOP limit or to a combined in- and out-of-network MOOP limit.
Although the MOOP limits apply to Parts A and B benefits, an MA
organization can apply the MOOP limit to supplemental benefits as well.
As discussed in the February 2020 proposed rule, CMS currently sets
MOOP limits based on a beneficiary-level distribution of Parts A and B
cost sharing for individuals enrolled in Medicare Fee-for-Service
(FFS). The CMS Office of the Actuary (OACT) conducts an annual analysis
to determine the MOOP limits using the most recent Medicare FFS data
and by projecting cost sharing using trend factors, such as enrollment
changes and enrollment shifts between MA and original Medicare. The
OACT bases its projections on actual claims data for Parts A and B
benefits from the National Claims History files. MOOP limits for 2020,
2021 and 2022 were set under the current regulation text at Sec. Sec.
422.100(f)(4) and (5) and 422.101(d)(2) and (3) that authorizes CMS to
set MOOP limits that strike a balance between limiting costs (meaning
cost sharing and premiums) to enrollees and changes in benefits, with
the goal of ensuring beneficiary access to affordable and sustainable
benefit packages. The mandatory MOOP limit represents approximately the
95th percentile of projected Medicare FFS beneficiary out-of-pocket
spending for the year to which the MOOP limit will apply. Stated
differently, using the contract year 2020 MOOP limits as examples, 5
percent of Medicare FFS beneficiaries are expected to incur
approximately $6,700 or more in Parts A and B deductibles, copayments,
and coinsurance; the voluntary MOOP limit of $3,400 represents
approximately the 85th percentile of projected Medicare FFS out-of-
pocket costs.
A strict application of the thresholds at the 95th and 85th
percentile to set the MOOP limits, since adoption of the MOOP
regulations for 2011, would have resulted in MOOP limits for MA LPPO
and RPPO plans fluctuating from year-to-year. Therefore, CMS exercised
discretion in order to maintain stable MOOP limits from year-to-year,
when the established MOOP limits were approximately equal to the
appropriate percentile. CMS took this approach in an effort to avoid
enrollee confusion (which may result from annual MOOP fluctuations year
over year), allow MA plans to provide stable benefit packages year over
year, and not discourage MA
[[Page 22296]]
organizations from adopting the lower voluntary MOOP limit because of
year to year fluctuations in the MOOP limits set by CMS.
MA plans may establish MOOP amounts that are lower than the CMS-
established maximum limits. As discussed in the February 2020 proposed
rule, for 2020, we considered any MOOP amount within the $0-$3,400
range as a voluntary MOOP limit and any MOOP amount within the $3,401-
$6,700 range as a mandatory MOOP limit. These amounts were updated to
$0-$3,450 for the voluntary MOOP and $3,451-$7,550 for coverage in 2021
and 2022.\1\ The in-network MOOP limit dictates the combined MOOP range
for PPOs (that is, PPOs are not permitted to offer a combined MOOP
amount within the mandatory range, while having an in-network MOOP
amount within the voluntary range). The combined MOOP limit for PPOs is
calculated by multiplying the respective in-network MOOP limits by 1.5
for the relevant year and rounding, if necessary, similar to what we
proposed at Sec. 422.100(f)(4)(iii).\2\ For example, the voluntary
combined MOOP limit for PPOs in contract year 2020 was calculated as
$3,400 x 1.5 = $5,100 (that is, an MA plan that establishes a dollar
limit within the $0-$5,100 range is using a lower, voluntary combined
MOOP limit). Similarly, the mandatory combined MOOP limit for PPOs in
contract year 2020 was calculated as $6,700 x 1.5 = $10,050, rounded
down to the nearest $100 ($10,000) and MA plans that establish a dollar
amount within the $5,101-$10,000 range are using a mandatory combined
MOOP limit.
---------------------------------------------------------------------------
\1\ See the HPMS memorandum titled ``Final Contract Year 2021
Part C Benefits Review and Evaluation,'' issued April 8, 2020, for
information on MOOP and cost sharing limits for contract year 2021
and the HPMS memorandum titled ``Final Contract Year 2022 Part C
Benefits Review and Evaluation,'' issued May 20, 2021, for
information on MOOP and cost sharing limits for contract year 2022.
\2\ CMS. ``Benefits Policy and Operations Guidance Regarding Bid
Submissions; Duplicative and Low Enrollment Plans; Cost Sharing
Standards; General Benefits Policy Issues; and Plan Benefits Package
(PBP) Reminders for Contract Year (CY) 2011'' (2010). Retrieved from
<a href="https://www.cms.gov/Medicare/Health-Plans/HealthPlans/downloads/dfb_policymemo041610final.pdf">https://www.cms.gov/Medicare/Health-Plans/HealthPlans/downloads/dfb_policymemo041610final.pdf</a>.
---------------------------------------------------------------------------
As noted in the February 2020 proposed rule, CMS affords greater
flexibility in establishing Parts A and B cost sharing to MA plans that
adopt a lower, voluntary MOOP amount (including PPO plans with a
combined MOOP limit in the voluntary range) than is available to plans
that adopt the higher, mandatory MOOP amount. The percentage of MA
plans (excluding employer, dual eligible special needs plans (D-SNPs),
and Medicare Medical Savings Accounts plans (MSAs)) offering a
voluntary MOOP limit and the proportion of total enrollees in a plan
with a voluntary MOOP limit (at or below $3,400) have decreased
considerably from contract year 2011 to contract year 2020. Based on
plan data from March 2021, this trend has continued through contract
year 2021 with approximately 18.5 percent of plans (21.5 percent of
enrollees) having an in-network MOOP amount within the range of the
prior voluntary MOOP limit (at or below $3,400), as shown in Table 1.
This percentage access to the voluntary MOOP increases to approximately
23.3 percent of plans (24.8 percent of enrollees) for contract year
2021 after taking into consideration the increase to the voluntary MOOP
limit for that year (at or below $3,450).
[GRAPHIC] [TIFF OMITTED] TR14AP22.002
[[Page 22297]]
CMS explained in the February 2020 proposed rule that we intend to
continue using more than one MOOP limit with a goal of encouraging plan
offerings that result in favorable benefit designs for beneficiaries.
In addition, we explained that by codifying the methodology for how
these MOOP limits will be set, we aimed to increase the level of
transparency for the MOOP and cost sharing policies, and provide more
stability and predictability to the MA program. For example, CMS
expects implementing more than two levels of MOOP and cost sharing
limits may increase beneficiary access to plans with MOOP limits below
the mandatory MOOP limit or with lower cost sharing. CMS also discussed
in the February 2020 proposed rule how section 17006 of the 21st
Century Cures Act amended section 1851(a)(3) of the Act to allow
Medicare eligible beneficiaries with diagnoses of end-stage renal
disease (ESRD) to choose a MA plan for Medicare coverage starting
January 1, 2021, without the restrictions on such enrollment that
previously applied. Based on these prior enrollment restrictions, we
explained how the data historically used by CMS to set the MOOP limits
excluded the projected out-of-pocket spending for beneficiaries with
diagnoses of ESRD, which we are referring to also in this FC as ``ESRD
costs,'' but that we believed the data used to set the MOOP limits for
future years should align with this change in eligibility for the MA
program. The February 2020 proposed rule also identified CMS authority
for its proposal related to MOOP limits for MA plans as flowing from
sections 1852(b)(1)(A), 1856(b)(1), 1857(e)(1), and 1858(b) of the Act.
We proposed to codify our current practice, with some revisions,
substantially revising and restructuring Sec. Sec. 422.100(f)(4) and
(5) and 422.101(d)(2) and (3) as described in the following
subsections.
We are finalizing, for 2023 and subsequent years, the majority of
our MOOP proposals with some changes. The changes include:
<bullet> Codifying explicit ranges used to determine if a MA plan's
in-network (catastrophic) and combined (total catastrophic) MOOP limits
are a mandatory, intermediate, or lower MOOP limit for purposes of
Sec. 422.100(f)(6) and (j) and Sec. Sec. 422.101(d) and
422.113(b)(2)(v).
<bullet> Improving clarity in the regulations regarding how CMS
will set the MOOP limits for 2023 and subsequent years, including how
we will use actuarial principles and practices in making the
projections required by the methodology to set MOOP limits and
calculate the intermediate MOOP limit.
<bullet> Modifying the transition schedule for incorporating ESRD
costs (that is, the out-of-pocket spending for beneficiaries with
diagnoses of ESRD) into the methodology CMS uses to set MOOP limits.
<bullet> Simplifying the maximum threshold of the guardrails which
was proposed to protect MA enrollees from potentially significant
changes in out of pocket costs resulting from changes to the plan's
MOOP amount (during and after the ESRD cost transition is completed).
<bullet> Removing the proposed requirement of a 3-year trend to
update the MOOP limits, after the ESRD cost transition is completed, to
avoid duplicating the OACT practice of trending years of data to
project costs for an applicable year (which will ensure MOOP limits are
updated to reflect changes in Medicare FFS costs in future years).
<bullet> Adopting explicit procedures for annually announcing the
MOOP limits with a process for notice and comment by the public
beginning for contract year 2024.
These changes are discussed in detail in section II.A.4. of this
FC. This FC sets the specific MOOP limits for contract year 2023 using
the methodology and standards in Sec. Sec. 422.100(f) and 422.101(d)
in addition to adopting the rules for 2024 and subsequent years.
1. Authorize Setting Up to Three MOOP Limits on Basic Benefits
(Sec. Sec. 422.100(f)(4) and (5) and Sec. 422.101(d)(2) and (3))
CMS proposed to codify our current practices for setting MOOP
limits with some revisions, including explicitly addressing authority
to set up to three MOOP limits. In addition to the proposals specific
to the methodology for setting the MOOP limits and how to incorporate
ESRD costs into that methodology, we proposed specific rules for the
MOOP limits. These proposals were to do all of the following:
<bullet> Use the term ``basic benefits'' instead of referring to
Medicare Part A and B benefits in our proposed revisions to the
regulations at Sec. Sec. 422.100(f)(4) and (5) and Sec. 422.101(d)(2)
and (3) because the term ``basic benefits'' is now defined in Sec.
422.100(c).
<bullet> Amend Sec. 422.100(f)(4) to state the general rule that,
except as provided in paragraph (f)(5), MA local plans must establish
MOOP limits for basic benefits; as in the current regulation, proposed
paragraph (f)(5) addressed how the MOOP limits apply to the out-of-
network coverage provided by local PPO plans.
<bullet> Codify the rules for PPOs in establishing in-network and
combined (or catastrophic) MOOP limits for basic benefits furnished in-
network and out-of-network in Sec. Sec. 422.100(f)(5) and
422.101(d)(2) and (d)(3).
<bullet> Add cross-references to codify the same limits under both
Sec. 422.100(f)(5) (for MA local PPOs) and Sec. 422.101(d)(3) (for MA
regional plans) for combined MOOP limits that apply to in-network and
out-of-network cost sharing and to codify the same MOOP limit under
Sec. 422.100 (f)(4) (for MA local plans) and Sec. 422.101(d)(2) (for
in-network MA regional plans) to avoid repetitive regulation text.
<bullet> Codify in Sec. Sec. 422.100(f)(4) and (5) and
422.101(d)(2) and (3) the responsibility MA organizations have to track
enrolled beneficiaries' out-of-pocket spending and to alert enrollees
and contracted providers when the MOOP limit is reached. This is
implicit in how a MOOP limit works, but we believe codifying these
responsibilities emphasizes for MA organizations that these
requirements are integral to the administration of basic benefits.
<bullet> Amend Sec. 422.100(f)(4) to authorize CMS, for 2022 and
subsequent years, to set up to three MOOP limits using projections of
beneficiary spending that are based on the most recent, complete
Medicare FFS data, including the current mandatory and voluntary MOOP
limits and a third, intermediate MOOP limit. CMS proposed to use these
terms (lower, intermediate, and mandatory) in referencing MOOP limits
instead of only ``voluntary'' and ``mandatory'' MOOP limits.
<bullet> Codify the current rule for using ranges to identify the
type of MOOP amount an MA plan has established and applying that rule
to the three proposed types of MOOP limits: The mandatory MOOP limit,
the intermediate MOOP limit, and the lower MOOP limit in Sec.
422.100(f)(4)(ii). Specifically, establishing that: (1) The mandatory
MOOP limit is any dollar limit that is above the intermediate MOOP
limit and at or below the mandatory MOOP limit threshold established
each year; (2) the intermediate MOOP limit is any dollar limit that is
above the lower MOOP limit and at or below the intermediate MOOP limit
threshold established each year; and (3) the lower MOOP limit is any
dollar limit that is between $0.00 and up to and including the lower
MOOP limit threshold established each year.
<bullet> Codify specific cost sharing limits and flexibilities tied
to using the intermediate and lower (previously
[[Page 22298]]
``voluntary'') MOOP limits by MA plans (see section II.B. of this FC
for the specific proposals).
2. Codify the Methodology for the Three MOOP Limits for 2022 and
Subsequent Years (Sec. 422.100(f)(4))
CMS proposed to codify generally our current methodology for how we
set MOOP limits with several revisions at Sec. 422.100(f)(4) and to
use cross-references in Sec. Sec. 422.100(f)(5), 422.101(d)(2) and
422.101(d)(3) to establish how MOOP limits are set for local and
regional plans. These proposals were to do all of the following:
<bullet> Amend Sec. 422.100(f)(4) to impose general rules for
setting the MOOP limits and codify the current practice of setting the
MOOP limits based on a percentile of projected Medicare FFS beneficiary
out-of-pocket spending, which would be developed based on the most
recent, complete Medicare FFS data.
<bullet> Codify rounding each MOOP limit to the nearest whole $50
increment, or the lower $50 increment in cases where the MOOP limit is
projected to be exactly in between two $50 increments, in Sec.
422.100(f)(4)(iii).
<bullet> Codify our current policy of setting the combined MOOP
limits (that is, the MOOP limits that cover both in-network and out-of-
network benefits) by multiplying the respective in-network MOOP limits
by 1.5 for the relevant year with rounding, if necessary, for MA
regional plans in Sec. 422.101(d)(3) and using a cross-reference to
that rule for MA local PPOs in Sec. 422.100(f)(5)(i).
<bullet> Establish the rules for setting the MOOP limits for
contract years 2022, 2023, 2024, 2025, and subsequent years in Sec.
422.100(f)(4)(iv), (v), and (vi). The proposal was, in effect, that the
MOOP limits for contract year 2022 would be a recalibration of the MA
MOOP limits by using a methodology adjusted from current practice. For
contract year 2022, we proposed to set the MOOP limits as follows:
<bullet> The mandatory MOOP limit is set at the 95th percentile of
projected Medicare FFS beneficiary out-of-pocket spending.
<bullet> The intermediate MOOP is set at the numeric midpoint of
mandatory and lower MOOP limits.
<bullet> The lower MOOP limit is set at the 85th percentile of
projected Medicare FFS beneficiary out-of-pocket spending.
These MOOP limits would be set subject to the rounding rules at
Sec. 422.100(f)(4)(iii). CMS proposed to use projections for the
applicable contract year of out-of-pocket expenditures for Medicare FFS
beneficiaries that are based on the most recent, complete Medicare FFS
data that incorporates a percentage of the costs incurred by
beneficiaries with diagnoses of ESRD (called ``ESRD costs'' in this
FC), using the ESRD cost transition schedule proposed in paragraph
(f)(4)(vii). In the following subsection, II.A.3. of this FC, we
summarize that transition schedule and the data we proposed to use for
setting MOOP limits.
For future contract years, we proposed to set the MOOP limits using
a methodology that considers the amount of change from the prior year's
MOOP limits to minimize disruption and change for enrollees and plans.
Our proposed methodology was designed to allow MA plans to provide
stable benefit packages year over year by minimizing MOOP limit
fluctuations unless a consistent pattern of increases or decreases in
beneficiary out-of-pocket costs emerges over time. Again, we proposed
that these MOOP limits would be set subject to the rounding rules and
using projections based on the most recent, complete Medicare FFS data
that incorporates a percentage of the costs incurred by beneficiaries
with diagnoses of ESRD, using the transition schedule at Sec.
422.100(f)(4)(vii). In addition, the proposed methodology for MOOP
limits for years 2023 until the end of this transition schedule was
designed to balance the incorporation of increased costs incurred by
beneficiaries with diagnoses of ESRD into the Medicare FFS data
projections used to calculate the MOOP limits with the goal of
providing stability in the MOOP limits. For example, we proposed to
delay the ESRD cost transition in years where the change in the MOOP
limit might otherwise be too significant, specifically when projections
for the upcoming contract year were outside the range of two
percentiles above, or below, the applicable percentile of Medicare FFS
beneficiary out-of-pocket spending (including costs incurred by
Medicare FFS beneficiaries with and without diagnoses of ESRD) from the
prior year. Similarly, the proposed methodology for establishing MOOP
limits for the years following the completion of the transition
schedule was intended to provide stability in the MOOP limits by
placing a cap on how much limits can increase from one year to the next
when certain conditions are met.
To set the mandatory and lower MOOP limits for contract years 2023
and 2024 or, if later, until the end of the ESRD cost transition, we
explained that under our proposal, CMS would--
<bullet> Review OACT projections of out-of-pocket spending for the
applicable year that is based on updated Medicare FFS data, including
all spending regardless of ESRD diagnoses;
<bullet> Compare the applicable year's projection of the 95th
percentile and 85th percentile to the prior year's projections;
<bullet> Determine if the prior year's projections for the 95th
percentile and 85th percentile are within a range, above or below, of
two percentiles of the applicable percentile in that updated
projection. For example, for the contract year 2023 mandatory MOOP
limit, we would determine if the contract year 2022 95th percentile
projection is between or equal to the 93rd and 97th percentiles of the
projections for 2023 out-of-pocket expenditures;
<bullet> If the prior year's 95th and 85th percentile projections
are between or equal to the two percentile ranges above or below, we
would continue the ESRD cost transition schedule proposed at Sec.
422.100(f)(4)(vii) for one or both of the MOOP limits;
<bullet> If one or both of the prior year's 95th and 85th
percentile projections are not within the two percentile ranges above
or below, we would increase or decrease one or both of the MOOP limits
up to 10 percent of the prior year's MOOP limit annually until the MOOP
limit reaches the projected 95th percentile for the applicable year,
subject to the rounding rules as proposed at Sec. 422.100 (f)(4)(iii).
For example, if the dollar amount that needs to be transitioned
represents 15 percent, then 10 percent would be addressed during the
upcoming contract year, while any remaining amount would be addressed
during the following contract year (if applicable based on updated data
projections from the OACT). During this period of time, we would delay
implementation of the next step in the ESRD cost transition schedule
proposed in paragraph (f)(4)(vii). The ESRD cost transition schedule
would resume at the rate that was scheduled to occur once the prior
year's projected 95th and 85th percentile remains within the range of
two percentiles above or below the projected 95th percentile for the
upcoming contract year. For example, for the contract year 2023
mandatory MOOP limit, if the 2023 projected 95th percentile corresponds
to the projected 98th percentile for contract year 2022 out-of-pocket
expenditures, we would set the contract year 2023 mandatory MOOP by
increasing the contract year 2022 mandatory MOOP limit by up to 10
percent and rounding as proposed at paragraph (f)(4)(iii); and
<bullet> The intermediate MOOP limit would be set by either
maintaining it as the prior year's intermediate MOOP
[[Page 22299]]
limit (if the mandatory and lower MOOP limits are not changed), or
updating it to the new numerical midpoint of the mandatory and lower
MOOP limits, and rounding as proposed at Sec. 422.100(f)(4)(iii).
We proposed regulation text to implement this process for setting
the mandatory, intermediate, and lower MOOP limits at Sec.
422.100(f)(4)(v), with paragraphs (f)(4)(v)(A), (B) and (C) addressing
the mandatory, intermediate, and lower MOOP limits respectively.
For contract year 2025 (or the year following the conclusion of the
ESRD cost transition schedule proposed at Sec. 422.100(f)(4)(vii)) and
for subsequent years, we proposed to include in the methodology a
process to consider trends that are consistent for 3 years. The
proposed regulation text included ``or following the ESRD cost
transition'' to clarify that the ESRD cost transition schedule may end
in 2025 or extend longer due to how we proposed to handle any sudden
increases or decreases in costs. For example, if for contract year
2023, the projected 95th percentile amount represents the 98th
percentile from the prior year's (contract year 2022) projections, then
we would only increase the MOOP limit for contract year 2023 by up to
10 percent of the prior year's MOOP amount and extend the ESRD cost
transition schedule past 2025 by the number of years it takes until the
upcoming year's projected 95th percentile amount was within two
percentiles above or below the prior year's projection of the 95th
percentile. We also proposed the methodology for the mandatory and
lower MOOP limits for contract year 2025 or following the ESRD cost
transition schedule. Specifically, CMS proposed that the prior year's
corresponding MOOP limit is maintained for the upcoming contract year
if: (1) The prior year's MOOP limit amount is within the range of two
percentiles above or below the projected 95th or 85th percentile of
Medicare FFS beneficiary out-of-pocket spending incurred by
beneficiaries with and without diagnoses of ESRD; and (2) the projected
95th or 85th percentile did not increase or decrease for 3 consecutive
years in a row. If the prior year's corresponding MOOP limit is not
maintained because either (1) or (2) occur, CMS would increase or
decrease the MOOP limit by up to 10 percent of the prior year's MOOP
limit amount annually until the MOOP limit reaches the projected
applicable percentile for the applicable year, based on the most
recent, complete Medicare FFS data projections from the OACT. The
intermediate MOOP limit would be set by either maintaining it as the
prior year's intermediate MOOP limit (if the mandatory and lower MOOPs
are not changed), or updating it to the new numerical midpoint of the
mandatory and lower MOOP limits, and rounding as proposed in paragraph
(f)(4)(iii). We proposed regulation text to implement this process for
setting the mandatory, intermediate, and lower MOOP limits for contract
year 2025 or following the data transition schedule and subsequent
years at paragraph (f)(4)(vi), with paragraphs (f)(4)(vi)(A), (B), and
(C) addressing the mandatory, intermediate, and lower MOOP limits
respectively.
We explained that the principal goals of our proposal were to
outline clearly the methodology for establishing the MOOP limits, to
provide stability in MOOP limits and benefit packages, minimize
fluctuations in the MOOP limits from year-to-year, and to minimize the
potential for enrollee confusion that may result from fluctuations from
year-to-year in the MOOP limit. We solicited comment on whether the
February 2020 proposed rule would accomplish those things.
3. Multiyear Transition of ESRD Costs Into the Methodology for MOOP
Limits (Sec. 422.100(f)(4))
Section 1851(a)(3) of the Act, as amended by section 17006 of the
21st Century Cures Act, permits Medicare beneficiaries with diagnoses
of ESRD to enroll in MA plans beyond the previous enrollment
limitations, beginning in contract year 2021. As discussed in the
February 2020 proposed rule, CMS expected this change will result in
Medicare beneficiaries with diagnoses of ESRD to begin transitioning to
or choosing MA plans in greater numbers than previously. Specifically,
the OACT expected ESRD enrollment in MA plans to increase by 83,000
beneficiaries as a result of the 21st Century Cures Act provision. The
OACT assumed the increase would be phased in over 6 years, with half of
those beneficiaries (41,500) enrolling during 2021. Based on actual
2021 enrollment data, the OACT continues to project that 83,000
beneficiaries with diagnoses of ESRD will enroll in the MA program over
6 years. We explained that the data we use to set the MOOP limits
should also incorporate the out-of-pocket expenditures of beneficiaries
with diagnoses of ESRD to reflect this statutory change.
For 2020 and prior years, CMS set MOOP limits using projected
Medicare FFS beneficiary out-of-pocket spending for the year, based on
a beneficiary-level distribution of Parts A and B cost sharing for
individuals enrolled in Medicare FFS and excluding all costs for
beneficiaries with ESRD. For example, for contract year 2020 MOOP
limits, we used projected out-of-pocket costs for Medicare FFS
beneficiaries (excluding out-of-pocket costs from beneficiaries with
diagnoses of ESRD) prepared by the OACT, based on the most recent
Medicare FFS data (from 2014 to 2018). We excluded the costs for
individuals with diagnoses of ESRD because of the limits on when and
how a Medicare beneficiary with diagnoses of ESRD could enroll in an MA
plan under section 1851(a) of the Act. In the February 2020 proposed
rule we stated that in contract year 2018, 0.6 percent of the MA
enrollee population, or approximately 121,000 beneficiaries, have
diagnoses of ESRD. This statistic was based on the statutory definition
of ESRD and CMS data. Using more recent enrollment data, the number of
beneficiaries enrolled in MA in contract year 2018 with diagnoses of
ESRD is lower than previously stated, approximately 120,100 (which does
not impact the 0.6 percent of the MA enrollee population figure).\3\
For 2021 and 2022, CMS set the voluntary and mandatory MOOP limits by
applying the standard in Sec. Sec. 422.100(f)(4) and (5) and
422.101(d)(2) and (3). Because of the expected changes in enrollment in
MA plans by beneficiaries with diagnoses of ESRD beginning in 2021, we
incorporated 40 percent of the ESRD cost differential (the difference
between projected out-of-pocket costs for Medicare FFS beneficiaries
with and without diagnoses of ESRD and only those without diagnoses of
ESRD) for 2021 which increased both types of MOOP limits from 2020.
These MOOP limits were maintained for contract year 2022.\4\
---------------------------------------------------------------------------
\3\ The Fiscal Year President's Budgets may be accessed at
<a href="https://www.govinfo.gov/app/collection/BUDGET/">https://www.govinfo.gov/app/collection/BUDGET/</a> and the annual
Advance Notice and Rate Announcements may be accessed at <a href="https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents">https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents</a>. In addition, see page 14 from the 2020
Rate Notice and Final Call Letter, retrieved from <a href="https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf">https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf</a>.
\4\ See the HPMS memorandum titled ``Final Contract Year 2021
Part C Benefits Review and Evaluation,'' issued April 8, 2020, for
information on MOOP and cost sharing limits for contract year 2021.
See the HPMS memorandum titled ``Final Contract Year 2022 Part C
Benefits Review and Evaluation,'' issued May 20, 2021, for
information on MOOP and cost sharing limits for contract year 2022.
---------------------------------------------------------------------------
CMS developed the approach to conduct a multiyear transition of
ESRD costs into the methodology for how CMS establishes MOOP limits
with input from the OACT. CMS did not
[[Page 22300]]
expect that those Medicare beneficiaries with diagnoses of ESRD that
were expected to switch from FFS to MA would enroll in the MA program
immediately after the enrollment limitations were lifted and as such,
CMS did not propose to integrate all of the costs associated with all
beneficiaries with diagnoses of ESRD within one contract year.
As part of developing the proposal, CMS looked at the impact of
factoring in 100 percent of the costs of beneficiaries with ESRD into
the data used to set MA MOOP limits. Using the most recent Medicare FFS
data available at the time of the February 2020 proposed rule (2015 to
2019 data, with 2018 being the most heavily weighted), the OACT
projected the out-of-pocket costs for Medicare FFS beneficiaries. Based
on this data, we compared the 95th and 85th percentiles of the
projected out-of-pocket costs for all Medicare FFS beneficiaries for
the 2021 contract year to the $7,175 and $3,360 dollar amounts
(calculated using the 95th and 85th percentiles of the projections
without ESRD costs) to calculate the cost difference, which we
consistently refer to as an ESRD cost differential. CMS calculated the
$999 95th percentile ESRD cost differential by comparing the $7,175 to
$8,174 with related ESRD costs, a difference of $999.
As discussed in the February 2020 proposed rule, our goal is to
strike a balance between potential increases in plan costs and enrollee
costs (meaning cost sharing and premiums) by scheduling adjustments to
the MOOP limits (that is, adjustments to include data about the costs
incurred by beneficiaries with diagnoses of ESRD into the data used to
set the MOOP limits) to reflect a reasonable transition of ESRD
beneficiaries into the MA program. Accordingly, our proposed revisions
to the current methodology for setting MOOP limits included a scheduled
transition for incorporating ESRD costs to allow MA organizations to
plan for the change and mitigate sudden changes in MOOP limits, benefit
designs, and premiums that could be disruptive to enrollees and MA
organizations. To accomplish this, we proposed to do all of the
following:
<bullet> Codify at Sec. 422.100(f)(4)(vii) a multiyear transition
schedule from our current practice of excluding all costs incurred by
beneficiaries with diagnoses of ESRD to including all related costs
into the Medicare FFS data that is used to set the MOOP limits.
<bullet> Add Sec. 422.100(f)(4)(vii) to define the term ``ESRD
cost differential'' to refer to the difference between: (1) Projected
out-of-pocket costs for beneficiaries using Medicare FFS data excluding
the costs incurred by beneficiaries with ESRD diagnoses for contract
year 2021 and (2) the projected out-of-pocket costs for all
beneficiaries using Medicare FFS data (including the costs incurred by
beneficiaries with ESRD diagnoses) for each year of the ESRD cost
transition.
<bullet> Identify the specific dollar amounts in the regulation
text defining the ESRD cost differential at Sec. 422.100(f)(4)(vii),
as $7,175 for the 95th percentile and $3,360 for the 85th percentile
based on the projected costs incurred by beneficiaries without ESRD
diagnoses for the 2021 contract year.
<bullet> Add Sec. 422.100(f)(4)(vii)(A), (f)(4)(vii)(B), and
(f)(4)(vii)(C) to establish a specific schedule for factoring in an
increasing percentage of the ESRD cost differential annually until 2024
or, if later, the final year of the transition and beyond.
<bullet> Begin the regulatory ESRD cost transition with the 2022
contract year, factoring in 60 percent of the ESRD cost differential
and increasing that percentage by 20 percentage points for each
successive year of the transition, as follows:
--For 2023 (or the next year of the transition), factor in 80 percent
of the ESRD cost differential.
--For 2024 (or the final year of the transition), factor in 100 percent
of the ESRD cost differential.
While we proposed to factor in the ESRD cost differential for
contract year 2022 through contract year 2024, CMS initially started
incorporating ESRD costs into the MOOP limits for contract year 2021.
Specifically, CMS calculated the MOOP limits for contract year 2021,
under the current regulations, using projections of Medicare FFS cost
data from 2015 to 2019 for beneficiaries without diagnoses of ESRD. The
OACT determined the Medicare FFS percentiles for 2021 by applying
Medicare FFS cost sharing trends (consistent with the 2019 Medicare
Trustees Report) to project contract year 2021 costs. CMS then added in
40 percent of the ESRD cost differential to the projected Medicare FFS
percentiles. A more complete discussion on how CMS set MOOP limits for
contract year 2021 is available in the HPMS memorandum titled ``Final
Contract Year 2021 Part C Benefits Review and Evaluation,'' issued
April 8, 2020. In the February 2020 proposed rule, CMS also proposed a
methodology to prevent excessive changes in the MOOP limit. Taking into
consideration both the 2021 MOOP limits and our proposal for contract
years 2022 through 2024, CMS's proposed policy would have effectively
used a 4-year period to transition to full incorporation of ESRD costs.
CMS included in the February 2020 proposed rule two tables (Table
4, ``Illustrative Example of In-Network MOOP Limits Based on Most
Recent Medicare FFS Data Projections'' and Table 5, ``Illustrative
Example of Combined MOOP Limits for LPPO and Catastrophic (MOOP) Limits
for RPPO Plans Based on Most Recent Medicare FFS Data Projections'') to
show the potential impact of incorporating the out-of-pocket costs of
Medicare FFS beneficiaries with diagnoses of ESRD into the methodology
for the MOOP limits proposed at Sec. Sec. 422.100(f)(4) and (5) and
422.101(d)(2) and (3) (85 FR 9077). These tables were developed to
project 2021 costs using Medicare FFS data from 2015-2019, which was
the most recent Medicare FFS data available at the time of the February
2020 proposed rule. In developing Tables 4 and 5 from the February 2020
proposed rule, we applied the proposed methodology, including not only
the multiyear transition for incorporating the ESRD cost differential
but also the rounding rules, and illustrated the ranges for the three
MOOP limits. We explained that the tables were only illustrative MOOP
limits for contract years 2022 through 2024 based on the most, recent
complete Medicare FFS data at the time the February 2020 proposed rule
was developed. As a result, we noted actual MOOP limits for these
contract years may be different from the illustrative limits based on
updated Medicare FFS data and projections. As part of our proposal, we
explained that we would apply the methodology as codified and publish
the resulting MOOP limits for each year on a timely basis, such as
through an HPMS memorandum, with a description of how the regulation
standard was applied, but we did not propose to codify the timeframe or
a requirement for that publication.
In conclusion, we proposed to amend Sec. Sec. 422.100(f)(4) and
(5) and 422.101(d)(2) and (3) as described to allow plans to provide
stable benefit packages year over year by minimizing MOOP limit
fluctuations unless a consistent pattern of increases or decreases in
costs emerges over time. We solicited comment on this approach in light
of our goal of avoiding enrollee confusion and maintaining stable
benefit packages. We also solicited comments whether our proposed
regulation text adequately and clearly specified the methodology that
would be used to set the MOOP limits each
[[Page 22301]]
year. We noted our intention to issue annual guidance applying these
rules, in advance of the bid deadline so that MA organizations know and
understand the MOOP limits for the upcoming year.
4. Comments Received and Responses for All MOOP Limit Provisions
We received feedback from 27 commenters on this proposal. The
majority of comments were from health plans, provider associations,
beneficiary and other advocacy organizations, and pharmaceutical
companies. A summary of the comments (generally by issue) and our
responses follows:
Comment: Several commenters supported CMS's proposals related to
MOOP limits overall and some additional commenters supported codifying
longstanding policies in regulation, including the Medicare FFS
percentiles used to determine the MOOP limits. A few commenters that
supported codifying longstanding policies in regulation noted that the
standardization, transparency, and predictability of formal rulemaking
provides program stability. A few other commenters specifically
appreciated the additional transparency in how CMS sets the MOOP
limits. A commenter was supportive of the MOOP limit proposal to codify
the methodology CMS uses to set the MOOP limits and the addition of the
third intermediate MOOP limit for the flexibility it would provide for
MA organizations to innovate, improve available benefit offerings, and
provide beneficiaries with affordable MA plans tailored to their unique
healthcare needs and financial situation. Another commenter appreciated
the opportunity to provide feedback to guide implementation processes.
Response: We thank commenters for their support. CMS believes
codifying these flexibilities in regulation will encourage MA
organizations to develop plan designs to take advantage of the
flexibilities as well as provide transparency and stability for the MA
program. In addition, we expect MA organizations will have a greater
understanding about how the MOOP limits are calculated and be better
prepared to anticipate changes in MOOP limits in future years as a
result of this provision. As we discussed in the February 2020 proposed
rule and in more detail in our responses to comments, the goals of this
rulemaking touch on several issues and we believe that this FC will
result in positive outcomes for the MA program.
The changes to the proposals we are finalizing in this FC range
from minor edits, reorganizations, corrections, and clarifications to
substantive modifications based on the comments received, operational
considerations (such as, changes stemming from the timing of this FC),
and improvements to the methodology. Our goal in finalizing the cost
sharing proposals as described in this FC is to adopt standards and
require compliance that further antidiscriminatory requirements (such
as, by supporting equitable access to plans for beneficiaries with high
health needs). Because of the timing of this FC, operational
considerations, and to help ensure that MA organizations have
sufficient implementation time, the provisions in this FC will be
applicable for coverage beginning January 1, 2023. This reflects a one-
year delay from the proposed implementation schedule. When MA bids for
contract year 2023 are submitted for review and approval by the
statutory deadline (June 6, 2022 for contract year 2023), the
regulations and final MOOP and cost sharing limits in this FC will be
used to evaluate those bids for approval as well as applying to the
coverage provided beginning January 1, 2023. Several modifications to
the proposed regulation text (for example, changing a reference from
January 1, 2022 to January 1, 2023 in Sec. 422.100(f)(4)) are because
of this change in the implementation of the MOOP provisions. Therefore,
to avoid repetitive text in responses to comments in this section II.A.
of this FC, we explain here that the proposed regulation text in
Sec. Sec. 422.100 and 422.101 was modified to change implementation by
1 year. Changes to the implementation of the proposed policies that are
more nuanced are explained in detail (for example, section II.A.4.c. of
this FC addresses the multi-year transition schedule of ESRD costs into
MOOP limits). For the same reason, to avoid repetitive text, where
there is no distinction made about the Medicare FFS data projections
used, CMS means the data includes out-of-pocket costs from
beneficiaries with and without diagnoses of ESRD. Specifically, the
term ``Medicare FFS data projections'' is used as defined in Sec.
422.100(f)(4)(i).
We take this opportunity to clarify, in addition to the discussion
in the February 2020 proposed rule, which costs are tracked and
accumulate toward the MOOP limit. As discussed 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'' that appeared in the Federal Register on April 15, 2011
(76 FR 21431) (April 2011 final rule), the in-network (catastrophic)
and combined (total catastrophic) MOOP limits consider only the
enrollee's actual out-of-pocket spending for purposes of tracking out
of pocket spending relative to its MOOP limit. This approach also
applies to D-SNPs. Thus, for any D-SNP enrollee, MA plans are only
required to count those amounts the individual enrollee is responsible
for paying net of any State responsibility or exemption from cost
sharing toward the MOOP limit rather than the cost sharing amounts for
services the plan has established in its plan benefit package (PBP).
(MA plans are permitted to count toward the MOOP any cost sharing that
is exempted from collection because the enrollee is dually eligible for
Medicare and Medicaid or that has been paid by Medicaid, but are not
required to do so.) We did not propose in the February 2020 proposed
rule to change the policy adopted in the April 2011 final rule
regarding which cost sharing amounts must be counted toward the MOOP
limit. We are finalizing the amended regulations at Sec. 422.100(f)(4)
and (f)(5) using the phrase ``incurred by the enrollee'' to be
consistent with current Sec. 422.101(d)(4), which refers to costs
``incurred by'' the enrollee in describing the MOOP limit. In the
proposed rule titled, ``Medicare Program; Contract Year 2023 Policy and
Technical Changes to the Medicare Advantage and Medicare Prescription
Drug Benefit Programs'' that appeared in the Federal Register on
January 12, 2022 (87 FR 1842) (January 2022 proposed rule), CMS is
proposing that the MOOP limit in an MA plan (after which the plan pays
100 percent of MA costs for Part A and Part B services) be applied
based on the accrual of all cost-sharing in the plan benefit,
regardless of whether that cost sharing is paid by the beneficiary,
Medicaid, other secondary insurance, or remains unpaid because of State
limits on the amounts paid for Medicare cost-sharing and dually
eligible individuals' exemption from Medicare cost-sharing. Throughout
this FC and in the various regulations adopted here, we use ``incurred
by'' in referring to out-of-pocket costs of an MA enrollee that are
counted toward accumulation of the MA plan's MOOP amount to avoid
suggesting this FC adopts an unproposed change in the policy from the
April 2011 final rule or distinction in the data we use regarding out-
of-pocket costs in the Medicare FFS program. In light of the January
2022 proposed rule, we note that the amendments regarding the phrase
``incurred by the enrollee'' described in this response may be subject
to change if a final rule for the MOOP attainment proposal is
published. However, other
[[Page 22302]]
than in the specific cases related to an MA organization's obligation
to track the MOOP limit for enrollees, the term is used in a more
general sense that does not specifically incorporate this aspect of the
current regulations for MOOP limits as applied to dually eligible
individuals.
Under this FC, MA organizations are responsible for tracking out-
of-pocket spending incurred by the enrollee, and must alert enrollees
and contracted providers when the applicable MOOP amount is reached
(for Sec. 422.100(f)(4) the in-network MOOP; for paragraph (f)(5)(iii)
the combined MOOP). In addition, we are not finalizing the regulations
at Sec. 422.101(d)(2)(ii) and (d)(3)(iii) as proposed (which
substantively addressed the same requirement for the catastrophic (in-
network) MOOP and the total catastrophic (combined) MOOP) to avoid
repeating text that is in paragraph (d)(4). Existing Sec.
422.101(d)(4) requires MA regional plans to track the deductible (if
any) and catastrophic limits in paragraphs (d)(1) through (d)(3) based
on incurred out-of-pocket beneficiary costs for original Medicare
covered services and to notify members and health care providers when
the deductible (if any) or a limit has been reached; we are not making
any revisions to that specific provision. As finalized, the regulations
at Sec. 422.100(f)(4) and (f)(5)(iii) require MA organizations to
track out-of-pocket spending incurred by the enrollee in a local MA
plan and alert enrollees and contracted providers when the applicable
MOOP amount (in-network, combined, catastrophic, or total catastrophic)
is reached. This FC maintains the ability for D-SNPs to establish zero
cost sharing for enrollees who are dually enrolled in both Medicare and
Medicaid. For example, in a Zero-Dollar Cost Sharing D-SNP, Medicare
inpatient hospital stays and doctor visits are available at no cost to
the enrollee. A Medicare Non-Zero Dollar Cost Sharing D-SNP is a D-SNP
under which the cost sharing for Medicare Part A and B services varies
depending on the enrollee's category of Medicaid eligibility.
Comment: A few commenters requested that CMS educate beneficiaries
with diagnoses of ESRD about their costs and plan choices in the MA
program. Related to this topic, another commenter noted that dialysis
providers may make special efforts to educate their patients about the
option to enroll in a MA plan, so that the beneficiary may benefit from
potential reductions in out-of-pocket costs because of the MOOP limit
and the value of supplemental benefits in addition to the dialysis
provider potentially being paid higher than Medicare FFS rates due to
provider concentration and network adequacy requirements in the MA
program.
Response: We agree with the commenters in that all beneficiaries
should have access to the information they need to make informed
decisions about what health plan best fits their needs. Enrollment of
beneficiaries with diagnoses of ESRD in MA increased in the years prior
to 2021 while the limitations on enrollment were in place. This
suggests that this patient population is knowledgeable about Medicare
plan choices. In addition, MA organizations, providers, and other
stakeholders have been aware of the program change to allow (beyond the
previous enrollment exceptions) Medicare beneficiaries with diagnoses
of ESRD to enroll in MA beginning with contract year 2021 since the
enactment of section 17006 of the 21st Century Cures Act in December
2016. CMS expects that MA organizations, providers, State Health
Insurance Assistance Programs, and other stakeholders have and will
continue to communicate information about MA plan options to all
Medicare eligible beneficiaries, including those with diagnoses of
ESRD. Section 422.111 requires that MA plans make materials available
to existing and prospective enrollees, including provider networks,
benefit coverage, and cost sharing. We believe that those requirements
will also ensure that eligible beneficiaries, including those with
diagnoses of ESRD, receive plan-level information they need to make an
enrollment election. In addition, CMS provides a Medicare & You
handbook to all beneficiaries annually which includes information about
MA plan options and eligibility (including for those with diagnoses of
ESRD). We agree with the comment that dialysis and other specialty
providers typically involved in caring for patients with diagnoses of
ESRD may choose to make special efforts to educate their patients about
the MA program. (We remind MA organizations that they and their
downstream entities must comply with applicable marketing and
communication regulations, including the limits on MA marketing
activities with healthcare providers and in healthcare settings in
Sec. 422.2266.) CMS also expects beneficiaries with diagnoses of ESRD
will evaluate all available health care plan options, including MA
plans.
Comment: Several commenters had general concerns about
beneficiaries with diagnoses of ESRD being discouraged from enrollment
or having a lack of access to MA plans due to discriminatory benefit
designs. For example, some commenters noted that enrollees with
diagnoses of ESRD are more expensive and will reach the MOOP amount
more quickly than enrollees without diagnoses ESRD, so MA organizations
may have an incentive to discourage enrollment of beneficiaries with
diagnoses of ESRD. In addition, commenters suggested MA plans may tier
or use different out of pocket costs based on certain conditions, or
limit benefits for ESRD enrollees compared to other enrollees. A
commenter noted concerns about ESRD enrollees having adequate access to
MA plan options based on the MOOP limits and network adequacy time and
distance requirements (another provision from the February 2020
proposed rule).
Response: MA plans may not use higher MOOP amounts or limit
benefits for enrollees with diagnoses of ESRD and CMS's review of bids
will evaluate for and deny benefit packages that CMS determines are
designed to discourage enrollment by beneficiaries with diagnoses of
ESRD. As noted in the February 2020 proposed rule, section 1852(b)(1)
of the Act prohibits discrimination by MA organizations on the basis of
health status-related factors and directs that CMS may not approve an
MA plan if CMS determines that the design of the plan and its benefits
are likely to substantially discourage enrollment by certain MA
eligible individuals. In addition, as stated in section VI.B. of the
February 2020 proposed rule (page 9079), MA organizations must comply
with applicable Federal civil rights laws that prohibit discrimination
on the basis of race, color, national origin, sex (including sexual
orientation and gender identity), age, disability, including section
1557 of the Affordable Care Act, title VI of the Civil Rights Act of
1964, section 504 of the Rehabilitation Act of 1973, and the Age
Discrimination Act of 1975. The regulation at Sec. 422.110 provides
that an MA organization may not deny, limit, or condition the coverage
or furnishing of benefits to individuals eligible to enroll in an MA
plan offered by the organization on the basis of any factor that is
related to health status. MA organizations discouraging or preventing
enrollment in an MA plan by beneficiaries on the basis of their ESRD
diagnoses after January 1, 2021, would be prohibited by Sec. 422.110.
CMS relies on the MA anti-discrimination provision, the agency's
authority under
[[Page 22303]]
section 1856(b) of the Act to adopt standards for MA organizations, and
the agency's authority under section 1857(e) of the Act to add terms
and conditions that are necessary, appropriate, and not inconsistent
with the Medicare statute in setting the requirements under Sec.
422.100(f)(4) and (5) that impose MOOP limits on local MA plans in
alignment with the statutory catastrophic limits imposed on regional MA
plans under section 1858(b) of the Act. We believe that requiring the
inclusion of a MOOP limit in plan benefit design is necessary in order
not to discourage enrollment by individuals who utilize higher than
average levels of health care services (that is, in order for a plan
not to be discriminatory in violation of section 1852(b)(1) of the
Act). None of the provisions in this FC limit application of other
anti-discrimination requirements.
As we discussed in the CY 2019 Call Letter \5\ and April 2018 final
rule (83 FR 16440), the flexibility we have adopted for how MA plans
must offer uniform benefits is premised on MA plans furnishing
additional benefits to improve treatment and outcomes for a specific
health condition; that flexibility may not be used to lower or restrict
benefits based on health status (83 FR 16480 through 16481). Therefore,
the flexibility to offer additional supplemental benefits based on a
connection with a particular health condition may not be used as a
means to discourage enrollment by or discriminate against beneficiaries
with diagnoses of ESRD. We encourage beneficiaries and other
stakeholders to bring to our attention marketing and communications
materials or other activities that may indicate that an MA organization
is violating the anti-discrimination requirements applicable in the
Medicare Advantage program by contacting 1-800-MEDICARE or by
submitting a Medicare Complaint Form online.\6\
---------------------------------------------------------------------------
\5\ Available at: <a href="https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents">https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents</a>.
\6\ The online Medicare Compliant Form may be accessed and
submitted at: <a href="https://www.medicare.gov/medicarecomplaintform/home.aspx">https://www.medicare.gov/medicarecomplaintform/home.aspx</a>.
---------------------------------------------------------------------------
a. Authorize Setting Three MOOP Limits on Basic Benefits (Sec. Sec.
422.100(f)(4) and (5) and 422.101(d)(2) and (3))
Comment: Several commenters supported CMS's proposal to add a
third, intermediate MOOP limit. Commenters who supported the proposal
noted that an intermediate MOOP limit will provide MA organizations the
flexibility to innovate, improve benefit designs to offer high-value
plan options to beneficiaries, and provide beneficiaries with
affordable MA plans tailored for their unique healthcare needs and
financial situation. A commenter stated this flexibility is
increasingly important, as CMS has allowed MA organizations to develop
specialized plans designed to address beneficiaries with chronic
conditions. Another commenter was supportive and stated lower MOOP
limits provide critical affordability protection for MA beneficiaries
as actuarial firm modeling has shown that the voluntary MOOP limit
provides substantial value to MA enrollees without driving higher
member premiums.\7\ Several commenters supported CMS monitoring over
time whether changes from the provisions in this FC result in
beneficiaries having access to plan offerings with MOOP limits below
the mandatory MOOP limit or lower cost sharing. A commenter noted that
this monitoring is critically important to ensuring that CMS can
effectively enforce the anti-discrimination provision of the statute.
---------------------------------------------------------------------------
\7\ Julia M. Friedman, Brett L. Swanson, Mary G. Yeh, and Jordan
Cates, Milliman Inc., ``State of the 2020 Medicare Advantage
industry: As strong as ever.'' February 14, 2020 <a href="https://at.milliman.com/en/insight/state-of-the-2020--medicare-advantage-industry-as-strong-as-ever">https://at.milliman.com/en/insight/state-of-the-2020--medicare-advantage-industry-as-strong-as-ever</a>.
---------------------------------------------------------------------------
Response: We appreciate the support. By implementing more than two
types of MOOP limits and providing increased flexibility in the cost
sharing limits for MA organizations with a lower MOOP amount, we expect
to encourage MA plan offerings with favorable benefit designs so that
beneficiaries can choose plans that meet their needs. CMS compared the
percentage of contract year 2021 plans with MOOP amounts within the
final dollar range of each MOOP type for contract year 2023 (as
calculated using the methodology set through this FC) to determine the
proportion of plans that established a MOOP amount that would be
considered one of the three MOOP types we are finalizing for use
beginning in contract year 2023. Based on plan data from March 2021
(excluding employer, D-SNPs, and MSA plans), the percentage of contract
year 2021 plans (and enrollees) with an in-network MOOP amount within
the final dollar range of each MOOP type for contract year 2023 (as
shown in Table 5, which incorporates ESRD costs as discussed in section
II.A.4.c. of this FC) is approximately:
<bullet> 24.9 percent of plans (25.8 percent of enrollees) have an
in-network MOOP amount between $0 and $3,650 (the contract year 2023
lower MOOP limit);
<bullet> 36.9 percent of plans (41.7 percent of enrollees) have an
in-network MOOP amount between $3,651 and $6,000 (the contract year
2023 intermediate MOOP limit); and
<bullet> 38.2 percent of plans (32.6 percent of enrollees) have an
in-network MOOP amount between $6,001 (the lowest range amount for the
contract year 2023 mandatory MOOP limit) and $7,550 (the highest
allowable contract year 2021 mandatory MOOP amount).
This distribution shows that the smallest proportion of contract
year 2021 plans established a MOOP amount that would qualify for a
lower MOOP type in contract year 2023 (see Table 5 for the final
contract year 2023 MOOP limits). A contributing factor to this
distribution may be how most cost sharing standards for professional
services have been historically set at the same amount regardless of
the MOOP type (mandatory or lower, previously ``voluntary'' MOOP limit)
established by the MA plan. In section VI.B. of the February 2020
proposed rule, we proposed differentiating cost sharing limits for
highly utilized services (for example, primary care physician and
physician specialist PBP service categories) and various other cost
sharing services categories by the MOOP type, with lower MOOP limits
receiving the most cost sharing flexibility. By establishing the
maximum permitted cost sharing limit at different amounts (that is, by
using a range of differentiated cost sharing limits for most services)
across the three MOOP types, this FC is expected to promote greater
differences between plans and provide MA organizations with meaningful
cost sharing flexibilities if they choose to use the lower MOOP limits
in their benefit design.
As discussed further in section II.B. of this FC, plan designs with
mandatory MOOP types will have less flexibility in cost sharing and
therefore less ability to use cost sharing as a means to incentivize
enrollee behavior and manage medical costs beginning in contract year
2023. For example, MA organizations that establish a mandatory MOOP
type for contract year 2026 will be subject to a 30 percent coinsurance
limit for certain professional services and those that establish an
intermediate MOOP type will be subject to a 40 percent coinsurance
limit (as finalized in section II.B. of this FC). As discussed in the
February 2020 proposed rule, the 30 percent coinsurance amount is most
closely related to the cost sharing limit amounts stated in the CY 2020
Call Letter. Stated another way, we expect
[[Page 22304]]
MA plans that establish a mandatory MOOP type will have lower or
comparable copayment amounts when compared to existing benefit packages
because the copayment limits set by CMS in past years for MA plans
were, based on 2015 through 2019 Medicare FFS data projections
available at the time of the February 2020 proposed rule, close to the
30 percent limit being set in this FC for several professional
standards. In addition, by offering the intermediate MOOP type, we will
be providing a mid-level MOOP option which is currently projected (for
contract year 2023) to represent approximately 37 percent of plan in-
network MOOP amounts in contract year 2021. We expect the combination
of the three MOOP types and proportional cost sharing flexibilities for
each type will encourage plans to adopt lower or intermediate MOOP
amounts and adopt cost sharing that is lower or comparable when
compared to existing benefit packages. Without the intermediate MOOP
type as an option, plans may be more likely to adopt higher MOOP limits
as a result of being afforded less cost sharing flexibility. Plans
could design their plan benefits in ways that also meet enrollee needs
by focusing on other benefit features, such as, zero premium and
supplemental benefits, rather than lower MOOP amounts.
CMS will monitor whether changes from this FC result in
beneficiaries having access to MA plan offerings with lower or
intermediate MOOP types and cost sharing that is lower or comparable
when compared to existing benefit packages over time. Specifically, we
will conduct these analyses annually and communicate concerns through
the subregulatory process finalized at Sec. 422.100(f)(7)(iii) and may
consider whether changes are necessary in future rulemaking based on
the results of these analyses.
Comment: A commenter had concerns about the potential beneficiary
impact of having up to three MOOP limits for local and regional plans,
such as the possibility of MA plans varying costs by beneficiary health
status and tiering or targeting higher MOOP limits towards
beneficiaries with diagnoses of ESRD. The commenter explained that if
MA plans tiered or targeted higher MOOP limits that it would create a
significant financial burden for beneficiaries with diagnoses of ESRD.
In addition, the commenter believed these increased costs and benefit
designs would discourage beneficiaries with diagnoses of ESRD and other
chronic illnesses from enrolling in the MA program and ultimately
result in the de facto elimination (or lack of access to meaningful
coverage options) of MA plans, contrary to the intent of Congress. The
commenter requested CMS clarify that MA plans may not target higher
MOOP limits to only ESRD patients. This commenter also noted that the
strong protections CMS applies for all other beneficiaries that
prohibit discrimination on the basis of health status, should be
applied fairly to beneficiaries with diagnoses of ESRD to prevent MA
plans from discriminating against and discouraging beneficiaries with
diagnoses of ESRD from enrolling in the MA program.
Response: We disagree that adding a third, intermediate MOOP limit
will allow MA organizations to design plans that discriminate against
beneficiaries with diagnoses of ESRD or other chronic conditions and
discourage them from enrolling in the MA program. Nothing in the MOOP
regulations, as proposed or finalized, permits an MA plan to have
higher MOOP amounts for certain enrollees in the plan based on health
status. Specifically, MA plans are not permitted to create tiered MOOP
amounts based on chronic conditions, such as kidney failure or the need
for dialysis services, and if a MA organization submitted a plan bid
with tiered MOOP amounts based on chronic conditions, that benefit
design would not be approved. MOOP limits are and must be applied
uniformly to all plan enrollees and our proposal to add a third,
intermediate MOOP limit did not change this requirement. In addition,
MA plans are required to provide all medically necessary Medicare Parts
A and B services to enrollees. We reiterate that the benefits for all
enrollees in an MA plan must be uniform, subject to the waiver of
uniformity that may be provided for an MA plan to target specific
Special Supplemental Benefits for the Chronically Ill (SSBCI) under
Sec. 422.102(f) and how optional supplemental benefits are only
provided for enrollees who elect to pay the extra premium for that
coverage under Sec. 422.101(c)(2). The ability to offer supplemental
benefits that have a connection with a specific health condition is
permitted only for reductions in cost sharing and additional benefits,
not for decreasing benefits, and requires the supplemental benefit to
be available to all similarly situated enrollees. Therefore, MOOP
amounts are applied uniformly to all plan enrollees, while MA plans are
allowed to offer different additional supplemental benefits, including
additional reductions in cost sharing, for similarly situated
individuals based on disease state or chronic health condition as part
of a uniform benefit package. As proposed and finalized, the MOOP
limits cannot be applied so that enrollees with diagnoses of ESRD have
a higher or otherwise different MOOP amount. In addition, a more
complete discussion about the statutes and regulations preventing MA
plans from discriminating against beneficiaries with diagnoses of ESRD
or other chronic conditions is provided in section II.A.4. of this FC
in response to other similar concerns about discrimination.
Finally, CMS will also continue evaluations based on enforcement of
the current authority prohibiting plans from misleading beneficiaries
in their marketing and communication materials and continue efforts to
improve plan comparison tools and resources (for example, Medicare Plan
Finder, Medicare & You, and 1-800-MEDICARE) in order to monitor whether
plan communications give the impression that MOOP amounts are not
applied uniformly for all enrollees. We encourage beneficiaries and
other stakeholders to bring to our attention marketing and
communication materials or other activities that may indicate that an
MA organization is violating the anti-discrimination requirements
applicable in the MA program, by contacting 1-800-MEDICARE or by
submitting a Medicare Complaint Form online.\8\
---------------------------------------------------------------------------
\8\ The online Medicare Compliant Form may be accessed and
submitted at: <a href="https://www.medicare.gov/medicarecomplaintform/home.aspx">https://www.medicare.gov/medicarecomplaintform/home.aspx</a>.
---------------------------------------------------------------------------
Comment: A commenter believed a third MOOP limit may create choice
confusion for new and existing enrollees when evaluating their plan
options.
Response: We disagree that adding a third, intermediate MOOP limit
will confuse beneficiaries when they are evaluating their plan options.
CMS expects that all beneficiaries reviewing their plan options for the
upcoming contract year will continue to consider a number of factors
when choosing an MA plan, such as plan type, benefits, per-service cost
sharing, provider network, and the MOOP amount. This information will
continue to be available to beneficiaries in Medicare Plan Finder and
MA plan communication materials. We also expect that MA organizations,
providers, State Health Insurance Assistance Programs, and other
stakeholders have and will continue to communicate information about MA
plan options to all Medicare eligible beneficiaries. Although
beneficiaries make their plan choice based on a number of factors, such
as the MOOP
[[Page 22305]]
amount and premium, they are typically not aware if the plan's MOOP
amount qualifies as a lower, intermediate, or mandatory MOOP limit
based on MA regulations.
Comment: A commenter opposed a third, intermediate MOOP limit
because it may result in higher MOOP limits for all MA beneficiaries.
Response: While there may be more variation in the MOOP amounts and
cost sharing structures used by MA plans as a result of this FC, we
believe that beneficiaries have the tools and resources to evaluate
their expected out-of-pocket costs, compare cost sharing amounts
charged by different MA plans, and determine whether a particular plan
design would benefit them. For example, these comparisons may be
assisted by using Medicare Plan Finder and communications materials. We
expect the MOOP limit and cost sharing flexibilities finalized in this
FC will allow MA organizations to design benefits that encourage
positive enrollee decision-making about their health care needs and
manage medical costs more effectively without producing plan options
that are confusing for beneficiaries.
Under section 1854(a)(5)(C)(ii) of the Act, CMS is authorized to
deny a plan bid if the bid proposes significant increases in enrollee
costs or decrease in benefits from one plan year to the next. A plan's
Total Beneficiary Cost (TBC) is the sum of the plan-specific Part B
premium, plan premium, and estimated beneficiary out-of-pocket costs.
CMS uses a standardized TBC evaluation for each bid to evaluate year
over year changes when bids are submitted for the upcoming contract
year. The TBC standard is applied at the plan level to ensure enrollees
in each applicable plan are not subject to too significant an increase
in costs or decrease in benefits from one plan year to the next. CMS
has observed that MA organizations tend to reduce their profit margins,
rather than substantially change their benefit package from one year to
the next. We believe this tendency may be to ensure that a bid does not
exceed the TBC threshold and also due to marketing and competitive
forces; for example, an MA plan with fewer or less generous
supplemental benefits, even for one year, may lose its enrollees to
competing plans that offer these supplemental benefits. Thus, it may be
advantageous for the MA organization to temporarily reduce its margin,
rather than reduce benefits. MA organizations have a range of cost
sharing flexibilities for a few service categories now (such as,
inpatient hospital acute and psychiatric length of stay scenarios) and
typically do not establish the highest allowable cost sharing for the
MOOP amount used by the MA plan. In fact, CMS has found that MA
organizations typically offer benefits with lower cost sharing amounts
than the maximum cost sharing limits for the vast majority of service
categories we have permitted in past years (such as primary care
physician). While we do not have definitive data, we believe this is
due to multiple factors, including the principles and incentives
inherent in managed care, effective negotiations between MA
organizations and providers, and competition. Further, MA plan must, at
a minimum, offer plan designs where the cost sharing for basic benefits
is at least actuarially equivalent to the cost sharing in the original
Medicare program. In addition, we expect beneficiary choice will
continue to act as an incentive for MA organizations to offer favorable
benefit designs. Considering these factors, CMS expects that
differentiating cost sharing standards by the three MOOP types, and in
some cases limiting the cost sharing flexibility for MA plans that
establish a mandatory MOOP type, will encourage MA organizations to
establish a lower MOOP type (that is, lower or intermediate) and/or
lower cost sharing amounts for enrollees in order to maintain a
competitive position in the market.
Comment: A commenter opposing the proposal was concerned that a
third, intermediate MOOP limit would not provide a strong actuarial
incentive for more MA plans to establish lower MOOP limits and that MA
organizations may find it difficult to determine which MOOP limit
offers the best value.
Response: We disagree with the comment that MA organizations may
find it difficult to determine which MOOP amount offers the best value
for their purposes as a result of this provision. CMS expects MA
organizations have, and will use, business tools and actuarial
resources to effectively structure benefit designs, including MOOP
amounts.
Comment: A commenter opposing the proposal to add a third,
intermediate MOOP limit suggested CMS encourage MA organizations to
offer plans with lower MOOP limits through alternative means. The
commenter suggested some alternative ways to incentivize MA plans to
establish a voluntary, lower MOOP limit including that CMS: (1) Raise
the 85th percentile that determines the voluntary MOOP limit to the
87th or 88th percentile while maintaining the 95th percentile for the
mandatory MOOP limit; or (2) provide higher ratings in the Part C and D
Star Rating program for MA plans that establish the lower, voluntary
MOOP limit. The commenter's rationale for increasing the percentile
that determines the lower, voluntary MOOP limit was that MA plans could
increase their cost sharing over time while the voluntary MOOP limit
increases simultaneously, which would not encourage MA plans to switch
to the mandatory MOOP limit.
Response: We appreciate the suggestions of other options to
incentivize MA organizations to offer plans with lower MOOP amounts.
While the commenter's suggestion to raise the percentile that we use to
calculate the lower, voluntary MOOP limit might produce some incentive
for MA plans to choose a lower MOOP type, it may also likely mean that
enrollees face increased cost responsibility with the lower MOOP
options than they would under our proposal and this FC. We believe
maintaining the lower (previously ``voluntary'') MOOP limit at the 85th
percentile is beneficial to enrollees and provides incentive to MA
plans to offer lower MOOP amounts when the cost sharing flexibilities
unique to each MOOP type are considered. The cost sharing provisions,
addressed in section II.B. of this FC, provide incentives for MA
organizations to offer lower MOOP amounts by permitting higher cost
sharing when a lower (or intermediate) MOOP type is used. For example,
CMS's longstanding policy has been to allow MA plans to establish up to
50 percent coinsurance for most in-network professional services
(subject to exceptions, such as for inpatient hospital acute and
psychiatric services, skilled nursing facility, chemotherapy
administration including chemotherapy drugs and radiation therapy, and
renal dialysis), regardless of the MOOP limit. In this FC, we limit
this degree of flexibility of having up to 50 percent coinsurance for
in-network professional services, beginning in contract year 2023, to
MA plans that establish lower MOOP amounts (40 percent coinsurance for
intermediate MOOP amounts and 30 percent coinsurance for mandatory MOOP
amounts after the transition period). The cost sharing flexibilities
adopted in this rule apply to highly utilized services (for example,
professional and inpatient hospital service categories) and, thus,
afford the most flexibility to MA plans that have lower MOOP amounts.
As a result, this flexibility will encourage MA organizations to
establish MOOP amounts at or below the lower MOOP limit because they
will have more
[[Page 22306]]
flexibility in establishing cost sharing. Overall, we aim to prevent
discriminatory benefit designs with the adoption of the methodologies
and rules for setting MOOP and cost sharing limits and by capping the
amount of financial responsibility the MA organization can transfer to
enrollees. Limits on out-of-pocket costs prevent plan designs that
deter or discourage enrollment by beneficiaries that are high utilizers
of health care services or that have higher-cost medical needs.
In regard to a commenter's suggestion to provide additional star
rating value for MA plans offering the lower voluntary MOOP amount, we
believe this request is outside of the scope of our proposal. Our Star
Ratings proposals did not include adding a quality measure or a quality
rating methodological change tied to MOOP type and were finalized in
section IV.D. of the January 2021 final rule (86 FR 5864).
We are finalizing our proposal for three MOOP limits. We take this
opportunity to explain the use of terminology in this FC and the
regulations; we use consistent language when referring to MOOP limits
(calculated by CMS by applying the methodologies finalized here), MOOP
amounts (established by MA organizations), and MOOP types (lower,
intermediate, and mandatory) in Sec. Sec. 422.100(f)(4) and (5) and
422.101(d)(2) and (3). We are also finalizing the regulations at
Sec. Sec. 422.100(f)(4) and (5) and 422.101(d)(2) and (3) with slight
changes from the February 2020 proposed rule to be clearer that: (1)
Sec. 422.100(f)(4) applies to an in-network MOOP limit for local MA
plans and, consistent with our current policy and practice, that in-
network MOOP limit applies to private fee-for-service (PFFS) plans; (2)
Sec. 422.100(f)(5) applies to a combined MOOP limit (for basic
benefits that are provided in-network and out-of-network) for MA local
PPO plans; (3) Sec. 422.101(d)(2) applies to a catastrophic limit (in-
network MOOP limit) for regional MA plans; and (4) Sec. 422.101(d)(3)
applies to a total catastrophic limit (combined MOOP) for regional MA
plans. In addition, we made edits throughout these provisions to ensure
clarity and consistency in referencing in-network, combined,
catastrophic, and total catastrophic MOOP limits, amounts, or types.
For example, in Sec. 422.101(d)(3)(i) we clarify that the total
catastrophic limit may not be used to increase the catastrophic limit
described in paragraph (d)(2).
CMS is finalizing Sec. 422.100(f)(4) with a clearer statement that
MA local plans must have an enrollee in-network MOOP amount for basic
benefits that is no greater than the annual limit calculated by CMS
using Medicare FFS data projections (as defined in paragraph
(f)(4)(i)). We believe this change clarifies a point from the February
2020 proposed rule that HMO-POS plans may offer out-of-network benefits
as supplemental benefits, but are not required to have these services
contribute to the in-network MOOP amount or to a combined in- and out-
of-network MOOP amount. Currently, and with the change proposed and
finalized in this rule, paragraph (f)(5) requires MA local PPO plans to
have a combined MOOP amount for basic benefits that are provided in
network and out-of-network. This change compared to our proposed text
for paragraph (f)(4) also improves the regulation text by making the
requirement to not exceed MOOP limits calculated by CMS more definitive
and transparent than the general reference to paragraph (f)(4) in the
February 2020 proposed rule. In addition, we added a statement to
paragraph (f)(4) to codify CMS's longstanding policy (since 2012) that
PFFS plans must use the in-network MOOP limit for all covered basic
benefits, regardless of whether the provider is contracted with the
PFFS plan or whether the PFFS plan has a partial or full provider
network. Specifically, PFFS plans have been subject to the in-network
MOOP limits for in- and out-of-network benefits because of the
complexities of their provider network designs and ability to use
balance billing. We also modified paragraph (f)(4)(i) to clarify that
CMS will calculate three in-network MOOP limits. Additional changes to
paragraph (f)(4)(i) (namely, defining a consistent term that describes
the data CMS uses in the methodology to calculate MOOP limits and
specifying the dollar ranges for each MOOP type) are discussed more
completely in section II.A.4.b. of this FC.
We thank commenters for all of their input. In this FC, we are
finalizing the proposed addition of a third, intermediate MOOP type at
Sec. Sec. 422.100(f)(4) and (f)(5) and 422.101(d)(2) and (d)(3). The
three MOOP types will apply to MA local and regional plans and to in-
network and, for PPO plans, out-of-network basic benefits. The
methodology for calculating the MOOP limits, including that the
calculations are subject to the rounding rules in paragraph (f)(4)(iii)
and the ESRD cost transition schedule in paragraph (f)(4)(vii), is
discussed in sections II.A.4.b. and c. of this FC. Among the
modifications we are finalizing are a change in the scope of data used
to calculate the MOOP and cost sharing limits (discussed in section
II.A.4.b. of this FC) and a change in the transition schedule for the
ESRD cost differential (discussed in section II.A.4.c. of this FC).
Further, we are finalizing the addition of descriptive headings to
Sec. 422.100(f)(1)--(9) to orient the reader to the content in each
paragraph. While we did not propose updates to paragraphs (f)(1)-(3),
the addition of headings will improve the clarity of the regulations,
does not change the substance of the regulations, and results in a
consistent approach for paragraph (f). Paragraph (f)(6) and new
paragraphs (f)(7)-(9) are discussed in detail in section II.B. of this
FC.
b. Codify the Methodology for the Three MOOP Limits for 2023 and
Subsequent Years (Sec. 422.100(f)(4))
Comment: A few commenters responded to the solicitation from the
February 2020 proposed rule on whether a specific rule requiring CMS to
issue subregulatory guidance applying the methodology in these
regulations by a specific date each year should be codified. The
commenters requested CMS provide guidance well in advance of the
upcoming plan year that the MOOP limit changes are effective. A
commenter requested CMS release annual guidance no later than 60 days
prior to the first Monday in April with a minimum 30-day comment period
to align with the Advance Notice of Methodological Changes for the
upcoming Calendar Year for Medicare Advantage Capitation Rates and Part
C and Part D Payment Policies.
Response: CMS will apply the finalized regulations each year to
calculate the MOOP limits for contract year 2023 and future years using
the methodology adopted in this FC and the most recent Medicare FFS
data projections. The final contract year 2023 MOOP limits in Table 5
are calculated using the methodology and formulas in Sec.
422.100(f)(4). These calculations using contract year 2023 Medicare FFS
data projections (based on 2017 to 2021 Medicare FFS data) are provided
in Tables 2 through 4. We are adopting at Sec. 422.100(f)(7)(iii) a
provision regarding the release of annual subregulatory guidance
beginning for contract year 2024. The guidance will identify the
contract year MOOP limits that are set and calculated using the
methodology and standards in Sec. Sec. 422.100(f) and 422.101(d). This
guidance may include a description of how CMS calculated the ESRD cost
differential to set the MOOP limits. This annual guidance will be
[[Page 22307]]
issued prior to bid submission to allow sufficient time for MA
organizations to prepare and submit plan bids. We expect this date will
typically be by the first Monday in April, which aligns with the
deadline for the Rate Announcement for MA rates and the risk adjustment
factors under section 1853(b) of the Act and Sec. 422.312.
Coordinating these MOOP and other cost sharing limit changes with the
announcement of MA payment policies for the year is important to CMS
and means that the final annual guidance of how the regulations we are
adopting in this FC will be applied with updated data is unlikely to be
issued prior to the first Monday in April. However, we are not adopting
this date as a deadline for the final issuance of annual guidance
specifying the MOOP limits and cost sharing standards as CMS may not
always be able to meet this timeline as competing priorities,
particularly those with statutory deadlines such as the Rate
Announcement, may take precedence. For contract year 2024, we expect to
issue the final MOOP limits and cost sharing standards sometime in
April, 2023. As finalized in Sec. 422.100(f)(7)(iii), CMS will provide
a public notice and comment period on the projected MOOP limits and
cost sharing limits for the upcoming contract year unless a public
comment period is impracticable, unnecessary, or contrary to the public
interest. We believe these situations will be rare and intend to
solicit comment annually, but believe that aligning the availability of
prior notice and an opportunity to comment with rulemaking standards,
which include authority to waive prior notice and a comment period when
it is impracticable, unnecessary, or contrary to the public interest,
is appropriate. To the extent necessary and appropriate, CMS may
solicit and consider public comment on actuarial approaches before
releasing the final MOOP limits and cost sharing standards as required
in paragraph (f)(7)(iii). The exercise of actuarial judgment by the
OACT may be a topic on which the public, or MA organizations, wish to
comment when reviewing how CMS has applied the regulations adopted in
this FC to calculate the benefit parameters for MA plans. As
appropriate, we will consider such comments and may revise the
decisions made in developing the projections and calculations of the
MOOP and other cost sharing limits. In addition to using set
departmental methods of posting guidance (for example, the HHS guidance
repository), CMS may also release this annual subregulatory guidance
through communication vehicles CMS has used in the past to deliver
certain guidance, such as HPMS memoranda.\9\ We believe stakeholders
are used to annual guidance for the MA program being released through
these additional avenues and continuing this practice will encourage
comment submissions as received in prior years.
---------------------------------------------------------------------------
\9\ Individuals and organizations may request placement on the
HPMS listserv at <a href="https://hpms.cms.gov/app/ng/home/">https://hpms.cms.gov/app/ng/home/</a>.
---------------------------------------------------------------------------
We did not codify a deadline or a specific minimum time frame for
the comment period on the MOOP and cost sharing standards for the
upcoming contract year to ensure flexibility when necessary in future
situations. As highlighted by the COVID-19 pandemic, maintaining a
certain level of flexibility in regulation can be beneficial for the
agency to better serve our stakeholders. For example, we may consider a
comment period less than 30 days in the event of delays from external
variables (such as, public health emergencies) when it is necessary in
order to release final MOOP and cost sharing limits on a timeframe that
is sufficient for MA organizations to prepare and submit plan bids.
This approach will support the release of subregulatory guidance that
addresses MOOP limits and cost sharing standards in advance of the
upcoming plan year.
We are finalizing the proposal that the three MOOP types will be
calculated using the 95th and 85th percentiles of projected Medicare
FFS beneficiary out-of-pocket spending and the mid-point between those
with the specific provisions as provided in Sec. 422.100(f)(4). In
addition, we are finalizing additional changes in the codification of
the methodology that CMS uses to calculate MOOP limits in paragraph
(f)(4). First, the ESRD cost transition (which was proposed in
paragraph (f)(4)(vii)) is finalized in paragraph (f)(4)(vi) with
changes from the proposal and we are finalizing the rules for
calculating the in-network MOOP limits for 2023 in Sec.
422.100(f)(4)(iv) and for 2024 and subsequent years in Sec.
422.100(f)(4)(v) (as more completely addressed in section II.A.4.c. of
this FC).
Second, we are not finalizing the term ``complete'' in various
provisions that describe the data used to develop the cost projections
that are the basis for calculating the MOOP limits to more accurately
reflect current practice in calculating MOOP limits and cost sharing
limits. The February 2020 proposed rule stated that the OACT uses the
most recent, complete Medicare FFS data to project costs for the
applicable year. Upon reflection, CMS realizes that the word
``complete'' may be subject to different interpretations. For example,
``complete'' could be interpreted as meaning that the data for that
year being used to project costs is missing no information or that only
one year of data would be used by the OACT to project costs. To ensure
clarity in the regulation text on this point, we are removing the
reference of ``complete'' and explaining here how the OACT approaches
developing the projections to be used in calculating cost sharing
limits. In developing the projections that CMS uses to determine cost
sharing limits, the OACT uses several years of Medicare data (generally
99 percent complete) that apply trend factors (consistent with the most
recent Medicare Trustees Report). The trend factors give the most
weight to the more recent calendar years of data. Projections are then
modified using actuarial judgement. This is considered an actuarially
acceptable approach in determining and projecting Medicare FFS
percentiles and is consistent with longstanding policy. As a result, we
are updating the references to the data CMS uses to calculate MOOP and
cost sharing limits throughout the regulations at Sec. Sec. 422.100(f)
and (j) and 422.101(d). Specifically, in paragraph (f)(4)(i) we are
defining the term, ``Medicare FFS data projections'' as meaning the
projections of beneficiary out-of-pocket costs for the applicable
contract year, based on recent Medicare FFS data, including data for
beneficiaries with and without diagnoses of ESRD, that are consistent
with generally accepted actuarial principles and practices as outlined
in paragraph (f)(7)(i) (discussed subsequently in this response). The
Medicare FFS data and resulting Medicare FFS data projections
necessarily include cost and utilization data associated with the
projected out-of-pocket costs. As defined and used throughout the
regulations, the term ``Medicare FFS data projections'' concisely and
consistently describes the data CMS uses to calculate MOOP and cost
sharing limits. In addition, we believe using the term ``Medicare FFS
data projections'' in describing the data is consistent with past
practice and our intent for this aspect of the methodology (that is,
data are from calendar years but the data are not fully complete, data
from more than one calendar year may be used, trend factors are used,
and projections are made to the contract year for which the MOOP limits
are set). Based on the definition and how we have used the term, the
Medicare FFS
[[Page 22308]]
data projections reflect full incorporation of the ESRD cost
differential.
Third, we are finalizing the substance of proposed Sec.
422.100(f)(4)(ii)(A) through (C) in paragraphs (f)(4)(i)(A) through (C)
with clarification. Specifically, we are clarifying in paragraphs
(f)(4)(i)(A) and (B), consistent with Table 4 (Illustrative Example of
In-Network MOOP Limits Based on Most Recent Medicare FFS Data
Projections) in the February 2020 proposed rule, that the ranges
determining in a plan's MOOP amount is considered a mandatory or
intermediate MOOP type are as follows:
<bullet> Mandatory MOOP limit: One dollar above the intermediate
MOOP limit and up to and including the mandatory MOOP limit.
<bullet> Intermediate MOOP limit: One dollar above the lower MOOP
limit and up to and including the intermediate MOOP limit.
We are finalizing the description of the range for the lower MOOP
limit in paragraph (f)(4)(i)(C) as proposed (in paragraph
(f)(4)(ii)(C)) as we believe the proposed regulation text is
sufficiently clear.
Next, we are finalizing Sec. 422.100(f)(4)(ii) with a more
complete list of the regulations which use the terms ``mandatory MOOP
limit,'' ``intermediate MOOP limit,'' and ``lower MOOP limit.'' These
terms encompass a MOOP amount that varies from the specific highest
allowable dollar figure announced by CMS for each MOOP type when the
plan's MOOP amount is within the ranges specified in Sec.
422.100(f)(4)(i)(A) through (C). We proposed to refer to paragraphs
(f)(6) and (j) of Sec. 422.100, but are finalizing references to
paragraphs (f) and (j) of Sec. 422.100, Sec. 422.101(d), and Sec.
422.113(b)(2)(v). This change better reflects the cost sharing
requirements finalized in section II.B. of this FC. Referring to Sec.
422.101(d) is consistent with how the types of in-network MOOP limits
referenced in Sec. 422.100(f)(4)(i)(A), (B), and (C) will be used,
beginning for contract year 2023, to calculate the catastrophic and
total catastrophic (combined MOOP) limits that apply to regional plans
under Sec. 422.101(d)(2) and (3).
To better reflect how finalized Sec. 422.100(f)(4) applies to
catastrophic and total catastrophic (combined MOOP) limits, increase
clarity in the regulations, and make necessary corrections from the
February 2020 proposed rule to codify the range CMS has applied in
calculating and evaluating compliance with these MOOP limits, we are
also finalizing changes in Sec. 422.101(d)(2) and (3). We are
consolidating proposed Sec. 422.101(d)(2) to clearly require MA
regional plans to: (1) Establish a catastrophic enrollee MOOP for basic
benefits that are furnished by in-network providers that is consistent
with Sec. 422.100(f)(4); and (2) have the same MOOP type (lower,
intermediate, or mandatory) for the catastrophic (in-network MOOP)
limit and total catastrophic (combined in-network and out-of-network
expenditures) limit under Sec. 422.101(d)(3).
In addition, we are adding new paragraphs (d)(3)(ii)(A), (B), and
(C) in Sec. 422.101. New paragraphs (d)(3)(ii)(A), (B), and (C)
specify the ranges to determine if a plan's total catastrophic
(combined MOOP) amount is considered a mandatory, intermediate, or
lower MOOP type for purposes of Sec. Sec. 422.100 and 422.101. These
correspond to the ranges in Sec. 422.100(f)(4)(i)(A) through (C) but
are specific to the total catastrophic (combined MOOP) limits.
Including these ranges for total catastrophic (combined MOOP) limits
improves the regulation overall by providing more specificity in our
codification of longstanding policy. As finalized in new Sec.
422.101(d)(3)(ii)(A), (B), and (C), the ranges that define the type of
total catastrophic (combined MOOP) limit (mandatory, intermediate, and
lower) are as follows:
<bullet> Mandatory MOOP limit: One dollar above the in-network
intermediate MOOP limit and up to and including the total catastrophic
mandatory MOOP limit.
<bullet> Intermediate MOOP limit: One dollar above the in-network
lower MOOP limit and up to and including the total catastrophic
intermediate MOOP limit.
<bullet> Lower MOOP limit: Between $0.00 and up to and including
the total catastrophic lower MOOP limit.
This addition adds clarity to the regulation text and the ranges
now codified in Sec. 422.101(d)(3)(ii)(A) and (B) are consistent with
our current practice for setting the lower and upper ranges of the
total catastrophic MOOP limits.
Finalizing regulation text with these ranges explicitly described
reflects a necessary correction to the proposed rule. Specifically, the
approach in Sec. 422.101(d)(3)(iii)(A) through (C) of having total
catastrophic (combined MOOP) limits set one dollar above the in-network
lower and intermediate MOOP limit amounts (for the total catastrophic
(combined) intermediate and mandatory MOOP limits, respectively) is
consistent with longstanding practice and reflects our current policy
for how MA plans must have the same type of in-network and total
catastrophic (combined MOOP) amount (mandatory, intermediate, or
lower). In the illustrative MOOP limits from Table 5 (Illustrative
Example of Combined MOOP Limits for LPPO And Catastrophic (MOOP) Limits
for RPPO Plans Based on Most Recent Medicare FFS Data Projections) in
the February 2020 proposed rule, the lower range of the illustrative
combined intermediate and mandatory MOOP types did not correctly
reflect our intention to continue our current policy. For example,
based on the illustrative in-network and combined MOOP limits for
contract year 2022 provided in Tables 4 and 5 in section VI.A. of the
February 2020 proposed rule, an MA plan that established an in-network
intermediate MOOP of $3,451 would have to establish a combined
intermediate MOOP between $5,151 and $8,400, even if a plan wanted to
establish a combined MOOP amount of $4,000. Requiring an MA plan with
an in-network MOOP amount to establish a combined MOOP amount that is
one dollar above the combined lower MOOP limit (as shown in Table 5
from the February 2020 proposed rule) unnecessarily raises the combined
MOOP amount rather than tying the lower range of the amount to the type
of in-network MOOP amount chosen. As a result, the contract year 2023
in-network and total catastrophic (combined MOOP) limits in Table 5
reflect this finalized policy (as well as other changes more completely
discussed in this section to apply the proposed rounding rules in Sec.
422.100(f)(4)(iii), clarify how the application of the 10 percent cap
on increases to the MOOP limits applies, and changes to the proposed
ESRD cost transition discussed in section II.A.4.c. of this FC.). No
changes in the approach to calculating the lower range of the combined
lower MOOP limit are needed as the MOOP limits were shown to correctly
reflect current practice by beginning at zero dollars in Table 5 from
the February 2020 proposed rule. In summary, CMS will continue our
longstanding approach by codifying the ranges finalized in Sec. Sec.
422.100(f)(4)(i) and 422.101(d)(3)(ii) to determine if an MA
organization is compliant with the finalized requirement in Sec.
422.101(d)(2)(ii) (proposed in paragraph (d)(2)(i)) that the MA plan
has the same type of in-network and total catastrophic (combined MOOP)
limit (mandatory, intermediate, or lower).
We are finalizing at Sec. 422.100(f)(4)(iii) the rounding rules
CMS uses for the MOOP limits generally as proposed but
[[Page 22309]]
we are also finalizing new text to clarify and correct how the rounding
rules at Sec. 422.100(f)(4)(iii) are applied in calculating the in-
network intermediate MOOP limit and all types of the catastrophic MOOP
limits. In order to avoid applying the rounding rules in paragraph
(f)(4)(iii) twice to calculate the in-network intermediate MOOP limit
and to ensure that the resulting intermediate MOOP limit most closely
reflects a numeric midpoint between the final mandatory and lower MOOP
limits, we are finalizing a modification to paragraphs (f)(4)(iv)(B)
and (v)(B). First, CMS will identify the unrounded mandatory and lower
MOOP limits and apply the 10 percent cap on increases to the mandatory
and lower MOOP limits from the prior year (as discussed in section
II.A.4.c. in this FC). Second, CMS will identify the numeric midpoint
of those two figures. Third, CMS will apply the rounding rules in
paragraph (f)(4)(iii) to that numeric midpoint. The resulting figure is
the intermediate MOOP limit. This process of calculating the
intermediate MOOP limit is illustrated in Table 3. Specifically, Table
3 shows the calculations to set the contract year 2023 in-network
intermediate MOOP limit following the methodology finalized in this FC.
By basing the intermediate MOOP limit on the non-rounded, capped
amounts used to calculate the final mandatory and lower MOOP limits, we
are still calculating the intermediate MOOP limit as the numeric
midpoint between the two MOOP limits as proposed. We are not finalizing
any reference to the rounding rules in Sec. 422.101(d)(2) because this
modification to the provisions in Sec. 422.100(f)(4) will apply to the
catastrophic MOOP limits for in-network basic benefits for regional MA
plans calculated under Sec. 422.101(d)(2) because of how Sec.
422.101(d)(2) cross-references Sec. 422.100(f)(4). In addition, we are
finalizing Sec. 422.101(d)(3)(ii) with clarifying language about when
the rounding rules are applied in order to avoid applying the rounding
rules twice in calculating the total catastrophic MOOP limits for
regional MA plans for contract year 2023 and subsequent years. We are
also finalizing clarifying language about applying the 10 percent cap
on increases to the mandatory and lower MOOP limits from the prior year
when calculating the total catastrophic MOOP limits. Specifically, for
contract year 2023 and subsequent years, we will calculate the total
catastrophic (combined MOOP) limits for regional MA plans by
multiplying the respective non-rounded in-network MOOP limits (after
application of the 10 percent cap on increases to the mandatory and
lower MOOP limits from the prior year in Sec. 422.100(f)(4)(iv) and
(v)) by 1.5 and then applying the rounding rules to that figure. The
rounded number will be the final upper range amount for the
catastrophic limit for MA regional plans for combined in-network and
out-of-network expenditures for basic benefits.
We believe these modifications to Sec. 422.100(f)(4)(iv)(B) and
(v)(B), and to Sec. 422.101(d)(3)(ii) will result in more precise in-
network intermediate MOOP limits and total catastrophic (combined MOOP)
limits for future years. CMS completed the calculations of the in-
network intermediate and total catastrophic (combined MOOP) limits for
contract year 2023 following this methodology as shown in Tables 3 and
4. The final contract year 2023 in-network intermediate MOOP limits and
total catastrophic (combined MOOP) limits in Table 5 reflect these
updates (as well as the other changes for calculating MOOP limits
finalized in this FC). MA plans must comply with the resulting final
MOOP limits included in Table 5 for contract year 2023.
We are also finalizing additional and revised text in Sec.
422.101(d)(2) and (d)(3) to clarify the scope of the regional MA plan
MOOP amounts and the specific services to which the different MOOP
limits apply: The catastrophic limit calculated under paragraph (d)(2)
applies to in-network basic benefits and the total catastrophic limit
calculated under paragraph (d)(3) applies to in-network and out-of-
network basic benefits. We are finalizing a new paragraph (d)(3)(iii)
to clearly require an MA organization to establish the total
catastrophic MOOP amount (mandatory, intermediate, or lower) within the
dollar range specified in paragraphs (d)(3)(ii)(A) through (C) and the
type of MOOP limit will be used for purposes of Sec. Sec.
422.100(f)(6), (j)(1), 422.101(d), and 422.113(b)(2)(v).
In large part the proposal was to describe and codify the
methodology used for MOOP limits under CMS's policies first developed
in a 2011 rulemaking for adopting MOOP limits beginning in 2012. As
described in the February 2020 proposed rule, the OACT performs the
data projections used for setting MOOP limits. Taking the most recent
Medicare FFS data and developing projections for the contract year for
which we will be calculating the MOOP limits necessarily involves
informed judgment and the making of actuarial assumptions. CMS and the
OACT have been guided by generally accepted actuarial principles and
practices in developing the projections used for calculating the MOOP
limits. The proposal implicitly acknowledged this in its description of
how the OACT analyzes the relevant data to develop the projections in
the preamble of the February 2020 proposed rule. Specifically, the
February 2020 proposed rule discussed how the OACT conducted necessary
analyses and projections in the past and made clear that the OACT would
be involved in applying the methodologies to calculate the MOOP limits
we were proposing. CMS will continue to use generally accepted
actuarial principles and practices in finalizing the projections of
beneficiary out-of-pocket costs that form the basis of the methodology
to calculate MOOP limits. As a result, we are also finalizing new Sec.
422.100(f)(7) to ensure that this FC provides more detail regarding the
actuarial nature of how Medicare costs are projected which we believe
is better stated in the regulation text. These principles permit
discretion and the exercise of actuarial judgment; as a result,
different actuaries and analysts may come to different, equally
appropriate, projections. Actuaries often consider different
methodologies and assumptions to project the effect of uncertain
events.\10\ Generally, data from full calendar years would be used (and
may be full data or samples based on full data), but specific trends
and/or utilization patterns from more recent periods may be considered
even if the Medicare FFS program and/or more recent utilization
information from MA encounter data are from incomplete years. The
projections of the percentiles that determine MOOP limits may be
affected in limited situations by changes in legislation (such as,
changes in Medicare benefits), payment policy changes, significant
region-specific events (such as, natural disasters), or other emergency
situations. As the OACT determines their projections, trend factors are
applied (consistent with the most recent Medicare Trustees Report). For
example, the OACT will apply trend factors that reflect the expected
volatility and impact of COVID-19 on Medicare FFS utilization data from
prior years in order to determine the Medicare FFS data projections for
2023 and subsequent years that CMS will use in calculating MOOP limits
for those years. This approach is consistent with accepted actuarial
standards of practice in that actuaries may use their professional
judgment when selecting methods and assumptions, conducting an
analysis, and reaching a conclusion. We reiterate
[[Page 22310]]
that this is an example and that CMS and the OACT may exercise
actuarial judgment in other matters as appropriate based on the
regulatory standard being finalized at paragraph (f)(7)(i). CMS may
explain the significant, professional actuarial judgments the OACT
considered and solicit comment from stakeholders through the
subregulatory process finalized in paragraph (f)(7)(iii) prior to final
issuance of the MOOP limits and cost sharing standards for a future
contract year. CMS may also describe how the OACT reached the
projections used to calculate MOOP limits, if applicable and
appropriate. For contract year 2023, the Medicare FFS data projections
of the 95th and 85th percentiles included in row D of Table 2 reflect
the OACT's actuarial judgements of expected costs in contract year
2023, including considerations of the impact from COVID-19. In summary,
we are finalizing paragraph (f)(7)(i) to ensure transparency about the
standards applied in developing the projections used in the
methodologies for calculating the MOOP limits in Sec. Sec.
422.100(f)(4) and (f)(5), and 422.101(d)(2) and (d)(3) will be applied
using generally accepted actuarial principles and practices.
---------------------------------------------------------------------------
\10\ <a href="http://www.actuarialstandardsboard.org/profcounts/asop-no-1-and-professional-judgment/">http://www.actuarialstandardsboard.org/profcounts/asop-no-1-and-professional-judgment/</a>.
---------------------------------------------------------------------------
As discussed in more detail in section II.B of this FC, new Sec.
422.100(f)(7) will also apply to how cost sharing standards in
paragraph (f)(6) and (j) are calculated and evaluated using the
methodologies adopted in this FC. Accordingly, we also discuss this new
regulatory paragraph as it relates to cost sharing standards in section
II.B. of this FC. Next, we address comments received on the ESRD cost
transition schedule, explain how CMS's calculations of MOOP limits are
impacted by ESRD costs, and more specifically address how the MOOP
limits will be set for 2023 and future years in section II.A.4.c. of
this FC.
c. Multiyear Transition of ESRD Costs Into the Methodology for MOOP
Limits and Post-Transition Changes in the MOOP Limits (Sec.
422.100(f)(4)(iv) Through (vi))
CMS proposed to conduct a multiyear transition of ESRD costs into
the methodology for how we calculate MOOP limits. Section 1851(a)(3) of
the Act, as amended by section 17006 of the 21st Century Cures Act,
amended the Medicare statute to permit Medicare beneficiaries with
diagnoses of ESRD to enroll in MA plans beyond the previous enrollment
limitations, beginning in contract year 2021. Before these amendments
were effective for contract year 2021, individuals diagnosed with ESRD
could not enroll in a MA plan, subject to limited exceptions. In the
proposed rule, we explained that the data CMS uses to calculate the
MOOP limits should also incorporate the out-of-pocket expenditures of
beneficiaries with diagnoses of ESRD, which we are referring to in this
FC as ``ESRD costs,'' to reflect this statutory change. We also
proposed safeguards to protect against excessive changes in the MOOP
limit during and after the ESRD cost transition. Since the February
2020 proposed rule, OACT studied the impact of expanded ESRD enrollment
eligibility for the MA program on MA benefits using 2021 Medicare data
and has estimated the impact to be $-0.45 PMPM which is the weighted
average for all MA plans.
Comment: A commenter noted that the February 2020 proposed rule did
not include Table 11, to which CMS referred (85 FR 9076) to illustrate
how the transition of ESRD costs into the MOOP limit calculations would
work.
Response: The references to Table 11 in the February 2020 proposed
rule preamble (85 FR 9076) were incorrect. We should have referenced
Table 4, titled ``Table 4--Illustrative Example of In-Network MOOP
Limits Based on Most Recent Medicare FFS Data Projections.'' As
indicated in the context of the February 2020 proposed rule and the
table title, Table 4 illustrated the transition of the ESRD cost
differential into the MOOP limit calculations using projections of
Medicare FFS cost based on 2015 to 2019 Medicare FFS data (85 FR 9077).
Comment: Many commenters were generally concerned about the
potential effects from enrollee subsidization of ESRD costs and
believed passing the financial burden of ESRD care on to enrollees is
not an appropriate solution. The commenters noted non-ESRD enrollee
subsidization of ESRD costs may produce negative downstream effects on
MA enrollment, plan options, premiums, supplemental benefits (including
SSBCI), care coordination services, and access to lower MOOP and cost
sharing limits. A commenter that opposed the transition of ESRD costs
into MOOP limits acknowledged that some increase may be justified but
stated that the incorporation of ESRD costs simply raises costs for all
beneficiaries and was similarly concerned about non-ESRD enrollees
subsidizing costs associated with enrollees with diagnoses of ESRD.
A commenter, in referencing a Wakely actuarial consulting firm
study,\11\ suggested MA organizations may raise enrollee premiums by as
much as $18 per member per month, or reduce benefits by a similar
magnitude, or limit plan options, to cover the increase in plan
expenses due to covering enrollees with diagnoses of ESRD. Another
commenter mentioned that MA organizations may redirect MA rebate
dollars, normally used for benefit enhancements such as reduced cost
sharing and mandatory supplemental benefits, to instead cover the
additional ESRD costs. A commenter noted that while some cost
subsidization across all MA enrollees is inherent to the design of the
MA program, the commenter did not believe that increasing the cost
burden for all MA enrollees is a sustainable solution for higher costs
caused by an increased number of ESRD beneficiaries in the MA program.
Another commenter urged CMS to give equal consideration to containing
out-of-pocket costs for all Medicare beneficiaries.
---------------------------------------------------------------------------
\11\ Tim Courtney and Rachel Stewart, Wakely Consulting Group.
``2021 Medicare Advantage Advance Notice,'' March 4, 2020 <a href="https://www.ahip.org/2021-medicare-advantage-advance-notice/">https://www.ahip.org/2021-medicare-advantage-advance-notice/</a>.
---------------------------------------------------------------------------
Response: We believe conducting a multiyear transition of ESRD
costs into our methodology for setting MOOP limits is an important and
necessary step to ensure plan designs are not discriminatory and
protect beneficiaries from significant changes in out-of-pocket costs
regardless of the MA plan they choose. As the MOOP limits will apply to
enrollees with and without diagnoses of ESRD, the data CMS uses to
calculate the MOOP limits should include out-of-pocket expenses from
beneficiaries with and without diagnoses of ESRD similar to how costs
for other high cost health conditions are included in the Medicare FFS
data used to calculate MOOP limits.
We appreciate that some MA plans anticipate increased costs
associated with covering the cost of care for individuals with
diagnoses of ESRD. An analysis conducted by the OACT demonstrates that
the ESRD open enrollment opportunities beginning in 2021 are expected
to have a limited impact on both the financial outcomes of MA
organizations and the corresponding benefits and premiums of the MA
program. The primary reasons for the relatively small effect are that
the increase in projected MA ESRD enrollment will represent a small
fraction of membership in MA plans and that any financial effects will
be diluted across existing plan membership. For the base data for this
analysis, the OACT used the 2019 ESRD experience submitted by MA
[[Page 22311]]
organizations as part of their 2021 bids. Increases in MA enrollment of
beneficiaries with ESRD due to the expanded ESRD enrollment eligibility
were estimated based on prior baselines that did not include this
expansion. The expectations are that the projected movement of
beneficiaries with ESRD into the MA program will result in slightly
decreased MA margins. The Medical Loss Ratio (MLR) for ESRD enrollees
is projected to be higher than the MLR for non-ESRD enrollees. The MLR
is expressed as a percentage, generally representing the percentage of
revenue used for patient care, rather than for such other items as
administrative expenses or profit. In general terms, the MLR is
inversely correlated with margins; higher MLRs are normally associated
with lower margins. The impact of the MA margin change on MA benefits
was estimated based on the assumption that MA organizations will recoup
the losses (gains) stemming from increased ESRD enrollment through a
reduction (increase) in the margin represented in the MA bid. Using the
revised bid margin assumption, we recalculated the key bid values,
including the plan bid, MA rebate, and MA basic premium, if applicable.
Combining these assumptions, the enrollment-weighted average estimated
change in net MA benefits resulting from the ESRD enrollment expansion
is -$0.45 PMPM for contract year 2021.
As provided in section 1853(a)(1)(H) of the Act, CMS establishes
separate rates of payment to MA organizations for ESRD beneficiaries
enrolled in MA plans. See also Sec. Sec. 422.254 and 422.304 through
422.308. The rates used for enrollees in dialysis or transplant status
are based on statewide average Medicare FFS costs for ESRD
beneficiaries in dialysis status. For enrollees with functioning graft
status, the MA county benchmark rates are the payment rates. The rates
for those in dialysis, transplant, and functioning graft status are
also adjusted using a risk adjustment methodology that is specific to
the health care costs for beneficiaries with ESRD in dialysis,
transplant or functioning graft status. The proposal being finalized
here was about how the MOOP limits should be calculated, including the
data used and the percentiles of Medicare FFS data projections that
should be used in those calculations.
We proposed to transition the out-of-pocket costs for beneficiaries
who have diagnoses of ESRD into the methodology CMS uses to calculate
MOOP limits over multiple years to avoid sudden and significant
changes, which would be disruptive to enrollees. A sudden and
significant shift in the MOOP limits--which would happen if the MOOP
limits were increased by 100 percent of the ESRD cost difference in one
year--is not consistent with protecting enrollees from disruptive year
over year benefit or cost sharing changes. In this manner, we believe
our approach gives equitable consideration to containing out-of-pocket
costs for all current and potential MA enrollees.
CMS acknowledges and understands that some plans may adopt a
mandatory MOOP type. However, we expect MA organizations will continue
to offer favorable benefit designs that meet beneficiary needs, are
competitive, and are attractive to beneficiaries. In addition, MA
organizations have multiple strategies to manage care and costs through
provider contracting, care coordination, case management, plan benefit
designs, and benefit flexibilities including SSBCI and MA uniformity
flexibility. As such, CMS believes MA organizations have the
opportunity to design affordable benefit packages that are tailored to
beneficiary needs. CMS does not expect the potential negative
downstream effects on MA enrollment, plan options, premiums,
supplemental benefits (including SSBCI), care coordination services,
and access to lower MOOP limits, referenced by the commenters, to come
to fruition solely due to the provisions in this FC.
Comment: A few commenters were concerned that the ESRD cost
transition and the resulting MOOP limits would promote adverse
selection of certain MA plans by enrollees with diagnoses of ESRD.
These commenters noted that the nature of the needed medical care to
manage ESRD is ongoing, complex, and will consistently produce annual
health care costs that significantly exceed the projected lower MOOP
limit. Commenters believe these factors will result in beneficiaries
with diagnoses of ESRD being disproportionately attracted to and
enrolling in MA plans with lower MOOP limits. A commenter noted that
this would place a heavier cost burden on MA plans that endeavor to
keep costs low for beneficiaries than for plans who maintain higher
MOOP limits.
Response: We understand the concern about potential adverse
selection that may result when MA plans establish a lower MOOP type for
beneficiaries that generally have higher health care costs, including
beneficiaries with diagnoses of ESRD. While some MA organizations have
experience in managing the health care services for beneficiaries with
diagnoses of ESRD, under the prior enrollment policy, the proposals on
MOOP limits and cost sharing standards, which we are finalizing with
some modifications, provide incentives in the form of cost sharing
flexibilities to MA organizations that adopt MOOP amounts below the
mandatory level. Further, MA plans can utilize effective risk
mitigation strategies, contracting arrangements, and care management
policies in conjunction with the addition of the cost sharing
flexibilities. For example, the People-to-People Health Foundation
reported MA SNP enrollees had lower mortality and lower rates of
utilization across the care continuum in comparison to Medicare FFS
beneficiaries and stated that SNPs may be an effective alternative care
financing and delivery model for patients with diagnoses of ESRD.\12\
Unlike past years, MA plans adopting a mandatory MOOP type in the
future will have limited cost sharing flexibility for most service
category standards compared to other MOOP limits (for example, the cost
sharing limit will be reduced from 50 percent coinsurance in 2022 to 30
percent by contract year 2026 for most professional standards). CMS
establishes separate rates of payment to MA organizations for ESRD
beneficiaries enrolled in MA plans; the rates used for enrollees in
dialysis or transplant status are based on statewide average FFS
Medicare costs for ESRD beneficiaries in dialysis status and are
subject to risk adjustment. Therefore, as the MA ESRD rates are based
on FFS costs, higher costs of covering medically necessary benefits for
beneficiaries with ESRD are factored into setting the payments to MA
plans for enrollees with ESRD. As a result, we do not believe that the
concern about adverse selection is as significant as it might otherwise
be.
---------------------------------------------------------------------------
\12\ Powers, et al. ``The Beneficial Effects Of Medicare
Advantage Special Needs Plans For Patients With End-Stage Renal
Disease'' September 2020 <a href="https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.01793?journalCode=hlthaff">https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.01793?journalCode=hlthaff</a>.
---------------------------------------------------------------------------
Further, we did not propose or discuss increasing MOOP limits or
plan premiums for only beneficiaries with diagnoses of ESRD. Consistent
with sections 1852(d) and 1854(c) of the Act, MA regulations at
Sec. Sec. 422.100(d), 422.254(b), and 422.262(c) require benefits,
cost sharing, and premiums for enrollees to be uniform. Our
interpretation of uniformity may permit an MA plan to reduce, not
increase, cost sharing for similarly situated enrollees in order to
address specific health needs of the enrollees (such as, lower cost
sharing for enrollees with diabetes to see an endocrinologist). Section
422.100(d), which was finalized in section V.C. of the January 2021
final
[[Page 22312]]
rule to codify our interpretation of uniformity, does not authorize
lower cost sharing or increased benefits for healthier enrollees. The
requirement for uniform benefits is also subject to the waiver of
uniformity that may be provided for an MA plan to target specific
Special Supplemental Benefits for the Chronically Ill (SSBCI) under
Sec. 422.102(f) and how optional supplemental benefits are only
provided for enrollees who elect to pay the extra premium for that
coverage under Sec. 422.101(c)(2). The ability to offer supplemental
benefits that have a connection with a specific health condition is
permitted only for reductions in cost sharing and additional benefits,
not for decreasing benefits, and requires the supplemental benefit to
be available to all similarly situated enrollees. We did not propose to
permit an MA plan to apply MOOP amounts (or other cost sharing
standards) in a non-uniform manner and are not finalizing any authority
for that. CMS's proposal discussed calculating MOOP limits that are
applied uniformly to all MA plan enrollees to cap the MOOP costs for
enrollees, protect beneficiaries, and prevent discrimination against
enrollees with significant health care needs. Our proposal necessarily
encompassed projected future increases to the MOOP limits but those
increases are also to be uniformly applied. In addition, plan premiums
are applied uniformly across plan enrollees (except for EGWPs that use
a waiver of the requirement for uniform premiums) and cannot be
targeted to specific beneficiaries or those with certain health
conditions. Because of these uniformity considerations, we do not
believe that the methodology for calculating the MOOP limits or the
incorporation of the ESRD cost differential into the data that is used
to calculate the MOOP limits will result in adverse selection or
discrimination against beneficiaries with diagnoses of ESRD.
Comment: A commenter believed the proposal to transition the out-
of-pocket costs for beneficiaries with diagnoses of ESRD into the data
used to set MOOP limits would result in an increased MOOP limit only
for enrollees with diagnoses of ESRD and stated that an $850 increase
in the mandatory MOOP limit is insufficient for MA organizations to
cover the ESRD-related costs for this population.
Response: We reiterate that as proposed and finalized, the MOOP
limits may not be applied so that enrollees with diagnoses of ESRD have
a higher MOOP amount than enrollees without these health conditions. A
more complete discussion of the uniformity aspects of CMS's MOOP limits
proposal is available in section II.A.4.a. of this FC and in a previous
response to comment in this section. Although the commenter stated that
initial increases to MOOP limits proposed for contract year 2022 (in
essence, the first year we proposed to apply the changes) were
insufficient to cover the increased costs that are projected for
enrollees with diagnoses of ESRD, the MOOP limits are projected to
further increase in future years based on our proposal to incorporate
more of the ESRD cost differential.
As discussed in greater detail subsequently in this section, CMS
will limit the potential increase in MOOP limits to a cap of 10 percent
compared to the MOOP limits set for the prior year (beginning with
contract year 2023). As illustrated in Tables 2 and 3 and reflected in
the final MOOP limits for contract year 2023, the in-network contract
year 2023 mandatory MOOP limit has been capped at a 10 percent increase
based on the contract year 2022 mandatory MOOP limit. This means the
mandatory MOOP limit for contract year 2023 does not fully reflect the
95th percentile of Medicare FFS data projections as doing so would
result in an increase greater than 10 percent compared to the contract
year 2022 mandatory MOOP limit. Applying this cap on the amount of
potential increase each year to the MOOP limits is an important
beneficiary protection and consistent with how we have previously
balanced the goal of limiting enrollee costs (to avoid plan designs
that discourage enrollment by sicker beneficiaries) and ensuring
continued access to affordable and sustainable benefit packages when
setting MOOP limits.
Comment: A few commenters who were opposed to the ESRD cost
transition generally encouraged CMS to explore alternative solutions to
account for the approximately $6,300 difference between the existing
mandatory MOOP limit ($6,700) and the average annual out-of-pocket
costs for beneficiaries with ESRD in Medicare FFS ($13,042 \13\ based
on data from 2015-2017) rather than raising the MOOP limit (as
projected from incorporating the ESRD cost differential into the out-
of-pocket costs used to establish the MOOP and cost sharing limits).
Some of these commenters referenced data analyses completed by MedPAC
\14\ and the Kaiser Family Foundation (KFF) \15\ that found that the
average cost of covering Medicare beneficiaries with ESRD is
significantly more than the healthcare costs of an average MA
beneficiary. Another commenter also referred to the research finding
that applying the mandatory MOOP limit to ESRD beneficiary spending
results in increased MA costs by an estimated 8 to 9 percent on average
when compared to Medicare FFS spending.\16\ A commenter described this
data from the perspective that every ESRD enrollee effectively
represents an outlier compared to the current average costs of care for
other beneficiaries. Another commenter was concerned about the
possibility of MA plans discriminating against and discouraging
beneficiaries with diagnoses of ESRD from enrolling in the MA program.
---------------------------------------------------------------------------
\13\ Health Management Associates. ``End-Stage Renal Disease and
Medicare Advantage.'' February 12, 2019. The most recent report is
available online at: <a href="https://www.healthmanagement.com/wp-content/uploads/Health-Management-Associates-ESRD-and-Medicare-Advantage-White-Paper.pdf">https://www.healthmanagement.com/wp-content/uploads/Health-Management-Associates-ESRD-and-Medicare-Advantage-White-Paper.pdf</a>.
\14\ MedPAC. June 2019. Section 2: Medicare Beneficiary
Demographics. June 2019 Data Book: Health Care Spending and the
Medicare Program. The most recent version of MedPAC's annual data
book may be retrieved from: <a href="https://www.medpac.gov/document-type/data-book">https://www.medpac.gov/document-type/data-book</a>.
\15\ KFF, ``Medicare Beneficiaries With End-Stage-Renal Disease
(ESRD),'' 2019 <a href="https://www.kff.org/medicare/state-indicator/enrollees-with-esrd/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D">https://www.kff.org/medicare/state-indicator/enrollees-with-esrd/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D</a>.
\16\ Health Management Associates. ``End-Stage Renal Disease and
Medicare Advantage.'' February 12, 2019. The most recent report is
available online at: <a href="https://www.healthmanagement.com/wp-content/uploads/Health-Management-Associates-ESRD-and-Medicare-Advantage-White-Paper.pdf">https://www.healthmanagement.com/wp-content/uploads/Health-Management-Associates-ESRD-and-Medicare-Advantage-White-Paper.pdf</a>.
---------------------------------------------------------------------------
In a related note, a few commenters encouraged CMS to consider how
coverage costs for ESRD patients can be significantly above or below
the overall state average in certain locales, such as metropolitan
areas in California, Florida, Ohio, and Texas. A commenter referenced
the Avalere Health analysis of 2018 Medicare FFS claims data that found
10 of the top 15 metropolitan statistical areas with the most ESRD
patients had costs that exceeded the MA payment rate.\17\ Given the
research, a few commenters suggested that most, if not all, enrollees
with diagnoses of ESRD will surpass the highest allowable, mandatory
MOOP limit despite projected increases from the proposed ESRD cost
transition.
---------------------------------------------------------------------------
\17\ Kazan et al, Avalere Health, ``Medicare Advantage Plans May
Be Paid Below Actual ESRD Patients' Costs in Large Metropolitan
Areas in 2021'' December 2019 <a href="https://avalere.com/insights/medicare-advantage-plans-may-be-paid-below-actual-esrd-patients-costs-in-large-metropolitan-areas-in-2021">https://avalere.com/insights/medicare-advantage-plans-may-be-paid-below-actual-esrd-patients-costs-in-large-metropolitan-areas-in-2021</a>.
---------------------------------------------------------------------------
Response: We appreciate the commenters' feedback and requests to
consider alternatives to raising the MOOP limits to protect
beneficiaries from increases in their out-of-pocket
[[Page 22313]]
costs. Under the current regulation, MA MOOP limits have been based on
stable percentiles of Medicare FFS spending. This approach supports our
goal of ensuring that all eligible beneficiaries have access to
affordable and sustainable benefit packages. Our approach to
incorporate costs of beneficiaries with diagnoses of ESRD in setting
MOOP limits is consistent with the approach CMS has historically used
of spreading the burden of medical costs across all potential MA
enrollees uniformly through the continued use of the 95th and 85th
percentiles of out-of-pocket spending for the population that is
eligible to enroll in an MA plan. Historically, CMS has tried to
balance between limiting beneficiaries' maximum out-of-pocket costs and
potential changes in premium, benefits, and cost sharing, with the goal
of ensuring beneficiary access to affordable and sustainable benefit
packages. This practice avoids discriminating against beneficiaries
with diagnoses of ESRD--or any group of beneficiaries with a particular
high cost condition or health status--that would result if there were
higher premiums, cost sharing, or MOOP amounts applicable only to those
individuals with a certain chronic condition. Excluding the out-of-
pocket costs for beneficiaries with diagnoses of ESRD from the data
used to calculate the MOOP limits might serve to keep the out-of-pocket
expenses borne by MA enrollees lower, but would not be consistent with
ensuring access to affordable and sustainable benefit packages for all
eligible beneficiaries because it would result in a significant
increase in the costs that exceed the MOOP limit and therefore are
borne by the MA organization. Increasing the coverage costs for MA
organizations could lead to other increases in premiums or decreases in
benefits. Further, calculating the MOOP limits at a level that is
significantly less than the 85th and 95th percentiles of beneficiary
out-of-pocket spending is not as consistent with the underlying purpose
for adopting the MOOP: Ensuring that beneficiaries that are most likely
to be discriminated against--those beneficiaries who have much higher
health care needs--are not discouraged from enrolling in an MA plan.
We acknowledge that as beneficiaries with diagnoses of ESRD enroll
in greater numbers into the MA program, MA organizations will more
often than before have to cover the costs associated with that chronic
condition when these enrollees meet the plan's MOOP amount and incur
more costs past the MOOP than enrollees without diagnoses of ESRD are
projected to do, on average. CMS uses historical FFS reimbursement and
enrollment data for beneficiaries with diagnoses of ESRD to develop the
rates used to pay MA organizations for these enrollees, which are
generally higher than the rates paid to MA organizations for enrollees
without diagnoses of ESRD.\18\ CMS believes without incorporating ESRD
costs into the MOOP limits, MA plans may have a greater likelihood of
increasing premiums for all enrollees or reducing benefits to address
the expected increased costs associated with additional enrollment of
beneficiaries with diagnoses of ESRD. Guarding against those outcomes
is consistent with the standard CMS uses to calculate the MOOP limit
under current Sec. Sec. 422.100(f) and 422.101(d) and part of our
rationale for incorporating the ESRD cost differential. We believe that
it is important for the MOOP limits to be calculated using data
regarding the out-of-pocket expenses of beneficiaries with and without
diagnoses of ESRD because the MOOP limits will apply to enrollees with
and without diagnoses of ESRD.
---------------------------------------------------------------------------
\18\ The Calendar Year 2021 and 2022 Rate Announcements may be
accessed at <a href="https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents">https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents</a>.
---------------------------------------------------------------------------
MA organizations serve different geographic areas and ESRD
enrollment and spending may vary across metropolitan areas and states.
It would be overly complex to set MOOP limits by geographic area. For
example, some complicating factors include: Medical economics in
different geographic areas; how to reasonably define geographic areas;
varying negotiating leverage of MA organizations and resources; and
potential resulting complexities for beneficiaries in evaluating plan
options. Also, it would be difficult to incorporate the remainder of
the ESRD cost differential at a rate that was consistent with the
enrollment rate of beneficiaries with diagnoses of ESRD in specific
geographic areas. Finally, setting geographically specific MOOP limits
was not proposed.
Comment: Some commenters requested CMS modify the ESRD cost
transition schedule to match projected enrollment changes or actual
enrollment of beneficiaries with diagnoses of ESRD. For example, a
commenter requested CMS delay finalizing the complete ESRD cost
transition schedule until the actual year-1 penetration rate of
beneficiaries with diagnoses of ESRD in the MA program can be assessed.
In addition, this commenter requested (if the actual penetration rates
were not used) that CMS match the ESRD cost transition rate to OACT's
projected rate of transition of beneficiaries with diagnoses of ESRD
into the MA program.
Response: CMS endeavors to calculate and issue these MOOP limit and
cost sharing standards sufficiently in advance of the bid deadlines
(typically by the first Monday in April, as discussed in section
II.A.4.b. of this FC, when capitation rates and payment policies are
announced for the upcoming year) to provide MA organizations with
sufficient time to develop their bids. In addition, we did not propose
to set the schedule for transitioning ESRD costs into MOOP limits based
upon OACT's projection of ESRD enrollment because actual ESRD
enrollment per plan may vary and OACT's analysis reflects expectations
for the MA program as a whole. Using the penetration and enrollment
rates from the prior year to transition the ESRD cost differential
would not truly address the issue raised by the commenter (that is, the
amount of the ESRD cost differential used in calculating the MOOP limit
for a year is not the same as the MA enrollment rate of beneficiaries
with diagnoses of ESRD for that year). The time lag between: (1) The
enrollment information we have available at the time we calculate the
MOOP limits; and (2) the contract year for which the MOOP limits are
applied would mean that there would always be a disconnect between the
enrollment numbers and the MOOP limit. In addition, as previously
summarized in this section, it would be overly complex to set MOOP
limits by geographic area and incorporate the remainder of the ESRD
cost differential at a rate that was consistent with the enrollment
rate of beneficiaries with diagnoses of ESRD in specific geographic
areas.
While we appreciate the commenter's suggestion to align the ESRD
cost transition schedule with the OACT's projected rate of ESRD
enrollment, we believe this would add another layer of complexity and
further delay the transition process. As discussed in the February 2020
proposed rule, the OACT expected ESRD enrollment in MA plans to
increase by 83,000 beneficiaries as a result of the 21st Century Cures
Act provision. The OACT assumed the increase would be phased in over 6
years, with half of those beneficiaries (41,500) enrolling during 2021;
the remaining 41,500 additional beneficiaries were expected to enroll
in MA plans during the years 2022 to 2026 under the assumption that the
number of additional enrollees who have diagnoses of ESRD will continue
to increase during that time frame though
[[Page 22314]]
at a decreasing rate in later years. Based on actual 2021 enrollment
data, the OACT continues to project that 83,000 beneficiaries with
diagnoses of ESRD will enroll in the MA program over 6 years. If CMS
were to match the transition of incorporating ESRD costs to that of
OACT's enrollment projections, we would be forced to delay the full
transition of ESRD costs until 2026. After publication of the February
2020 proposed rule, CMS announced that it would take the Medicare FFS
costs of beneficiaries with diagnoses ESRD into account in developing
MOOP and cost sharing limits for 2021.\19\ The contract year 2021 MOOP
limits (which encompassed 40 percent of the ESRD cost differential)
were maintained for contract year 2022 while enrollment of
beneficiaries with diagnoses of ESRD is projected to increase.\20\ As a
result, CMS believes any further delays to the ESRD cost transition
would not be beneficial as only 40 percent of the ESRD cost
differential has been incorporated up to contract year 2022, the year
the OACT projected total enrollment of beneficiaries with diagnoses of
ESRD into the MA program to exceed 50 percent. In addition, when
developing our proposed ESRD cost transition schedule, we considered
how OACT's aggregate projections may not reflect the experiences in all
geographic locations, which could have different rates of transition
and changes in expenditures for providing care to beneficiaries with
diagnoses of ESRD.
---------------------------------------------------------------------------
\19\ See the HPMS memorandum titled ``Final Contract Year 2021
Part C Benefits Review and Evaluation,'' issued April 8, 2020 for
information on MOOP limits for contract year 2021.
\20\ See the HPMS memorandum titled ``Final Contract Year 2022
Part C Benefits Review and Evaluation,'' issued May 20, 2021 for
information on MOOP limits for contract year 2022.
---------------------------------------------------------------------------
Comment: As summarized in this section, CMS received many comments
relevant to the solicitation in the February 2020 proposed rule on
whether the ESRD cost transition schedule proposed at Sec.
422.100(f)(4)(vii) aligns with the goals of providing predictable and
transparent MOOP limits and cost sharing standards, minimizing
significant new costs for MA plans or enrollees, and providing
flexibility if the ESRD cost differential transition needs to be
adjusted. Most commenters supported a multi-year transition of ESRD
costs into the MOOP limits, but recommended changes to accelerate or
simplify the transition. Some commenters who were supportive of the
proposed transition schedule, or who did not solely tie their concerns
to the proposed schedule of transitioning ESRD costs into the
methodology for setting MOOP limits at paragraph (f)(4)(vii), shared
concerns addressed in previous comment summaries in this section
(namely, negative effects from costs associated with enrollees with
diagnoses of ESRD being subsidized by other enrollees without these
diagnoses; adverse selection of MA plans by enrollees with diagnoses of
ESRD; and the possibility of MA plans discriminating against and
discouraging beneficiaries with diagnoses of ESRD from enrolling in the
MA program). A commenter who supported the transition noted that the
projected MOOP limit increases over time would allow flexibility for MA
organizations to adjust to the costs of covering enrollees with
diagnoses of ESRD and that the gradual implementation of higher MOOP
limits will minimize impacts (such as, additional cost sharing or
increased premiums) on enrollees. Another commenter supported the ESRD
cost transition schedule as proposed.
Several commenters recommended accelerating or simplifying the ESRD
cost transition because: (1) A lengthy, complex or confusing transition
would be difficult for MA organizations to plan and execute; (2) a
longer transition would not support MA plans managing the higher ESRD
costs quickly enough; and (3) delaying the transition may require
premium increases to fully cover or subsidize ESRD member costs. A
commenter requested CMS complete the transition over 3 years, instead
of 4 years, by incorporating 25 percent of the ESRD cost differential
each year as follows: 50 percent in 2021, 75 percent in 2022, and 100
percent of all ESRD costs incorporated in 2023. In addition, a few
commenters were concerned that the OACT's projections of beneficiaries
with diagnoses of ESRD that will enroll in an MA plan during the next
several years is understated. A commenter explained that even if only a
small number of beneficiaries with diagnoses of ESRD migrate from
Medicare FFS to the MA program, MA organizations will face
significantly increased medical care costs. This commenter also stated
that CMS's phase-in proposal for the ESRD cost differential was
understating the speed at which beneficiaries with ESRD will transition
to MA plans. A commenter that wanted to accelerate the transition was
also concerned that as beneficiaries with diagnoses of ESRD migrate to
MA and fewer remain in Medicare FFS, CMS's methodology of calculating
MOOP limits using both non-ESRD and ESRD costs would result in MOOP
limits being set too low and would fail to achieve an actuarially
equivalent level of cost sharing. Specifically, this commenter noted
that the substantial financial benefits of the MOOP limit for ESRD
members would result in the ultimate blending (of out-of-pocket costs
for all beneficiaries) being insufficient if the penetration rate of
ESRD members in MA plans ends up exceeding that of non-ESRD members.
Response: In response to the comments we received (summarized in
this section) and given the timing of this FC, we are finalizing some
changes to the schedule for incorporating the ESRD cost differential
into the Medicare FFS cost data used in the methodology for calculating
the MOOP limits each year (and also used in the methodology for
calculating inpatient hospital acute and psychiatric cost sharing
limits, as discussed in section II.B. of this FC). The transition
schedule was proposed as follows: 60 percent in 2022; 80 percent in
2023 or next year; and 100 percent in 2024 or the final year of
transition. This was proposed in the context of the 2021 MOOP limits
being based on Medicare FFS data projections that incorporated 40
percent of the ESRD cost differential. In addition, we proposed
guardrails to pause the incorporation of the ESRD cost differential and
cap the annual maximum change in MOOP limits to a 10 percent increase
or decrease in the limits from the prior year, if the dollar figure at
the 85th or 95th percentile of projected Medicare FFS costs increased
or decreased by a difference of more than two percentiles above or
below the 85th and 95th percentile from the prior year. The combination
of the transition and guardrails was designed to strike a balance of
providing plan benefit design stability while also protecting
beneficiaries from rapid premium or cost sharing changes. We respond to
general concerns regarding potential beneficiary discrimination tied to
the MOOP limit methodology in section II.A.4. of this FC and to
concerns related to enrollee subsidization of ESRD costs and potential
adverse selection in previous responses in this section.
We appreciate the recommendations about the timing to incorporate
ESRD costs into the data used to calculate MOOP limits (and inpatient
hospital acute and psychiatric cost sharing limits). In this FC, we are
finalizing the use of a transition schedule combined with guardrails on
overall increases with some modifications compared to the proposal. We
are finalizing the definition and use of the ESRD cost differential as
a specific way to measure ESRD costs and factor them into the data (and
the methodology CMS uses to calculate annual MOOP limits) with
[[Page 22315]]
moderate modifications based on commenter feedback. We are finalizing a
modification to the ESRD cost differential definition at Sec.
422.100(f)(4)(vi) (proposed in paragraph (f)(4)(vii)) to clarify that
this value is the difference between, first, for the mandatory MOOP
limit, $7,175 and for the lower MOOP limit, $3,360 and second, for the
mandatory MOOP limit, the 95th percentile and, for the lower MOOP
limit, the 85th percentile of the Medicare FFS data projections for
each year between 2023 and 2024. The proposed definition mistakenly
referred only to using costs incurred by beneficiaries with ESRD and
did not fully clarify the specific comparisons being made for the
mandatory and lower MOOP types. We note using the ``Medicare FFS data
projections'' term as defined in paragraph (f)(4)(i) ensures that the
ESRD cost differential compares the 95th and 85th percentiles of the
projected out-of-pocket costs for Medicare FFS beneficiaries with and
without diagnoses of ESRD for the upcoming year to the $7,175 and
$3,360 dollar amounts in order to calculate the ESRD cost differential
for that year (as discussed in the February 2020 proposed rule). We
believe that clarification on these points improves the regulation
text. We also added language to paragraph (f)(4)(vi) to clarify that
the ESRD cost differential is used in the ESRD cost transition
finalized throughout paragraph (f)(4). Because the Medicare FFS data
projections will be updated each year with more recent data, references
to different projections in this FC include the contract year that the
projections are for and the years of data that those projections are
based on. For example, contract year 2023 Medicare FFS data projections
(based on Medicare FFS data from 2017 to 2021) reflect the amounts CMS
used to calculate the MOOP and cost sharing limits for contract year
2023.
As discussed in section V.H.1. of this FC, CMS considered several
alternatives to implementing the proposed ESRD cost transition schedule
into the methodology CMS uses to calculate MOOP limits based on public
comments, the timing of this FC, potential for enrollee disruption, and
impacts of further delays in integrating ESRD costs. After
consideration of those alternatives, we believe finalizing a modified
transition schedule would be beneficial and address the concerns and
interests raised by the comments. The delay in finalizing this
provision resulted in no increased ESRD cost adjustment for contract
year 2022 MOOP limits (rather, the ESRD cost differential remained the
same as 2021) while ESRD enrollment in MA is projected to increase in
2022. Specifically, CMS maintained the contract year 2021 MOOP limits
for contract year 2022. Therefore, we are not finalizing a provision to
address the incorporation of the ESRD cost differential for contract
year 2022 (proposed at paragraph (f)(4)(vii)(A)) and are organizing the
regulation text as necessary.
As a result, we are finalizing at Sec. 422.100(f)(4)(vi)(A) and
(B) that the ESRD cost differential will be factored into the Medicare
FFS data projections used to calculate the MOOP limits as follows: For
2023, 70 percent and for 2024, 100 percent.
In finalizing use of 70 percent of the ESRD cost differential for
2023, we aim to strike a balance among curbing potential disruptive
changes in MOOP limits from contract year 2022 to contract year 2023,
avoiding the concerns with a lengthy transition identified by
commenters, and ensuring MA organizations can continue offering all
plan enrollees, regardless of their ESRD status, quality care and
service while keeping premiums and cost sharing at non-discriminatory
levels. As finalized, Sec. 422.100(f)(4)(iv) through (vi) reflects the
updated timing for the finalized transition and includes some minor
clarifications and edits to use consistent terminology. We expect these
changes will help ensure that MA plans are able to both expand their
membership to beneficiaries with diagnoses of ESRD and continue
offering all enrollees, regardless of their ESRD status, high-quality
health care and service while keeping premiums and out-of-pocket costs
at reasonable levels for all enrollees.
The modified schedule we are finalizing to transition ESRD costs
was used to update the MOOP limits from the illustrative figures
provided in Tables 4 and 5 (Table 4, ``Illustrative Example of In-
Network MOOP Limits Based on Most Recent Medicare FFS Data
Projections'' and Table 5, ``Illustrative Example of Combined MOOP
Limits for LPPO and Catastrophic (MOOP) Limits for RPPO Plans Based on
Most Recent Medicare FFS Data Projections'') in the February 2020
proposed rule. In this FC, Table 5 contains the final MOOP limits for
contract year 2023 and Table 9 contains illustrative MOOP limits for
contract year 2024 for comparison purposes to Tables 4 and 5 from the
February 2020 proposed rule. The calculations to reach the MOOP limits
in Tables 5 and 9 are provided in Tables 2-4 and Tables 6-8. In
addition, Tables 4, 5, 8, and 9 include a correction in the calculation
of the lower ranges to the total catastrophic (combined MOOP) limits
per Sec. 422.100(d)(3)(iii), as discussed in section II.A.4.b. of this
FC. CMS took public comments on the MOOP limit proposal from the
February 2020 proposed rule into consideration regarding the use of a
subregulatory notice and comment process before finalizing the MOOP and
cost sharing limits each year and as discussed in sections II.A.4.b.
and II.B.5. of this FC, we are adopting that process for the future.
However, as this FC is not being published early enough to provide time
for CMS to solicit comment and release subregulatory guidance before
the contract year 2023 bid deadline, the MOOP limits contained in Table
5 are final. These limits were calculated applying the rules finalized
in this FC. CMS intends to update the illustrative contract year 2024
MOOP limits using contract year 2024 Medicare FFS data projections
(based on Medicare FFS data from 2018 to 2022) when available and have
a separate public comment period (based on Sec. 422.100(f)(7)(iii))
before releasing the final contract year 2024 MOOP limits.
Using the 95th percentile of contract year 2023 Medicare FFS data
projections (based on Medicare FFS data from 2017-2021), the projected
percent increase to the mandatory MOOP limit for contract year 2023
would be greater than 10 percent in comparison to the mandatory MOOP
limit set for contract year 2022. Table 2 compares the unrounded
contract year 2023 in-network mandatory MOOP limit before application
of the 10 percent cap ($8,530.20) to the mandatory MOOP limit set for
contract year 2022 ($7,550.00); this increase equates to approximately
13 percent (after accounting for the rounding rules which would raise
the MOOP limit amount to $8,550.00). As a result, Tables 2 through 5
illustrate application of the 10 percent guardrail for the mandatory
MOOP limit in contract year 2023 to limit the increase to 9.9 percent
after application of the rounding rules. Conversely, the percent
increase of 5.8 percent to the lower MOOP limit for contract year 2023
is less than 10 percent in comparison to the voluntary MOOP limit set
for contract year 2022. Similarly, comparing the highest allowable in-
network mandatory and lower MOOP limits for contract year 2023 to the
corresponding illustrative in-network MOOP limits for contract year
2024 is less than 10 percent. For example, the final contract year 2023
in-network mandatory MOOP limit
[[Page 22316]]
($8,300.00) compared to the illustrative unrounded contract year 2024
in-network mandatory MOOP limit ($9,111.00) reflects an approximate 9.8
percent increase (and an approximate 3.3 percent increase for the
illustrative lower MOOP limits). As a result, Tables 2 through 9
illustrate application of the 10 percent guardrails finalized in
paragraphs (f)(4)(iv)(A) and (C) and (f)(4)(v)(A) when the increase
threshold is met. These guardrails are also discussed more completely
in a subsequent response to comment in this section.
Under Sec. 422.100(f)(4)(vi), the ESRD cost differential for
contract year 2023 is the difference between, first, for the mandatory
MOOP limit, $7,175 and for the lower MOOP limit, $3,360 and second, for
the mandatory MOOP limit, the 95th percentile ($9,111.00) and for the
lower MOOP limit, the 85th percentile ($3,772.00) of the contract year
2023 Medicare FFS data projections (based on Medicare FFS data from
2017 to 2021). As shown in Tables 2 through 5, modifying the ESRD cost
transition from the proposed 80 percent to 70 percent of the ESRD cost
differential in contract year 2023 and completing the calculations
using projections of Medicare FFS data from 2017-2021 (compared to the
2015-2019 Medicare FFS data available at the time of the February 2020
proposed rule), produced a moderate increase from the illustrative
amounts contained in the February 2020 proposed rule. For example, the
highest allowable (and illustrative) in-network mandatory MOOP limit
was listed as $7,950 for contract year 2023 in the February 2020
proposed rule. In comparison, as shown in Table 5, the final contract
year 2023 highest allowable in-network mandatory MOOP limit is $8,300
(an increase of $350).
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR14AP22.003
[[Page 22317]]
[GRAPHIC] [TIFF OMITTED] TR14AP22.004
[GRAPHIC] [TIFF OMITTED] TR14AP22.005
[[Page 22318]]
[GRAPHIC] [TIFF OMITTED] TR14AP22.006
BILLING CODE 4120-01-C
In summary, we are finalizing Sec. 422.100(f)(4)(vi) (proposed in
paragraph (f)(4)(vii)) with changes in the transition schedule to
calculate annual in-network MOOP limits and modifications to paragraph
(f)(4) addressed in this section and section II.A.4. of this FC.
CMS will monitor the penetration rate of beneficiaries with
diagnoses of ESRD in MA plans and if the penetration rate ends up being
significantly different from Medicare FFS, we will consider future
rulemaking to alter the methodology CMS uses to set MOOP limits if
there are significant unforeseen impacts or negative consequences that
need to be addressed. We also would consider whether additional changes
would outweigh the interests of maintaining a settled methodology for
the MOOP limits and sufficiently protect enrollees from substantial
changes in cost sharing and benefits from one year to the next.
Finally, we note that MA organizations can still design a PBP with cost
sharing that is actuarially equivalent to cost sharing in Medicare FFS
while complying with the MOOP and cost sharing limits in this FC.
Comment: A few commenters made specific requests on how CMS should
simplify or otherwise modify the proposed transition of ESRD costs into
MOOP limits. A commenter requested CMS enforce the schedule to
transition ESRD costs into MOOP limits regardless of any year-over-year
changes to the 95th and 85th percentiles for the following reasons: (1)
ESRD migration is happening separately from any changes to non-ESRD
costs in setting the MOOP limits; and (2) potential delays in the ESRD
phase-in schedule could require additional member premium increases for
non-ESRD members in order to subsidize ESRD member costs. Another
commenter noted that simplifying the methodology for incorporating the
ESRD cost differential would increase transparency and predictability.
Response: Regarding the request to enforce the ESRD cost transition
schedule year-over-year regardless of any other considerations, we
believe the commenter was specifically referring to the guardrails at
proposed Sec. 422.100(f)(4)(v)(A) and (C) that we proposed to prevent
sudden, significant changes to MOOP limits for contract year 2023 and
2024 (or until the end of the ESRD cost transition) if the projections
of the 85th or 95th percentile were to shift more than two percentiles
within 1 year. We proposed that if the dollar value at the 85th or 95th
percentile shifted more than two percentiles during the ESRD cost
transition, the MOOP limits would only increase or decrease by 10
percent. The 97th and 93rd percentiles of the contract year 2021
Medicare FFS data projections (based on Medicare FFS data from 2015-
2019) were $11,485 and $6,391 respectively, in comparison to the 95th
percentile of $8,174. The 97th percentile was approximately 40 percent
higher than the 95th percentile and the 93rd percentile was
approximately 22 percent lower than that the 95th percentile for
contract year 2021. In addition, the 87th and 83rd percentiles of the
contract year 2021 Medicare FFS data projections (based on Medicare FFS
data from 2015-2019) were $3,993 and $3,162 respectively, in comparison
to the 85th percentile of $3,537. The 87th percentile was approximately
13 percent higher than the 85th percentile and the 83rd percentile was
approximately 11 percent lower than that the 85th percentile for
contract year 2021. Our proposed guardrails were intended to protect MA
enrollees from being potentially subject to a MOOP amount that is
substantially different compared to the prior contract year. However,
based on historical trends, we do not expect a shift in one year that
is outside of the range created by these percentiles. We believe that
the guardrails can be simplified while protecting enrollees as
intended.
We are modifying the proposed guardrails to use only a 10 percent
cap on increases to MOOP limits from the prior year and will apply this
guardrail for contract year 2023 and subsequent years at Sec.
422.100(f)(4)(iv) and (v). In essence, we are not finalizing the
condition that the projections of the 85th or 95th percentile must
shift more than two percentiles within one year in order to apply a 10
percent change cap to the mandatory and lower MOOP limits. We are also
not finalizing the proposal to toll or delay the incorporation of the
ESRD cost differential as part of the limits on changes to MOOP limits
from year to year. We are finalizing the 10 percent guardrail in
paragraphs (f)(4)(iv) and (v) and will apply it during and after the
ESRD cost transition. To simplify the regulation text for how CMS
calculates the MOOP limits for contract year 2024 and subsequent years,
we are also consolidating into one paragraph ((f)(4)(v)(A)) rather than
two (proposed paragraphs (f)(4)(v)(A) and (C)) the methodology that
will apply consistently to both the mandatory and lower MOOP types
(with the only difference being the percentile that determines the type
of limit). This makes the regulation simpler while providing stability
and a measure of predictability for enrollees and MA organizations
about the degree of change that may occur in MOOP limits from year to
year. As finalized, paragraphs (f)(4)(iv) and (f)(4)(v) provide that
the mandatory and lower MOOP limits may only increase by 10 percent;
the intermediate MOOP limit will be calculated as the numeric midpoint
between the mandatory and lower MOOP limits after application of the 10
percent cap on increases, subject to the clarified rounding rules. By
finalizing
[[Page 22319]]
only the 10 percent cap on increases, we are making the guardrails more
definitive and more likely to limit dramatic shifts in annual Medicare
FFS data projections that do not quite reach a change that is more than
two percentiles from the 95th and 85th percentiles. We believe this is
appropriate as the 95th percentile of contract year 2023 Medicare FFS
data projections with full incorporation of the ESRD cost differential
(based on Medicare FFS data from 2017-2021) is $9,111 and does not
reflect a change that is more than two percentiles different than the
projected amounts for the prior contract year. Specifically, based on
Medicare FFS data from 2016-2020, the projected contract year 2022 95th
percentile was $8,468, the 97th percentile was $11,837, and the 93rd
percentile was $6,631. Using the proposed two percentile requirement,
these projections would not trigger CMS to apply the 10 percent cap to
calculate the contract year 2023 mandatory MOOP limit because $9,111
does not exceed $11,837. Using the $9,111 amount without applying the
cap on increases would produce a contract year 2023 mandatory MOOP
limit of $8,550, which is approximately 13 percent higher than the
contract year 2022 mandatory MOOP limit ($7,550) after applying the
rounding rules and incorporating 70 percent of the ESRD cost
differential. In addition, this would increase the intermediate MOOP
limit as it is calculated using the numeric midpoint between the
mandatory and lower MOOP limits and the total catastrophic (combined)
MOOP limits as they are calculated at 1.5 times the in-network amounts.
It is likely that significant increases in costs occurring within two
percentiles of the prior year's Medicare FFS data projections would
circumvent the purpose of our proposed guardrail to provide stability
and predictability of MOOP limits from one year to the next. In such a
situation, MA enrollees would not be protected from potentially
significant increases in MOOP amounts for that contract year. In order
to better protect MA enrollees from significant increases in costs for
contract year 2023 and future years, we are finalizing the 10 percent
cap on increases without the two percentile requirement; application of
the 10 percent cap is shown in Tables 2 through 9. In summary, this
removal of the two percentile requirement results in a contract year
2023 mandatory MOOP limit that is $8,300 rather than $8,550 and an
intermediate MOOP limit that is $6,000 rather than $6,100. In addition,
the increases to the total catastrophic (combined) MOOP mandatory and
intermediate MOOP types for contract year 2023 were tempered through
application of the final 10 percent cap requirement, with the mandatory
limit set at $12,450 rather than $12,800 and the intermediate MOOP
limit set at $8,950 rather than $9,150. With regard to the lower MOOP
limit, the contract year 2023 limit compared to the prior contract year
reflects an increase less than 10 percent. In addition, the contract
year 2023 85th percentile ($3,772) did not exceed the prior year's 87th
percentile ($4,153), so there is no effect in removing the two-
percentile requirement for the lower in-network and total catastrophic
(combined) MOOP type for contract year 2023. As shown in Tables 6
through 9, we currently project that the contract year 2024 mandatory
MOOP limit will incorporate any remaining difference, to the lower of
$9,130 (a 10 percent increase) or the value at the 95th percentile as
projected using the annually updated Medicare FFS data projections.
Regarding the comments about potential increases in MA premiums
associated with our proposals to limit increases in the MOOP limits
from year to year and to phase-in the ESRD cost differential over a
period of time, only 40 percent of the ESRD cost differential was
incorporated into the MOOP limits set for contract year 2021 (and
maintained for contract year 2022) which is a one year delay in
incorporating additional ESRD costs (in comparison to the schedule
proposed). Despite this delay and the limited increase in MOOP limits
for these contract years during which enrollment of beneficiaries with
diagnoses of ESRD continued to increase into the MA program, the
weighted average monthly plan premium is continuing to decrease from
prior years and the percent of plans offering supplemental benefits or
other benefit flexibilities (such as, SSBCI) continues to increase
(based on plan bid information for contract year 2022). This suggests
that increases in plan premiums or supplemental benefit changes are not
occurring on an aggregate level in response to a 1 year delay of
incorporating additional ESRD costs into the methodology CMS uses to
calculate MOOP limits. We expect this may be a result of market forces
and competition. Therefore, we believe that finalizing a 10 percent cap
on increases to the MOOP limits from the prior year and its application
for the mandatory and intermediate MOOP limits (in-network and
combined) using contract year 2023 Medicare FFS data projections (based
on Medicare FFS data from 2017-2021) will not immediately result in MA
plans increasing premiums or reducing benefits. We are finalizing
guardrails at Sec. 422.100(f)(4)(iv) and (v) that use this 10 percent
cap on increases in the mandatory and lower MOOP limits; this cap will
necessarily limit increases in the intermediate MOOP limit and the
total catastrophic (combined) MOOP limits as well based on the
methodology to calculate those limits.
Therefore, subject to the rounding rules in Sec.
422.100(f)(4)(iii) and the ESRD cost transition schedule in Sec.
422.100(f)(4)(vi), the MOOP limits for 2023 and subsequent years will
be calculated as follows:
For contract year 2023 (applying both Sec. 422.100(f)(4)(iv) and
(vi)(A)):
<bullet> The mandatory MOOP limit is calculated as $7,175 (the 95th
percentile of projected contract year 2021 Medicare FFS beneficiary
out-of-pocket spending for beneficiaries without diagnoses of ESRD)
plus 70 percent of the ESRD cost differential unless: the resulting
MOOP limit (after application of the rounding rules in paragraph
(f)(4)(iii) of this section) reflects an increase greater than 10
percent compared to the mandatory MOOP limit from the prior year, in
which case CMS caps the increase to the mandatory MOOP limit by 10
percent of the prior year's MOOP limit.
<bullet> The intermediate MOOP limit is calculated as the numeric
midpoint between the mandatory and lower MOOP limits (calculated before
application of the rounding rules in Sec. 422.100(f)(4)(iii) and after
application of the 10 percent cap on increases to the mandatory and
lower MOOP limits from the prior year in paragraphs (f)(4)(iv)(A) and
(C)).
<bullet> The lower MOOP limit is calculated as $3,360 (the 85th
percentile of projected contract year 2021 Medicare FFS beneficiary
out-of-pocket spending for beneficiaries without diagnoses of ESRD)
plus 70 percent of the ESRD cost differential unless: The resulting
MOOP limit (after application of the rounding rules in paragraph
(f)(4)(iii) of this section) reflects an increase greater than 10
percent compared to the voluntary MOOP limit from the prior year, in
which case CMS caps the increase to the lower MOOP limit by 10 percent
of the prior year's MOOP limit.
The MOOP limits for contract year 2024 and subsequent years will be
calculated, subject to the rounding rules in paragraph (f)(4)(iii), as
follows:
<bullet> The mandatory and lower MOOP limits are calculated as the
95th and
[[Page 22320]]
85th percentiles of the Medicare FFS data projections if the resulting
MOOP limits reflect a decrease or an increase equal to or less than 10
percent compared to each of the prior year's corresponding MOOP limits.
If the MOOP limits are not calculated as the 95th and 85th percentiles
of the Medicare FFS data projections, CMS increases the prior year's
mandatory and lower MOOP limits by 10 percent annually until the MOOP
limits are calculated at the applicable percentile (95th percentile for
the mandatory MOOP limit and 85th percentile for the lower MOOP limit)
of Medicare FFS data projections. This policy is finalized in paragraph
(f)(4)(v)(A).
<bullet> The intermediate MOOP type is either maintained at the
prior year's limit or if either the mandatory or lower MOOP limit
changes from the prior year, updated to the new numeric midpoint
between the mandatory and lower MOOP limits (calculated before
application of the rounding rules in paragraph (f)(4)(iii) and after
application of the 10 percent cap on increases to the mandatory and
lower MOOP limits from the prior year in paragraph (f)(4)(v)(A)). This
policy is finalized in paragraph (f)(4)(v)(B).
As a result, CMS will distribute significant (that is, more than 10
percent) increases to the mandatory and lower MOOP types over multiple
years in order to avoid potential disruption to beneficiaries and plan
designs for contract y
[…truncated; see source link]Indexed from Federal Register on April 14, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.