Rule2023-07115
Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly
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 12, 2023
Effective
June 5, 2023
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule will revise the Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations to implement changes related to Star Ratings, marketing and communications, health equity, provider directories, coverage criteria, prior authorization, passive enrollment, network adequacy, and other programmatic areas. This final rule will also codify regulations implementing section 118 of Division CC of the Consolidated Appropriations Act, 2021, section 11404 of the Inflation Reduction Act, and includes provisions that will codify existing sub-regulatory guidance in the Part C, Part D, and PACE programs.
Full Text
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[Federal Register Volume 88, Number 70 (Wednesday, April 12, 2023)]
[Rules and Regulations]
[Pages 22120-22345]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-07115]
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Vol. 88
Wednesday,
No. 70
April 12, 2023
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 417, 422, 423, et al.
Medicare Program; Contract Year 2024 Policy and Technical Changes to
the Medicare Advantage Program, Medicare Prescription Drug Benefit
Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care
for the Elderly; Final Rule
Federal Register / Vol. 88 , No. 70 / Wednesday, April 12, 2023 /
Rules and Regulations
[[Page 22120]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
Office of the Secretary
42 CFR Parts 417, 422, 423, 455, and 460
[CMS-4201-F]
RIN 0938-AU96
Medicare Program; Contract Year 2024 Policy and Technical Changes
to the Medicare Advantage Program, Medicare Prescription Drug Benefit
Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care
for the Elderly
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule will revise the Medicare Advantage (Part C),
Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and
Programs of All-Inclusive Care for the Elderly (PACE) regulations to
implement changes related to Star Ratings, marketing and
communications, health equity, provider directories, coverage criteria,
prior authorization, passive enrollment, network adequacy, and other
programmatic areas. This final rule will also codify regulations
implementing section 118 of Division CC of the Consolidated
Appropriations Act, 2021, section 11404 of the Inflation Reduction Act,
and includes provisions that will codify existing sub-regulatory
guidance in the Part C, Part D, and PACE programs.
DATES:
Effective date: These regulations are effective on June 5, 2023.
Applicability dates: The provisions in this rule are applicable to
coverage beginning January 1, 2024, except as otherwise noted. The
revisions to Sec. Sec. 422.166(a)(2)(i) and 423.186(a)(2)(i) regarding
Tukey outlier deletion are applicable on June 5, 2023. The marketing
and communications provisions at Sec. Sec. 422.2262 through 422.2274
and 423.2262 through 423.2274 are applicable for all contract year 2024
marketing and communications beginning September 30, 2023. The
revisions to the definition of ``gross covered prescription drug
costs'' in Sec. 423.308 are applicable on June 5, 2023. The removal of
the Part C Diabetes Care--Kidney Disease Monitoring measure as
described in sections V.D.1. of the final rule is applicable on June 5,
2023. The risk adjustment to the three Part D adherence measures based
on sociodemographic status characteristics as described in section
V.D.2. of this final rule is applicable for 2028 Star Rates beginning
January 1, 2026. The PACE provision on the contract year definition at
Sec. 460.6 and the PACE provision on service determination requests at
Sec. 460.121 are applicable on June 5, 2023.
FOR FURTHER INFORMATION CONTACT:
Lucia Patrone, (410) 786-8621--General Questions.
Carly Medosch, (410) 786-8633--Part C and Cost Plan Issues.
Catherine Gardiner, (410) 786-7638--Part D Issues.
Sonia Eaddy, (410) 786-5459--Part D Issues.
Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and
Appeals Issues.
Kelley Ordonio, (410) 786-3453--Parts C and D Payment Issues.
Hunter Coohill, (720) 853-2804--Enforcement Issues.
Lauren Brandow, (410) 786-9765--PACE Issues.
Sara Klotz, 410-786-0507--D-SNP Issues.
<a href="/cdn-cgi/l/email-protection#f9a9988b8dba98979dbdaa8d988bab988d90979e8ab99a948ad791918ad79e968f"><span class="__cf_email__" data-cfemail="2e7e4f5c5a6d4f404a6a7d5a4f5c7c4f5a4740495d6e4d435d0046465d00494158">[email protected]</span></a>--Parts C and D Star Ratings
Issues.
SUPPLEMENTARY INFORMATION: CMS intends to address all of the remaining
proposals from the December 2022 proposed rule in subsequent
rulemaking. Therefore, CMS plans to make provisions adopted in the
subsequent, second final rule applicable to coverage beginning no
earlier than January 1, 2025. Notwithstanding the foregoing, for
proposals from the December 2022 proposed rule that would codify
statutory requirements that are already in effect, CMS reminds
organizations, plan sponsors, and other readers that the statutory
provisions apply and will continue to be enforced. CMS intends to
implement the statutory requirements in section 118 of Division CC of
the Consolidated Appropriations Act, 2021 (CAA) and section 11404 of
the Inflation Reduction Act (IRA) consistent with their effective
provisions.
We received nearly one thousand timely pieces of correspondence
containing multiple comments on the CY 2024 proposed rule. We note that
some of the public comments were outside of the scope of the proposed
rule. These out-of-scope public comments are not addressed in this
final rule. Summaries of the public comments that are within the scope
of the proposed rule and our responses to those public comments are set
forth in the various sections of this final rule under the appropriate
heading. However, we note that in this final rule, we are not
addressing comments received on the provisions of the proposed rule
that we are not addressing or finalizing at this time. Rather, we will
address them at a later time, in a subsequent rulemaking document, as
appropriate.
I. Executive Summary
A. Purpose
The primary purpose of this final rule is to amend the regulations
for the Medicare Advantage (Part C), Medicare Cost Plan, and Medicare
Prescription Drug Benefit (Part D) programs, and Programs of All-
Inclusive Care for the Elderly (PACE). This final rule includes a
number of new policies that would improve these programs as well as
codify existing Part C and Part D sub-regulatory guidance.
Additionally, this rule implements certain sections of the
following Federal laws related to the Parts C and D programs:
<bullet> The Inflation Reduction Act (IRA) of 2022.
<bullet> The Consolidated Appropriations Act (CAA), 2021.
B. Summary of the Major Provisions
1. Medicare Advantage/Part C and Part D Prescription Drug Plan Quality
Rating System (Sec. Sec. 422.162, 422.164, 422.166, 423.182, 423.184,
and 423.186)
We are finalizing a health equity index (HEI) reward for the 2027
Star Ratings to further incentivize Parts C and D plans to focus on
improving care for enrollees with social risk factors (SRFs); as part
of this change, we also are finalizing the removal of the current
reward factor (a reward for consistently high performance). This policy
supports CMS efforts to ensure attainment of the highest level of
health for all people. We are finalizing the reduction in the weight of
patient experience/complaints and access measures to further align
efforts with other CMS quality programs and the current CMS Quality
Strategy, as well as to better balance the contribution of the
different types of measures in the Star Ratings program. We also are
finalizing the removal of the Part C Diabetes Care--Kidney Disease
Monitoring measure; addition of the Part C Kidney Health Evaluation for
Patients with Diabetes measure; and substantive updates to the Part D
Medication Adherence for Diabetes Medications, Medication Adherence for
[[Page 22121]]
Hypertension (RAS Antagonists), and Medication Adherence for
Cholesterol (Statins) measures. We are also finalizing a rule for the
removal of certain types of Star Ratings measures in the future;
removal of the 60 percent rule that is part of the adjustment for
extreme and uncontrollable circumstances (also called the disaster
adjustment); and technical clarifications and changes related to the
disaster adjustment, treatment of ratings for contracts after
consolidation, and the correction of an error related to codification
of the use of Tukey outlier deletion. Generally, these changes will
apply (that is, data will be collected and performance measured) for
the 2024 measurement period and the 2026 Star Ratings, except for the
removal of the Part C Diabetes Care--Kidney Disease Monitoring measure,
which will apply beginning with the 2024 Star Ratings; the HEI reward,
which will apply beginning with the 2024 and 2025 measurement periods
and the 2027 Star Ratings; the risk adjustment based on
sociodemographic status characteristics to the three adherence
measures, which will be implemented beginning with the 2026 measurement
period and the 2028 Star Ratings; and addressing the codification error
related to the use of Tukey outlier deletion which will be applicable
upon the effective date of this final rule and apply beginning with the
2024 Star Ratings.
The remaining Star Ratings provisions of the proposed rule are not
being finalized in this rule and instead will be addressed in a later
final rule. Those provisions include removing the stand-alone
Medication Reconciliation Post-Discharge measure; adding the updated
Colorectal Cancer Screening and Care for Older Adults--Functional
Status Assessment measures; adding the Part D Concurrent Use of Opioids
and Benzodiazepines, Polypharmacy Use of Multiple Anticholinergic
Medications in Older Adults, and Polypharmacy Use of Multiple Central
Nervous System Active Medications in Older Adults measures; removing
guardrails (that is, bi-directional caps that restrict upward and
downward movement of a measure's cut points for the current year's
measure-level Star Ratings compared to the prior year's measure-
threshold specific cut points) when determining measure-specific-
thresholds for non-Consumer Assessment of Healthcare Providers and
Systems (CAHPS) measures; modifying the Improvement Measure hold
harmless policy; and adding technical clarifications related to Quality
Bonus Payment (QBP) appeals and weighting of measures after a
substantive specification change.
2. Health Equity in Medicare Advantage (MA) (Sec. Sec. 422.111 and
422.112)
CMS is working to achieve policy goals that advance health equity
across its programs and pursue a comprehensive approach to advancing
health equity for all, including those who have been historically
underserved, marginalized, and adversely affected by persistent poverty
and inequality.\1\ To that end, in addition to the health equity index,
we are finalizing the following regulatory updates.
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\1\ <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/">https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/</a>.
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First, current regulations require MA organizations to ensure that
services are provided in a culturally competent manner. The regulation
provides examples of populations that may require consideration
specific to their needs. In this final rule, we further clarify the
broad application of our policy. Specifically, we are amending the list
of populations to include people: (1) with limited English proficiency
or reading skills; (2) of ethnic, cultural, racial, or religious
minorities; (3) with disabilities; (4) who identify as lesbian, gay,
bisexual, or other diverse sexual orientations; (5) who identify as
transgender, nonbinary, and other diverse gender identities, or people
who were born intersex; (6) who live in rural areas and other areas
with high levels of deprivation; and (7) otherwise adversely affected
by persistent poverty or inequality.
Next, CMS currently provides best practices for organizations to
use in developing their provider directories, including incorporating
non-English languages spoken by each provider and provider/location
accessibility for people with physical disabilities. In this rule, we
are codifying these best practices by requiring organizations to
include providers' cultural and linguistic capabilities (including
American Sign Language, ASL) in their provider directories. This change
will improve the quality and usability of provider directories,
particularly for non-English speakers, limited English proficient
individuals, and enrollees who use ASL.
In addition, as the use of telehealth becomes more prevalent, there
is evidence of disparities in telehealth access due in part to low
digital health literacy, especially among populations who already
experience health disparities. Low digital health literacy is one of
the most significant obstacles in achieving telehealth equity, and many
older adults with low digital health literacy experience gaps in access
to the health care they need. This is concerning for the MA program
because its enrollee population includes older adults who are age 65 or
older, which is why we are finalizing policies to address the issue by
requiring MA organizations to develop and maintain procedures to
identify and offer digital health education to enrollees with low
digital health literacy to assist with accessing any medically
necessary covered telehealth benefits. We solicited comments from
stakeholders on various aspects of our proposal, which informed the
types of MA plans we are subjecting to the finalized regulatory
requirements, and how we will collect information related to compliance
with these requirements.
Finally, MA organizations' existing quality improvement (QI)
programs are an optimal vehicle to develop and implement strategies and
policies designed to reduce disparities in health and health care, and
advance equity in the health and health care of MA enrollee
populations, especially those that are underserved. To support these
efforts, we will require MA organizations to incorporate one or more
activities into their overall QI program that reduce disparities in
health and health care among their enrollees. MA organizations may
implement activities such as improving communication, developing and
using linguistically and culturally appropriate materials (to
distribute to enrollees or use in communicating with enrollees), hiring
bilingual staff, community outreach, or similar activities. We believe
adopting this proposed requirement for MA organizations as part of
their required QI programs will align with health equity efforts across
CMS policies and programs.
3. Utilization Management Requirements: Clarifications of Coverage
Criteria for Basic Benefits and Use of Prior Authorization, Additional
Continuity of Care Requirements, and Annual Review of Utilization
Management Tools (Sec. Sec. 422.101, 422.112, 422.137, 422.138, and
422.202)
In recent years, CMS has received numerous inquiries regarding MA
organizations' use of prior authorization and its effect on beneficiary
access to care. We are finalizing several regulatory changes to address
these concerns regarding prior authorization. First, we are finalizing
that prior authorization policies for coordinated care plans may only
be used to confirm
[[Page 22122]]
the presence of diagnoses or other medical criteria and/or ensure that
an item or service is medically necessary based on standards specified
in this rule. Second, we are finalizing that an approval granted
through prior authorization processes must be valid for as long as
medically necessary to avoid disruptions in care in accordance with
applicable coverage criteria, the patient's medical history, and the
treating provider's recommendation, and that plans provide a minimum
90-day transition period when an enrollee who is currently undergoing
an active course of treatment switches to a new MA plan. Third, we are
finalizing that MA plans must comply with national coverage
determinations (NCD), local coverage determinations (LCD), and general
coverage and benefit conditions included in Traditional Medicare laws.
This includes criteria for determining whether an item or service is a
benefit available under Traditional Medicare. We are finalizing that
when coverage criteria are not fully established in Medicare statute,
regulation, NCD, or LCD, MA organizations may create publicly
accessible internal coverage criteria that are based on current
evidence in widely used treatment guidelines or clinical literature. We
are also clarifying that coverage criteria are not fully established
when additional, unspecified criteria are needed to interpret or
supplement general provisions in order to determine medical necessity
consistently; NCDs or LCDs include flexibility that explicitly allows
for coverage in circumstances beyond the specific indications that are
listed in an NCD or LCD, or there is an absence of any applicable
Medicare statutes, regulations, NCDs or LCDs setting forth coverage
criteria. When additional, unspecified criteria are needed to interpret
or supplement general provisions, the MA organization must demonstrate
that the additional criteria provide clinical benefits that are highly
likely to outweigh any clinical harms, including from delayed or
decreased access to items or services.
Finally, to ensure prior authorization and other utilization
managed policies are consistent with the rules we are adopting on
coverage criteria and coverage policies and relevant current clinical
guidelines, we are finalizing that all MA plans establish a Utilization
Management Committee to review all utilization management, including
prior authorization, policies annually and ensure they are consistent
with the coverage requirements, including current, traditional
Medicare's national and local coverage decisions and guidelines. These
changes will help ensure MA enrollees have consistent access to
medically necessary care, without unreasonable barriers or
interruptions.
4. Medicare Advantage (MA) and Part D Communications and Marketing
(Subpart V of Parts 422 and 423)
In accordance with our statutory authority to review marketing
materials and application forms and to develop marketing standards
under sections 1851(h), 1851(j), 1860D-1(b)(1)(vi), and 1860D-4(l) of
the Act, as well as the statutory requirements in sections 1852(c) and
1860D-4(a) of the Act requiring MA organizations and Part D sponsors
disclose specific types of information to enrollees, we proposed
several changes to 42 CFR parts 422 and 423, subpart V, to strengthen
beneficiary protections and improve MA and Part D marketing. We are
finalizing the following changes: notifying enrollees annually, in
writing, of the ability to opt out of phone calls regarding MA and Part
D plan business; requiring agents to explain the effect of an
enrollee's enrollment choice on their current coverage whenever the
enrollee makes an enrollment decision; simplifying plan comparisons by
requiring medical benefits be in a specific order and listed at the top
of a plan's Summary of Benefits; limiting the time that a sales agent
can call a potential enrollee to no more than 12 months following the
date that the enrollee first asked for information; limiting the
requirement to record calls between third-party marketing organizations
(TPMOs) and beneficiaries to marketing (sales) and enrollment calls;
prohibiting a marketing event from occurring within 12 hours of an
educational event at the same location; clarifying that the prohibition
on door-to-door contact without a prior appointment still applies after
collection of a business reply card (BRC) or scope of appointment
(SOA); prohibiting marketing of benefits in a service area where those
benefits are not available, unless unavoidable because of use of local
or regional media that covers the service area(s); prohibiting the
marketing of information about savings available that are based on a
comparison of typical expenses borne by uninsured individuals, unpaid
costs of dually eligible beneficiaries, or other unrealized costs of a
Medicare beneficiary; requiring TPMOs to list or mention all of the MA
organization or Part D sponsors that they represent on marketing
materials; requiring MA organizations and Part D sponsors to have an
oversight plan that monitors agent/broker activities and reports agent/
broker non-compliance to CMS; modifying the TPMO disclaimer to add
SHIPs as an option for beneficiaries to obtain additional help;
modifying the TPMO disclaimer to state the number of organizations
represented by the TPMO as well as the number of plans; prohibiting the
collection of Scope of Appointment cards at educational events; placing
discrete limits around the use of the Medicare name, logo, and Medicare
card; prohibiting the use of superlatives (for example, words like
``best'' or ``most'') in marketing unless the material provides
documentation to support the statement, and the documentation is based
on data from the current or prior year; clarifying the requirement to
record calls between TPMOs and beneficiaries, such that it is clear
that the requirement includes virtual connections such as video
conferencing and other virtual telepresence methods; and requiring 48
hours between a Scope of Appointment and an agent meeting with a
beneficiary, with exceptions for beneficiary-initiated walk-ins and the
end of a valid enrollment period. We are not addressing our proposal to
prohibit TPMOs from distributing beneficiary contact information in
this final rule and may address it in a future final rule.
We are finalizing and implementing the changes, as previously
discussed, to Subpart V in this rule for CY 2024. As such, they will
become effective on September 30, 2023 for all activity related to CY
2024.
5. Strengthening Translation and Accessible Format Requirements for
Medicare Advantage, Part D, and D-SNP Enrollee Marketing and
Communication Materials (Sec. Sec. 422.2267 and 423.2267)
Sections 422.2267(a)(2) and 423.2267(a)(2) require MA
organizations, cost plans, and Part D sponsors to translate required
materials into any non-English language that is the primary language of
at least 5 percent of individuals in a plan benefit package service
area. In addition, 45 CFR part 92 requires plans to provide appropriate
auxiliary aids and services, including interpreters and information in
alternate formats, to individuals with impaired sensory, manual, or
speaking skills, where necessary to afford such persons an equal
opportunity to benefit from the service in question. However, CMS has
learned from oversight activities, enrollee complaints, and stakeholder
feedback that enrollees often must make a separate request each time
they would like a material in a non-English language or accessible
format.
[[Page 22123]]
In addition, an increasing number of dually eligible individuals
are enrolled in managed care plans where the same plan covers both
Medicare and Medicaid services. In some cases, Medicaid standards for
Medicaid managed care plans require translation of plan materials into
a non-English language not captured by the Medicare Advantage
requirements.
We are finalizing a requirement that MA organizations, cost plans,
and Part D sponsors must provide materials to enrollees on a standing
basis in any non-English language that is the primary language of at
least 5 percent of the individuals in a plan benefit package service
area or accessible format upon receiving a request for the materials or
otherwise learning of the enrollee's primary language and/or need for
an accessible format. We are also finalizing the application of this
requirement to individualized plans of care for special needs plans. In
addition, we are finalizing a requirement that fully integrated dual
eligible special needs plans (FIDE SNPs), highly integrated dual
eligible special needs plans (HIDE SNPs), and applicable integrated
plans (AIPs) as defined at Sec. 422.561, translate required materials
into any languages required by the Medicare translation standard at
Sec. 422.2267(a) plus any additional languages required by the
Medicaid translation standard as specified through their Medicaid
capitated contracts.
In this rule, we are finalizing and implementing the changes as
proposed for materials produced for CY 2024.
6. Behavioral Health in Medicare Advantage (MA) (Sec. Sec. 422.112 and
422.116)
As part of the January 2022 proposed rule, we solicited comments
from stakeholders regarding challenges in building MA behavioral health
networks and opportunities for improving access to services.
Stakeholders commented on the importance of ensuring adequate access to
behavioral health services for enrollees and suggested expanding
network adequacy requirements to include additional behavioral health
specialty types.
To strengthen our network adequacy requirements and reaffirm MA
organizations' responsibilities to provide behavioral health services,
we are finalizing to: (1) add Clinical Psychology and Licensed Clinical
Social Work as specialty types that will be evaluated as part of the
network adequacy reviews under Sec. 422.116, and make these new
specialty types eligible for the 10-percentage point telehealth credit
as allowed under Sec. 422.116(d)(5); (2) amend our general access to
services standards in Sec. 422.112 to include explicitly behavioral
health services; (3) codify, from existing guidance on reasonable wait
times for primary care visits, standards for wait times that apply to
both primary care and behavioral health services; (4) clarify that some
behavioral health services may qualify as emergency services and,
therefore, must not be subject to prior authorization; and (5) extend
current requirements for MA organizations to establish programs to
coordinate covered services with community and social services to
behavioral health services programs to close equity gaps in treatment
between physical health and behavioral health.
7. Enrollee Notification Requirements for Medicare Advantage (MA)
Provider Contract Terminations (Sec. Sec. 422.111 and 422.2267)
CMS requires notification to MA enrollees when a provider network
participation contract terminates. Continuity of care is essential,
especially for primary care and behavioral health, and consequently,
adequate communication to enrollees is vital when network changes occur
so that patients of any terminating primary care or behavioral health
providers can decide how to proceed with their course of treatment. CMS
is finalizing amendments to Sec. 422.111(e) that establish specific
enrollee notification requirements for no-cause and for-cause provider
contract terminations and add specific and more stringent enrollee
notification requirements when primary care and behavioral health
provider contract terminations occur. CMS is also amending Sec.
422.2267(e)(12) to specify the content and additional procedural
requirements for the notification to enrollees about a provider
contract termination. These requirements will generally increase
enrollee protections when MA network changes occur and will raise the
standards for the stability of enrollees' primary care and behavioral
health treatment.
8. Transitional Coverage and Retroactive Medicare Part D Coverage for
Certain Low-Income Beneficiaries Through the Limited Income Newly
Eligible Transition (LI NET) Program (Sec. Sec. 423.2500-423.2536)
CMS has operated the LI NET demonstration since 2010. The LI NET
demonstration provides transitional, point-of-sale coverage for low-
income beneficiaries who demonstrate an immediate need for
prescriptions, but who have not yet enrolled in a Part D plan, or whose
enrollment is not yet effective. LI NET also provides retroactive and/
or temporary prospective coverage for beneficiaries determined to be
eligible for the Part D low-income subsidy (LIS) by the Social Security
Administration (SSA) or a State. In this final rule, we are making the
LI NET program a permanent part of Medicare Part D, as required by the
Consolidated Appropriations Act, 2021 (CAA). We are finalizing the
regulation largely as proposed, with a few minor clarifying
modifications.
9. Expanding Eligibility for Low-Income Subsidies (LIS) Under Part D of
the Medicare Program (Sec. Sec. 423.773 and 423.780)
Section 11404 of the IRA amended section 1860D-14 of the Act to
expand eligibility for the full LIS to individuals with incomes up to
150 percent of the Federal poverty level (FPL) beginning on or after
January 1, 2024. In addition, the IRA allows for individuals to qualify
for the full subsidy based on the higher resource requirements
currently applicable to the partial LIS group. This change will provide
the full LIS subsidy for those who currently qualify for the partial
subsidy. In this rule, we are finalizing implementing regulations at
Sec. Sec. 423.773 and 423.780 as proposed.
C. Summary of Costs and Benefits
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TR12AP23.000
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[GRAPHIC] [TIFF OMITTED] TR12AP23.001
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[GRAPHIC] [TIFF OMITTED] TR12AP23.002
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[GRAPHIC] [TIFF OMITTED] TR12AP23.003
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[GRAPHIC] [TIFF OMITTED] TR12AP23.004
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[GRAPHIC] [TIFF OMITTED] TR12AP23.005
BILLING CODE 4120-01-C
D. General Comments on the Proposed Rule
Comment: A commenter suggested that CMS had not allowed for a 60-
day comment period for the proposed rule because the beginning of the
comment period was calculated from the date the proposed rule was made
available for public inspection on the Federal Register website rather
than the date that it appeared in an issue of the Federal Register. The
commenter recommended that CMS provide an additional 60-day comment
period on the proposed rule.
Response: Section 1871(b) of the Act requires that we provide for
notice of the proposed regulation in the Federal Register and a period
of not less than 60 days for public comment thereon. The proposed rule
was available for public inspection on <a href="http://federalregister.gov">federalregister.gov</a> (the website
for the Office of Federal Register) on December 14, 2022. We believe
that beginning the comment period for the proposed rule on the date it
became available for public inspection at the Office of the Federal
Register fully complied with the statute and provided the required
notice to the public and a meaningful opportunity for interested
parties to provide input on the provisions of the proposed rule.
II. Implementation of Certain Provisions of the Bipartisan Budget Act
of 2018, the Consolidated Appropriations Act, 2021, and the Inflation
Reduction Act of 2022
A. Applying D-SNP Look-Alike Requirements To Plan Benefit Package
Segments (Sec. Sec. 422.503(e), 422.504, 422.510 and 422.514)
In the final rule titled ``Medicare Program; Contract Year 2021
Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, and Medicare Cost Plan
Program'' which appeared in the Federal Register on June 2, 2020 (85 FR
33796) (hereinafter referred to as the June 2020 final rule), CMS
finalized the contracting limitations for D-SNP look-alikes at Sec.
422.514(d) and the associated authority and procedures for
transitioning enrollees from a D-SNP look-alike at Sec. 422.514(e).
For plan year 2022 and subsequent years, as provided in Sec.
422.514(d)(1), CMS will not enter into a contract for a new non-SNP MA
plan that projects, in its bid submitted under Sec. 422.254, that 80
percent or more of the plan's total enrollment are enrollees entitled
to medical assistance under a State plan under Title XIX. For plan year
2023 and subsequent years, as provided in Sec. 422.514(d)(2), CMS will
not renew a contract with a non-SNP MA plan that has actual enrollment,
as determined by CMS using the January enrollment of the current year,
consisting of 80 percent or more of enrollees who are entitled to
medical assistance under a State plan under Title XIX, unless the MA
plan has been active for less than 1 year and has enrollment of 200 or
fewer individuals at the time of such determination.
We established these contract limitations to address the
proliferation and growth of D-SNP look-alikes, which raised concerns
related to effective implementation of requirements for D-SNPs
established by section 1859 of the Act (including amendments made by
the Medicare Improvements for Patients and Providers Act of 2008 (Pub.
L. 110-275) and the Bipartisan Budget Act of 2018 (Pub. L. 115-123)).
We adopted the regulation to ensure full implementation of requirements
for D-SNPs, such as contracts with State Medicaid agencies; a minimum
integration of Medicare and Medicaid benefits; care coordination
through health risk assessments (HRAs); and evidence-based models of
care. In addition, we noted how limiting these D-SNP look-alikes would
address beneficiary confusion stemming from misleading marketing
practices by brokers and agents that misrepresent to dually eligible
individuals the characteristics of D-SNP look-alikes. For a more
detailed discussion of D-SNP look-alikes and their impact on the
implementation of D-SNP Medicare and Medicaid integration, we direct
readers to the June 2020 final rule (85 FR 33805
[[Page 22130]]
through 33820) and the Medicare and Medicaid Programs; Contract Year
2021 and 2022 Policy and Technical Changes to the Medicare Advantage
Program, Medicare Prescription Drug Benefit Program, Medicaid Program,
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the
Elderly (85 FR 9018 through 9021) (also known as the February 2020
proposed rule). We proposed amendments to close unforeseen loopholes in
the scope of the regulation adopted to prohibit D-SNP look-alikes.
1. Applying Contracting Limitations for D-SNP Look-Alikes to MA Plan
Segments
As written at Sec. 422.514(d) and (e), the contracting limitations
for D-SNP look-alikes are based on analysis at the MA plan level.
Section 1854(h) of the Act authorizes MA organizations to segment an MA
plan and apply the uniformity requirements for MA plans at the segment
level, provided that the segments are comprised of one or more MA
payment areas. As implemented in Sec. Sec. 422.2 (defining ``MA
plan''), 422.100(d), 422.254, and 422.262, MA plans may include
multiple segments in an MA plan in which different benefit designs,
cost-sharing, and premiums are available; bids are submitted at the
segment level if an MA plan is segmented, and evaluation of compliance
with MA requirements is done at the segment level where appropriate.
For more information on MA plan segments, see 87 FR 79465 of the
proposed rule. Since adopting Sec. 422.514(d), we have seen MA plans
where a specific segment looks like a D-SNP look-alike and would be
subject to the contracting prohibitions in Sec. 422.514(d) if the
segment were treated as an MA plan. Currently, Sec. 422.514(d) does
not clearly apply to a segment within an MA plan. However, we believe
that by applying the D-SNP look-alike contracting limitations only at
the MA plan level without applying it to segments of plans, our
existing regulation has an unintended and unforeseen loophole through
which D-SNP look-alikes could persist, contrary to the stated
objectives in our prior rulemaking.
In the proposed rule (87 FR 79465), we described examples of non-
SNP MA plan segments that would be identified as D-SNP look-alikes if
we were to apply the Sec. 422.514(d)(2) criteria at the MA plan
segment level. The segments in those three plans collectively have
approximately 3,000 enrollees. While the number of non-SNP MA plans at
the segment level is currently small, this number could grow in the
future and provide an opportunity for MA organizations to circumvent
the D-SNP look-alike contracting limitations at Sec. 422.514(d).
We proposed adding a new paragraph at 42 CFR 422.514(g) to provide
that Sec. 422.514(d) through (f) apply to segments of the MA plan in
the same way that those provisions apply to MA plans. Under the
proposal, CMS would not contract with or renew a contract with a plan
segment where the MA plan or segment is not a D-SNP and the enrollment
thresholds in paragraph (d)(1) or (d)(2) are met. This proposal, to
treat a segment of an MA plan as an MA plan, is consistent with CMS'
annual review of MA plan bids and Medicare cost-sharing, in which each
MA plan segment submits a separate bid pricing tool and plan benefit
package (PBP) like an unsegmented MA plan and CMS separately evaluates
these submissions for compliance with MA requirements.
As discussed in the June 2020 final rule, CMS implements the
contracting prohibition in Sec. 422.514 at the plan level. Where an MA
plan is one of several offered under a single MA contract and the MA
organization does not voluntarily non-renew the D-SNP look-alike, CMS
will sever the D-SNP look-alike from the overall contract using its
authority under Sec. 422.503(e) to sever a specific MA plan from a
contract and terminate the deemed contract for the look-alike plan (85
FR 33812). However, CMS does not currently have clear regulatory
authority to sever a segment from an MA plan to terminate a contract
that has only a segment of an MA plan. CMS adopted the severability
regulation at Sec. 422.503(e) in the Medicare Program; Establishment
of the Medicare+Choice Program interim final rule (63 FR 35103,
hereafter known as the June 1998 interim final rule) as part of
implementing the statutory authority for MA contracts to cover more
than one MA plan. Without amending Sec. 422.503(e), CMS would need to
sever the entire MA plan that has the D-SNP look-alike segment. As a
result, the other segments in that MA plan would be subject to the
contracting prohibition and not renewed under Sec. 422.514(d) as
proposed to be amended. Instead, we proposed to amend Sec. 422.503(e)
to allow for CMS to sever a segment from an MA plan and allow the
remaining segments of that MA plan to continue along with any other MA
plans offered under the same contract. We proposed to rely on our
authority to adopt MA standards under section 1856(b)(1) of the Act and
our authority to adopt additional contract terms when necessary and
appropriate, and not inconsistent with the MA statute, under section
1857(e)(1) of the Act. Our primary impetus for this proposal relates to
D-SNP look-alikes, but our proposal at Sec. 422.503(e) is not specific
to D-SNP look-alikes; because each segment of an MA plan is like a plan
itself, we believe severability should apply similarly at the plan and
segment level. We also proposed to amend Sec. 422.504(a)(19) to adopt
a new contract term that MA organizations agree not to segment an MA
plan in a way that results in a D-SNP look-alike. In conjunction with
the proposed amendments to Sec. 422.514(g) to apply the prohibitions
on contracting with D-SNP look-alikes to segments of an MA plan, the
amendments to Sec. 422.503(e) would allow CMS to eliminate existing D-
SNP look-alike segments and the amendments to Sec. 422.504(a)(19)
would allow CMS to prevent new D-SNP look-alikes.
2. Applying Contracting Limitations for D-SNP Look-Alikes to Existing
MA Plans
We identified a second loophole during our analysis of contract
year 2023 MA plan bids to identify any new MA plans that meet the
contract limitation at Sec. 422.514(d)(1). An existing (that is,
renewing) MA plan that did not meet the criteria in Sec. 422.514(d)(2)
(using January 2022 MMR data as provided in paragraph (e)(3)) projected
in its contract year 2023 bid that the MA plan would have 80 percent or
higher enrollment of dually eligible individuals in 2023. Because this
MA plan is not a new MA plan for contract year 2023, the contract
prohibition in Sec. 422.514(d)(1) did not apply. To prevent similar
situations in the future, we proposed to amend Sec. 422.514(d)(1) to
apply it to both new and existing (that is, renewing) MA plans that are
not D-SNPs and submit bids with projected enrollment of 80 percent or
more enrollees of the plan's total enrollment that are dually eligible
for Medicare and Medicaid. We proposed to revise paragraph (d)(1) to
provide that CMS does not enter into or renew an MA contract for plan
year 2024 and subsequent years when the criteria in paragraphs
(d)(1)(i) and (ii) are met. We proposed to begin this prohibition with
2024 because we expect that 2024 will be the first plan year after the
final rule adopting this proposal. Pending finalization of this
proposal, Sec. 422.514(d)(1) will continue to prohibit contracts with
new MA plans that meet the criteria. We noted in the proposed rule at
87 FR 79466 that the earliest our proposed revision to expand the scope
of Sec. 422.514(d)(1) could apply is 2024.
[[Page 22131]]
3. Contract Limitations for D-SNP Look-Alikes as a Basis for MA
Contract Termination (Sec. 422.510(a)(4))
Finally, we proposed an amendment to Sec. 422.510(a)(4), which
outlined the bases for termination of an MA contract. Specifically, we
proposed to add language at Sec. 422.510(a)(4) to add a new paragraph
(a)(4)(xvi) that permits CMS to terminate an MA contract when the MA
organization meets the criteria in Sec. 422.514(d)(1) or (d)(2). This
proposed amendment is consistent with how Sec. 422.514(d) provides
that CMS will not enter into or renew an MA contract in certain
circumstances. In our view, Sec. 422.514(d) is sufficient authority
for the non-renewal, that is termination, of MA contracts when Sec.
422.514(d) applies. However, we believe that adopting a specific
provision in Sec. 422.510(a)(4) will avoid any inadvertent ambiguity
on this topic and make it clear that the procedures outlined in Sec.
422.510, including notices, timeframes, and appeal rights, apply when
CMS does not renew an MA contract based on application of Sec.
422.514(d).
We received the following comments, and our responses follow.
Comment: Numerous commenters, including MACPAC and MedPAC,
supported the CMS proposals overall to apply contracting limitations
for D-SNP look-alikes to existing MA plans and MA plan segments. A few
commenters specifically noted support for applying the contracting
limitations to MA plan segments. A commenter stated that, despite
concerns the commenter had raised in the past, the CMS proposal was a
logical extension of existing policy and would allow remaining segments
of the plan and other plans under the same contract to continue.
Another commenter emphasized that MA plan segments are treated
comparably to separate plans in a number of ways (for example, segments
can have different benefit designs and cost-sharing; bids are submitted
at the segment level; and where appropriate, compliance with MA
requirements is determined at the segment level). Another commenter
specifically emphasized its support to apply the D-SNP contract
limitations to existing MA plans and to clarify CMS' authority to
terminate an MA contract based on the application of D-SNP look-alike
requirements.
Some of these commenters emphasized their overall support for CMS'
proposals and general approach to limiting D-SNP look-alikes, noting
that D-SNP look-alikes detract from plans that integrate Medicare and
Medicaid benefits. MACPAC stated that it views D-SNP look-alikes as
acting at cross purposes to State and Federal efforts to integrate care
by drawing dually eligible individuals away from integrated products
and avoiding the additional requirements for D-SNPs. MedPAC indicated
that D-SNP look-alikes undermine efforts to develop integrated plans
for dually eligible individuals by encouraging them to enroll instead
in plans that provide many of the same extra benefits as D-SNPs but do
nothing to integrate Medicaid coverage. A commenter stated that dually
eligible individuals are better served in integrated plans, and thus,
in areas with highly integrated dual eligible special needs plans (HIDE
SNPs) or fully integrated dual eligible special needs plans (FIDE
SNPs), they should have a choice among these available integrated
modalities rather than D-SNP look-alikes. A commenter supported CMS'
proposals as an important step to advance Medicare-Medicaid
integration. A few commenters supported the proposals noting that D-SNP
look-alikes create unnecessary competition for integrated products
without meeting any requirements to work with States to integrate or
coordinate Medicaid services, have specific models of care approved by
the National Committee on Quality Assurance, or incorporate additional
SNP quality measures designed for complex needs populations.
Several commenters supported CMS efforts to close unforeseen
loopholes that have allowed D-SNP look-alikes to persist. A commenter
appreciated CMS' efforts, citing the integrity of D-SNPs is critical
since their membership consists of people with disabilities of all
ages.
Response: We appreciate the widespread support we received for the
proposed amendments and agree with the commenters' concerns about D-SNP
look-alikes. Many of these concerns mirror the discussion in the 2020
Final Call Letter,\2\ February 2020 proposed rule (85 FR 9018 through
9021), and June 2020 final rule (85 FR 33805 through 33808). We believe
the amendments that we are finalizing in this rule will enable us to
more effectively implement Medicare-Medicaid integration requirements
under the BBA of 2018 along with other State and Federal requirements.
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\2\ 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>.
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Comment: Some commenters recommended that CMS take action beyond
implementing the proposals to lower the threshold used to identify D-
SNP look-alikes. A few of these commenters suggested CMS reduce the
threshold at Sec. 422.514(d) for declining to contract or renew
contracts with D-SNP look-alikes from 80 percent dually eligible
enrollment to 50 percent, helping to mitigate the targeting of dually
eligible individuals by non-integrated models. A commenter suggested
lowering the threshold to at least 50 percent. Another commenter noted,
while the 80 percent threshold is addressing the most obvious targeting
of dually eligible individuals by non-SNP plans, it has allowed some
non-SNP plans with enrollment of dually eligible individuals above 50
percent to continue to operate in markets where D-SNPs are not offered.
This commenter supported lowering the enrollment threshold over the
coming years as long as it can be done in a way that minimizes
disruption to the enrollees and based its support for a lower threshold
on the success of implementing the 80 percent threshold. A commenter
indicated the current 80 percent threshold can itself serve as a
loophole, allowing plans to enroll high proportions of dually eligible
individuals without being subject to D-SNP look-alike requirements.
This commenter encouraged CMS to consider a lower threshold to further
promote integrated care and minimize enrollee confusion. MACPAC did not
opine on whether or not CMS should change the enrollment threshold for
identifying D-SNP look-alikes but expressed concern that there could
still be a real risk of growth in plans of this type falling below the
80 percent threshold and thus continuing to detract from Federal and
State efforts to integrate care.
Response: We appreciate these comments. The recommendations to
reduce the enrollment threshold at Sec. 422.514(d) are outside of the
scope of our proposed amendments. We continue to monitor the level of
dually eligible enrollment among non-SNP MA plans and will consider
these comments for future rulemaking. We note that the D-SNP look-alike
contracting limitations at Sec. 422.514(d) only apply in a State where
there is a D-SNP or any other plan authorized by CMS to exclusively
enroll individuals entitled to Medicaid, which includes Medicare-
Medicaid Plans.
Comment: Some commenters suggested that CMS exclude or reconsider
excluding partial-benefit dually eligible individuals when calculating
the 80 percent threshold at Sec. 422.514(d). Several commenters
recommended that we exclude partial-benefit dually eligible individuals
from the 80 percent threshold calculation in States that limit D-SNP
enrollment to
[[Page 22132]]
full-benefit dually eligible individuals. A few of these commenters
noted that including partial-benefit dually eligible individuals in the
80 percent threshold calculation may limit managed care options for
dually eligible individuals in these States. These commenters stated
that the lack of access to medical benefits through some Medicaid
programs and differences in the level of premium support and cost-
sharing protections available to partial-benefit dually eligible
individuals warrants separate plan benefit design from plans that are
offered to full-benefit dually eligible individuals in order to
optimize benefits to support functional and social needs and limit
cost-sharing for partial-benefit dually eligible individuals. These
commenters listed States like Massachusetts and New Jersey that limit
D-SNP enrollment to full-benefit dually eligible individuals and
explained that non-SNP MA plans in these States may be incentivized not
to enroll partial-benefit dually eligible individuals due to the 80
percent threshold for determining D-SNP look-alikes. Another commenter
noted that, in 2025, this concern would apply to all States with FIDE
SNPs. Additionally, a commenter emphasized the importance of balancing
the challenge many D-SNPs have with State procurements, which can
result in increased numbers of dually eligible individuals enrolling in
general MA plans.
A commenter expressed concern that CMS' current policy for
calculating the 80 percent threshold may fail to maximize advances in
health equity, as partial-benefit dually eligible individuals who are
harmed are more likely than the overall Medicare population to be Black
or Hispanic/Latino, under age 65, experience isolation and food
insecurity, have a mental illness, and have a multiple chronic
condition diagnosis. This commenter further stated that MA plans have
the ability to offer unique, targeted benefits that are tailored to
low-income populations (for example, groceries, health meals,
transportation, and over-the-counter benefits) that directly address
social determinants of health and drive higher quality and believed
that, where plans are forced to offer less targeted benefits to avoid
triggering the 80 percent threshold, partial-benefit dually eligible
individuals are harmed. This commenter noted that at least eight States
currently prohibit partial-benefit dually eligible individuals from
enrolling in D-SNPs. Without a solution, according to the commenter,
plans in these States will need to take benefits and resources away
from this complex low-income population to instead use them to reduce
Part D cost-sharing to attract enough non-dually eligible enrollees to
avoid the 80 percent threshold.
A few commenters emphasized the value of allowing partial-benefit
dually eligible individuals to enroll into D-SNPs. These commenters
stated that D-SNPs provide supplemental benefits and care coordination
provided through individualized care plans. A commenter noted that
although partial-benefit dually eligible individuals are ineligible for
most Medicaid services, these individuals have similar clinical,
functional, and social needs as full-benefit dually eligible
individuals and can benefit from access to stronger care management
models available in D-SNPs. Recognizing that States decide whether or
not to allow D-SNPs to enroll partial-benefit dually eligible
individuals, a commenter recommended that CMS exclude these individuals
from the calculation of the 80 percent threshold.
A commenter suggested that CMS consider alternative approaches,
such as working with Congress to require States that limit D-SNP
enrollment to full-benefit dually eligible individuals to, in turn,
require their D-SNPs to have a separate PBP for partial-benefit dually
eligible individuals, as Pennsylvania and Virginia have already done.
A commenter stated that excluding partial-benefit dually eligible
individuals from the 80 percent threshold calculation would allow CMS
to enforce D-SNP look-alike contracting restrictions in States where
dually eligible individuals have D-SNPs they can move to, while not
penalizing States that have not yet adopted the D-SNP model for all
partial- and full-benefit dually eligible individuals.
Response: We thank the commenters for their perspectives. The
recommendations to revise the definition of the enrollment threshold at
Sec. 422.514(d) are outside of the scope of our proposed amendments;
we believe that policy making on this issue would benefit from further
study and engagement with interested parties. We will consider these
comments for future rulemaking. For contract year 2023, D-SNPs limited
to partial-benefit dually eligible individuals exist in 11 States (that
is, Connecticut, Delaware, Florida, Idaho, Michigan, Mississippi, New
York, Ohio, Virginia, Washington, and Wisconsin) and the District of
Columbia. We continue to believe that allowing non-SNP MA plans to
enroll partial-benefit dually eligible individuals with no limit would
discourage States from taking this approach.
We believe the commenter noting that limitations on D-SNPs
enrolling only full-benefit dually eligible individuals would apply to
all States with FIDE SNPs in 2025 is referencing an amendment we made
to the FIDE SNP definition in the Medicare Program; Contract Year 2023
Policy and Technical Changes to the Medicare Advantage and Medicare
Prescription Drug Programs; Policy and Regulatory Revisions in Response
to the COVID-19 Public Health Emergency; Additional Policy and
Regulatory Revisions in Response to the COVID-19 Public Health
Emergency, which appeared in the Federal Register on May 9, 2022 (85
CFR 22704). Per the amendment to the FIDE SNP definition at 422.2
paragraph (5), for plan years 2025 and subsequent years, FIDE SNPs must
have exclusively aligned enrollment. Starting for plan year 2025, FIDE
SNPs will no longer be permitted to enroll any partial-benefit dually
eligible individuals, because the definition of aligned enrollment is
limited to full-benefit dually eligible individuals. However, the new
requirement for exclusively aligned enrollment does not directly affect
partial-benefit dually eligible individuals because no FIDE SNPs
currently enroll partial-benefit dually eligible individuals. With
respect to the comment regarding the ability of MA plans to offer
benefits tailored to low-income populations such as groceries,
transportation, and over-the-counter benefits, we note that these
benefits may be offered when consistent with Sec. Sec. 422.100(c)(2)
and 422.102.
Comment: A commenter suggested that CMS impose D-SNP look-alike
restrictions only on MA plans and plan segments that have a minimum
number of enrollees. The commenter indicated that creating an
enrollment floor would prevent a small number of dually eligible
enrollees from having an outsized impact on the plan's percentage of
dually eligible enrollment due to low enrollment and recommended
establishing this floor at 200 enrollees per plan for both new and
existing plans to create a statistically significant sample size.
Response: We thank the commenter for this perspective but disagree
with the recommendation. The recommendations to revise the enrollment
threshold at Sec. 422.514(d) are outside of the scope of our proposed
amendments. We will consider these comments for future rulemaking.
Currently, Sec. 422.514(d)(2)(ii) already exempts from the D-SNP look-
alike contracting limitations non-SNP MA
[[Page 22133]]
plans that have been active for less than one year and have enrollment
of 200 or fewer individuals based on January enrollment of the current
year. The commenter is recommending that we adopt a minimum enrollment
floor alone, without the requirement that the non-SNP MA plan be a new
plan. As discussed in the June 2020 final rule at 85 FR 33813, we
adopted the exemption at Sec. 422.514(d)(2)(ii) to allow for some
additional flexibility for initial enrollment patterns that may not be
representative of the longer term enrollment pattern for the plan. Once
the initial enrollment period has passed or the number of enrollees
during that first year of operation exceeds 200 enrollees, we believe
the enrollment profile accurately reflects whether or not the plan was
designed to exclusively enroll dually eligible individuals.
Comment: A commenter suggested that CMS couple the proposed
amendments to the D-SNP look-alike policy with additional efforts to
mitigate targeting of dually eligible individuals by non-integrated
models, such as by considering the application of the D-SNP look-alike
policy to other types of SNPs including chronic condition SNPs (C-
SNPs). Another commenter noted that the proposed rule did not specify
whether the proposed standards would apply to C-SNPs and requested that
CMS provide more detail and transparency regarding the application of
the proposal.
Response: We welcome the commenters' perspectives but clarify that
the proposed amendments would not apply the D-SNP look alike contract
limitations to other types of SNPs. For plan year 2022 and subsequent
years, as provided in Sec. 422.514(d)(1), CMS will not enter into a
contract for a new non-SNP MA plan that projects, in its bid submitted
under Sec. 422.254, that 80 percent or more of the plan's total
enrollment are enrollees who are dually eligible. For plan year 2023
and subsequent years, as provided in Sec. 422.514(d)(2), CMS will not
renew a contract with a non-SNP MA plan that has actual enrollment, as
determined by CMS using the January enrollment of the current year,
consisting of 80 percent or more of enrollees are dually eligible,
unless the MA plan has been active for less than 1 year and has
enrollment of 200 or fewer individuals at the time of such
determination. We proposed adding a new paragraph at Sec. 422.514(g)
to provide that Sec. 422.514(d) through (f) apply to segments of the
MA plan in the same way that those provisions apply to MA plans.
The recommendation to extend the contracting limitations at
422.514(d) to C-SNPs and I-SNPs is outside of the scope of our proposed
amendments. We stated in the February 2020 proposed rule (85 FR 9021)
and June 2020 final rule (85 FR 33813) that we proposed applying the
requirement at Sec. 422.514(d) only to non-SNP plans to allow for the
predominant dually eligible enrollment that characterizes D-SNPs, I-
SNPs, and some C-SNPs by virtue of the populations that the statute
expressly permits each type of SNP to exclusively enroll. At this time,
we are not aware of any non-SNP MA plans with features similar to C-
SNPs and I-SNPs that do not meet the C-SNP or I-SNP requirements.
Nonetheless, we will monitor evolution in enrollment patterns.
Comment: Several commenters raised concerns or requested greater
clarity about CMS' authority to terminate an MA contract. A commenter
opposed CMS terminating an entire H contract number if CMS determined
that a PBP of a health plan is a D-SNP look-alike due to having dually
eligible enrollment greater than 80 percent of total enrollment and
requested more detail regarding CMS' application of the proposal.
Another commenter expressed concerns about CMS terminating a full MA
contract when a plan segment rises above the D-SNP look-alike
enrollment threshold since it would likely lead to significant
disruptions in coverage and care coordination for impacted enrollees.
This commenter suggested that CMS permit plans to crosswalk enrollees
from MA plans that are at the 80 percent threshold or at risk of
reaching the 80 percent threshold for dually eligible enrollment in a
non-SNP plan, as well as add a corrective action period before the
termination of an MA plan if the threshold is crossed. The commenter
explained that providing such plans with the ability to crosswalk
enrollees and a six-month window for corrective action may prevent CMS
from needing to terminate the full MA contract and would prevent
negative impacts for enrollees. Another commenter recommended that CMS
provide details regarding the circumstances under which it would use
the proposed authority to terminate an MA contract instead of taking
more incremental measures to achieve compliance with the proposal.
Response: We appreciate these comments and the requests for
clarification. As stated in the June 2020 final rule at 85 FR 33812 and
reiterated in the preamble to the proposed rule at 87 CFR 79466, we
implement the contracting prohibition in Sec. 422.514 at the plan
level. We will similarly implement the contracting prohibition at the
segment level if enrollment in the segment exceeds the D-SNP look-alike
threshold.
Where an MA plan is one of several offered under a single MA
contract and the MA organization does not voluntarily non-renew the D-
SNP look-alike, CMS will sever the D-SNP look-alike from the overall
contract using its authority under Sec. 422.503(e) to sever a specific
MA plan from a contract, and then terminate the deemed contract for the
D-SNP look-alike. The other, non-D-SNP look-alike plans offered under
the original contract would not be terminated. This action, in effect,
allows CMS to renew only the portion of the contract that does not
include the D-SNP look-alike. In this final rule, we are finalizing an
amendment to Sec. 422.503(e) to allow for CMS to sever a segment from
an MA plan and allow the remaining non-D-SNP look-alike segments of
that MA plan to continue along with any other non-D-SNP look-alike
plans offered under the same contract.
Further, MA plans and MA plan segments that meet the criteria at
Sec. 422.514(d)(2) will have the opportunity to transition enrollees
from a D-SNP look-alike per Sec. 422.514(e). The transition authority
at Sec. 422.514(e) only permits transitioning the enrollment from the
D-SNP look-alike plan or segment, that is, MA plans or segments that
meet contracting limitation requirements at Sec. 422.514(d)(2). The
transition authority at Sec. 422.514(e) does not apply to non-SNP MA
plans with less than 80 percent dually eligible enrollees; a
permissible crosswalk may be available depending on the circumstances.
The comments about permitting transition of enrollees from plans at
risk of reaching the 80 percent threshold and allowing a correction
action period before termination of the MA plan meeting Sec.
422.514(d) are out of scope for this rulemaking; we believe that
policymaking on this issue would benefit from further study and
engagement with interested parties. We will consider these comments for
future rulemaking.
Comment: A few commenters supported our proposal but noted that
confusion can arise when crosswalk transactions are processed between
segmented and non-segmented plans due to the variety of permissible
scenarios. These commenters explained that in some cases CMS approved
crosswalk transition plans for 2023 but MA plans later experienced
incorrect denials during the plan crosswalk process despite the prior
approval. These commenters believed the
[[Page 22134]]
proposal would clarify some of this confusion but recommended that CMS
work with plan sponsors to ensure approvals are clearly indicated
within the Health Plan Management System (HPMS) and appropriately
communicated to all parties involved in executing crosswalk
transactions.
Response: We thank the commenters for their perspectives. We
acknowledge that confusion can arise related to D-SNP look-alike
transitions permitted under Sec. 422.514(e) and crosswalk exceptions
under Sec. 422.530(c). We are planning enhancements to HPMS that will
improve the clarity of approved and denied transactions.
Comment: A commenter requested that CMS confirm whether it is
permissible to consolidate two or more existing plans into a single
plan and then segment the resulting consolidated plan.
Response: We appreciate the comment. While an MA organization could
consolidate two or more existing plans into one MA plan per Sec.
422.530(b)(1)(ii) and segment the resulting consolidated plan, the
resulting consolidated plan would be subject to the requirement we are
finalizing at Sec. 422.514(g).
Comment: A commenter suggested that CMS delay implementation of the
contracting limitations until January 1, 2025 to align with the
transition of Medicare-Medicaid Plans (MMP). The commenter added that
this delay would give dually eligible individuals who are currently
enrolled in MMPs the ability to move to a D-SNP at the end of the
demonstration and would give States that are currently participating in
MMPs the ability to transition to D-SNPs as well.
Response: We appreciate the commenter's suggestion but do not
agree. The existing D-SNP look-alike contract limitation and transition
authority at Sec. 422.514(d) through (f), and amendments finalized at
Sec. 422.514(d) and Sec. 422.514(g) in this rule, are not necessary
to facilitate MMP to D-SNP transitions. Rather, CMS will work with
States participating in the Financial Alignment Initiative to
transition as described in the final rule titled Medicare Program;
Contract Year 2023 Policy and Technical Changes to the Medicare
Advantage and Medicare Prescription Drug Benefit Programs; Policy and
Regulatory Revisions in Response to the COVID-19 Public Health
Emergency; Additional Policy and Regulatory Revisions in Response to
the COVID-19 Public Health Emergency which appeared in the Federal
Register on May 9, 2023 (CMS-4192-F) at 87 CFR 27796 through 27798.
This process is consistent with the transition of California MMPs to D-
SNPs effective January 1, 2023.\3\ The transition of enrollees from
MMPs to D-SNPs does not address our need to stem the proliferation and
growth of D-SNP look-alikes now, as summarized earlier in this section
and discussed in more detail in the February 2020 proposed rule (85 FR
9018 through 9021).
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\3\ The California three-way contract is available at: <a href="https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Downloads/CAContract.pdf">https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Downloads/CAContract.pdf</a>.
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Comment: A commenter encouraged CMS to continue efforts to reduce
incentives for non-SNP plans to focus enrollments efforts on dually
eligible individuals. A commenter suggested that CMS continue to
monitor and evaluate any non D-SNP plan where dually eligible
individuals make up the majority of the covered lives to ensure the
plan is not engaged in deceptive marketing practices. Another commenter
recommended that CMS contemplate requiring Medicare to inform
beneficiaries when they are enrolling in a non-integrated model where
an integrated model exists.
Response: We appreciate the comments and agree with concerns about
the potential proliferation of D-SNP look-alikes that are not required
to comply with the requirements for D-SNPs and that may undermine our
goals of encouraging and furthering integrated coverage options for
dually eligible individuals. As described in the June 2020 final rule
at 85 FR 9020, we stated that the prevalence of D-SNP look-alikes has
led to instances of misleading marketing by brokers and agents that
misrepresent to dually eligible individuals the characteristics of such
look-alike plans, especially where the plans have marketed themselves
as being special Medicaid-focused plans. We sought to reduce that
prevalence through finalizing the D-SNP look-alike contracting
limitations at Sec. 422.514(d). Also in the June 2020 final rule, we
codified at Sec. 422.2262(a)(1)(xvi) a prohibition on MA
organizations, with respect to their non-D-SNP plans, from marketing
their plan as if it were a D-SNP, implying that their plan is designed
for dually eligible individuals, targeting their marketing efforts
exclusively to dually eligible individuals, or claiming a relationship
with the State Medicaid agency, unless a contract to coordinate
Medicaid services for that plan is in place. We will continue to
monitor the level of dually eligible enrollment among non-SNP MA plans.
This comment is out of scope for this rulemaking, but we will consider
ways to monitor non-D-SNP plans for deceptive marketing practices and
contemplate for future rulemaking a requirement to inform beneficiaries
upon enrolling into a non-integrated model where an integrated model
exists.
Comment: A commenter noted that the unforeseen loopholes reinforced
their concerns about the overly complex nature of MA contracting and
the opportunities that complexity brings for abuse, which led to the
need for D-SNP look-alike regulations. This commenter emphasized that
complexity hampers transparency as shown by the MA plan segment issues
and recommended that CMS take a hard look at its contracting and
oversight of MA plans to ensure the system is more straightforward,
accountable, and transparent.
Response: We welcome this perspective. While this comment is out of
scope for this rulemaking, we will consider it for future rulemaking
and oversight opportunities.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing revisions to Sec. Sec. 422.503(e), 422.504(a)(19),
422.510(a)(4), and 422.514(g) as proposed.
B. Part D Special Enrollment Period Change Based on CAA Medicare
Enrollment Changes (Sec. 423.38)
Section 101 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) established a Part
D--Voluntary Prescription Drug Benefit program for Medicare-eligible
individuals. The MMA added section 1860D-1(b)(3)(C) of the Act, which
authorized the Secretary to establish Part D special enrollment periods
(SEP) for Medicare-eligible individuals to enroll in a Part D plan
based on exceptional conditions--that is, an individual may elect a
plan or change his or her current plan election when the individual
meets an exceptional condition as determined by the Secretary.
In 2020, we codified a number of exceptional condition SEPs,
including the SEP for Individuals Who Enroll in Part B During the Part
B General Enrollment Period (GEP) (85 FR 33909). This SEP, as codified
at Sec. 423.38(c)(16), allowed individuals who are not entitled to
premium-free Part A and who enroll in Part B during the GEP for Part B
(January-March) to enroll in a Part D plan. This SEP begins April 1st
and ends June 30th, with a Part D plan enrollment effective date of
July 1st. This SEP effective date aligns with the
[[Page 22135]]
entitlement date for Part B for individuals who enroll in Part B during
the GEP.
Prior to January 1, 2023, when an individual enrolled in Part B
during the GEP, their Part B enrollment entitlement date was July 1st,
regardless of when during the GEP they enrolled. Division CC, title I,
subtitle B, section 120 of the Consolidated Appropriations Act, 2021
(CAA) Public Law 116-260 modified section 1838(a)(2) of the Act, to
address the beginning of the entitlement for individuals enrolling
during their GEP pursuant to section 1837(e) of the Act. As added by
the CAA, section 1838(a)(2)(D)(ii) of the Act requires that, for an
individual who enrolls in Part B during the GEP on or after January 1,
2023, entitlement begins the first day of the month following the month
in which the individual enrolled. For example, if an individual enrolls
in Part B in February 2023 (during the GEP), their Part B coverage will
begin on March 1st.
Based on Medicare enrollment statutory changes made by the CAA
described previously, we proposed to modify Sec. 423.38(c)(16) to
provide that on or after January 1, 2023, an individual who is not
entitled to premium-free Part A and who enrolls in Part B during the
GEP is eligible to use the SEP for Individuals Who Enroll in Part B
During the Part B GEP to request enrollment in a Part D plan, and that
this SEP will begin when the individual submits the application for
Part B, and will continue for the first 2 months of enrollment in Part
B. Further, we proposed to modify Sec. 438.38(c)(16) to provide that
where an individual uses this Part D SEP to request enrollment in a
Part D plan, the Part D plan enrollment would be effective the first of
the month following the month the Part D plan sponsor receives the
enrollment request.
These proposed revisions are needed to align the timeframe for use
of this Part D SEP based on new Part B GEP enrollment effective date
parameters.
Because an individual may elect a Part D plan only during an
election period, Medicare Part D sponsors already have procedures in
place to determine the election period(s) for which an applicant is
eligible. Finalizing this SEP will not add to existing enrollment
processes, so we believe any burden associated with this aspect of
enrollment processing would remain unchanged from the current practice
and will not impose any new requirements or burden.
All information impacts of this provision have already been
accounted for under OMB control number 0938-1378 (CMS-10718). We do not
believe finalizing this SEP will adversely affect individuals
requesting enrollment in Medicare plans, the plans themselves, or their
current enrollees. Similarly, we do not believe finalizing this SEP
will have any impact to the Medicare Trust Funds.
We received a number of comments on this proposal--those comments
and our responses follow.
Comment: All commenters supported our proposal to align the
timeframe for use of this SEP based on the revised GEP effective date
parameters established by the CAA. One commenter stated that they
support beneficiaries' access to affordable, quality health coverage,
and that this change would reduce potential coverage gaps. Another
commenter agreed that this change would help alleviate potential
coverage gaps, and added that it would simplify the process for
beneficiaries and their caregivers, as it will align the effective date
of Part D coverage with the effective date for other Part D SEPs.
Another commenter stated that they support policies that support
enrollment alignment across Medicare Parts A, B, C and D.
Response: We thank the commenters for their support of this
proposed revision to align the timeframe for use of this SEP with the
new parameter for GEP effective dates established under the CAA.
Comment: One commenter supported the proposal, but stated that
current eligibility criteria do not require checking Part A status of
payment, and requested clarification on whether CMS intends to require
plans to validate Part A Entitlement Status Code in the Medicare
Advantage Prescription Drug (MARx) system as part of eligibility
verification for use of this SEP.
Response: CMS did not propose any change to the criteria for use of
this SEP, only the timeframe for its use, and the effective date of the
coverage. Therefore, the actual enrollment process will not change. Per
current procedures outlined in the CMS Plan Communications User Guide,
Part D sponsors must verify Part D eligibility/Medicare entitlement by
either the Batch Eligibility Query (BEQ) process or the MARx online
query (M232 screen) or its equivalent for all enrollment requests
except enrollment requests from a current enrollee of a PDP who is
requesting enrollment into another PDP offered by the same parent
organization with no break in coverage (that is, ``switching plans'').
CMS systems are updated within two business days of SSA processing new
or changed Part A or Part B entitlement for a Medicare beneficiary. If
the plan needs to validate the individual's Part A entitlement status,
that code/information can be found in the Part A Entitlement Status
column on the M257 screen in MARx.
Comment: One commenter stated that the individual's premium-Part A
entitlement is a necessary component if one were to use the SEP to
apply for Part D. They further stated that, the window for applying for
premium-Part A in the 14 group-payer states is limited to the GEP, so,
group-payer states can delay the individual's ability to take advantage
of the proposed Part D SEP.
Response: We thank the commenter, but the parameters for applying
for premium--Part A in group-payer states are outside of the scope of
this rule.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the SEP for Individuals Who Enroll in Part B During the Part
B GEP to request enrollment in a Part D plan at Sec. 423.38(c)(16)
without modification.
C. Alignment of Part C and Part D Special Enrollment Periods With
Medicare Exceptional Condition Enrollment (Sec. Sec. 422.62 and
423.38)
Section 1851(e)(4)(D) of the Act authorizes the Secretary to create
special enrollment periods (SEPs) for an individual to disenroll from
an MA plan or elect another MA plan if the individual meets an
exceptional condition provided by the Secretary. This authority was
originally codified at Sec. 422.62(b)(4) in the June 1998 interim
final rule as a general SEP for CMS to apply on an ad hoc basis. (63 FR
35073)
As noted previously, section 1860D-1(b)(3)(C) of the Act authorizes
the Secretary to establish Part D SEPs for Medicare-eligible
individuals to enroll in a Part D plan if they meet certain exceptional
conditions. This authority was originally codified at Sec.
423.38(c)(8)(ii) (70 FR 4529). The MMA also added section 1860D-
1(b)(1)(B) of the Act which provides that in adopting the Part D
enrollment process, the Secretary ``shall use rules similar to (and
coordinated with) the rules for enrollment, disenrollment, termination,
and change of enrollment with an MA-PD plan under the following
provisions of section 1851.''
As required by section 1851(a)(3) of the Act (for the MA program)
and section 1860D-1(a)(3)(A) of the Act (for the Part D program) and
described in Sec. Sec. 422.50(a)(1) and 423.30(a)(1)(i), eligibility
for MA or Part D plan enrollment requires that an individual first have
Medicare Parts A and B for MA eligibility and either Part A or B for
[[Page 22136]]
Part D eligibility. Division CC, title I, subtitle B, Section 120 of
the CAA established section 1837(m) of the Act to authorize the
Secretary to establish Part B SEPs for individuals who are eligible to
enroll in Medicare and meet such exceptional conditions as the
Secretary provides. Per section 1818(c) of the Act, the provisions of
section 1837 of the Act, excluding subsection (f) thereof, applies to
the premium Part A program. This authority to adopt exceptional
conditions SEPs for premium Part A and Part B was effective January 1,
2023. CMS finalized new exceptional condition SEPs under section
1837(m) of the Act in 42 CFR 406.27 and 407.23 for Medicare parts A and
B, respectively, in a final rule that was published in the Federal
Register on November 3, 2022, titled ``Medicare Program; Implementing
Certain Provisions of the Consolidated Appropriations Act, 2021 and
Other Revisions to Medicare Enrollment and Eligibility Rules'' (87 FR
66454). These SEPs are available to individuals who have missed an
enrollment period due to an exceptional condition that is specified in
the final rule. Specifically, individuals who miss an IEP, GEP, or
another SEP, such as the Group Health Plan SEP, due to an exceptional
condition, would be eligible to enroll in Medicare premium Part A or
Part B using the new SEPs.
Based on Medicare enrollment changes made by the CAA described
previously, we proposed to add corresponding exceptional condition SEPs
for MA and Part D enrollment, as authorized under sections
1851(e)(4)(D) and 1860D-1(b)(3)(C) of the Act, to align with the new
Medicare premium--Part A and B exceptional condition SEPs that CMS has
finalized in 42 CFR 406.27 and 407.23.
We proposed at Sec. 422.62(b) to redesignate current paragraphs
(26) as (27) and add a new paragraph (26) to provide an SEP for
individuals to enroll in a MA plan or MA plan that includes Part D
benefits (MA-PD plan), when they use a Medicare exceptional condition
SEP to enroll in premium Part A and/or Part B. We also proposed at
Sec. 423.38(c) to redesignate current paragraph (34) as (35) and add
new paragraph (34) to provide an SEP for individuals to enroll in a
stand-alone Part D prescription drug plan (PDP) when they use a
Medicare exceptional condition SEP to enroll in premium Part A or Part
B.
The proposed new MA SEP would begin when the individual submits the
application for premium Part A and Part B, or only Part B, and would
continue for the first 2 months of enrollment in Part A (premium or
premium-free) and Part B. Similarly, the proposed new Part D SEP would
begin when the individual submits their premium-Part A or Part B
application and would continue for the first 2 months of enrollment in
premium Part A or Part B. The MA or Part D plan enrollment would be
effective the first of the month following the month the MA or Part D
plan receives the enrollment request.
Because an individual may elect an MA or Part D plan only during an
election period and when eligible, MA organizations and Part D sponsors
already have procedures in place to determine the election period(s)
for which an applicant is eligible. Finalizing these coordinating SEPs
will not add to existing enrollment processes, so we believe any burden
associated with this aspect of enrollment processing will remain
unchanged from the current practice, and will not impose any new
requirements or burden.
Consequently, finalizing these SEPs will not have added impact. All
burden impacts of these provisions have already been accounted for
under OMB control number 0938-1378 (CMS-10718). We do not believe
finalizing these SEPs will adversely impact individuals requesting
enrollment in Medicare plans, the plans themselves, or their current
enrollees. Similarly, we do not believe the finalized SEPs will have
any impact to the Medicare Trust Funds.
We received a number of comments on this proposal--those comments
and our responses follow.
Comment: All commenters supported our proposal to add corresponding
exceptional condition SEPs for MA and Part D enrollment to align with
the new Medicare premium Part A and B exceptional condition SEPs that
CMS has finalized in 42 CFR 406.27 and 407.23. A few commenters
expressed that the availability of these SEPs would reduce potential
coverage gaps and help prevent late enrollment penalties. Another
commenter stated that they support the timely access to prescription
drugs, and these new SEPs would allow vulnerable beneficiaries access
to prescription drug coverage to become effective the first of the
month following the month the plan sponsor receives the enrollment
request. One commenter stated that they support policies that promote
enrollment alignment across Medicare Parts A, B, C and D. Another
commenter stated that their priority is to improve beneficiary
experience by reducing confusion and to align program dates within
Medicare or between Medicare and Medicaid. They further stated that
this will provide Medicare beneficiaries with the opportunity to learn
about and enroll in MA special needs plans (SNPs). The commenter added
that an ongoing issue for beneficiaries and stakeholders is the lack of
understanding of the availability of SNPs, and that this will provide
another opportunity for CMS to provide beneficiaries with the very
important choice of fee-for-service vs. MA, and MA vs. SNPs.
Response: We thank the commenters for their support of our proposal
to add corresponding exceptional condition SEPs for MA and Part D
enrollment to align with the new Medicare premium Part A and B
exceptional condition SEPs.
Comment: One commenter expressed that, under the new requirements,
a Part D plan would not know the date the applicant submitted their
application to the SSA. Accordingly, they requested CMS to clarify how
the start of the SEP factors into a plan processing an enrollment
request using the SEP.
Response: Per current practice, the MA or Part D plan would need to
confirm that the individual had enrolled in premium Part A and/or Part
B, as applicable, prior to the individual's MA or Part D enrollment
effective date. The SSA will have to first process the individual's
premium Part A and/or Part B application and submit that information
into SSA systems, which, in turn, would be populated in the CMS
enrollment systems, for an MA or Part D plan to have access to that
enrollment information.
<bullet> For MA enrollment, the SEP begins when the individual,
using an exceptional condition SEP, submits their application for--
++ Premium--Part A and Part B; or
++ Part B only, if the individual is already entitled to Part A,
(or enrolls in premium-free Part A within the timeframe for use of this
SEP).
<bullet> For Part D enrollment, the SEP begins when the individual,
using an exceptional condition SEP, submits their premium--Part A or
Part B application.
We note that the timeframe for use of both of these SEPs extends
two months beyond the premium--Part A and/or Part B entitlement date,
which will be visible to plans.
Comment: A commenter stated that, although they support CMS' policy
intent with this proposal, with increased prescription coverage for
beneficiaries, this will likely exacerbate current reimbursement
challenges at the pharmacy counter--where pharmacies are being paid
below costs for many of the prescriptions they purchase and dispense.
Another commenter suggested
[[Page 22137]]
that CMS consider creating an SEP that would allow cancer patients to
switch back to Original Medicare, in the case where a patient in an MA
plan receives a cancer diagnosis and is unable to access needed
treatment in a timely manner. The commenter also recommended that CMS
create an ongoing open enrollment window for patients diagnosed with
cancer, which would automatically provide the benefits of having
comprehensive in-network care.
Response: We thank the commenters for their feedback; however, we
proposed to add corresponding exceptional condition SEPs for MA and
Part D enrollment to align with the new Medicare premium-Part A and B
exceptional condition SEPs that CMS has finalized, and these comments
are outside of the scope of this rulemaking.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing, the MA SEP at Sec. Sec. 422.62(b)(26) with a minor edit to
the regulation text to clarify that this SEP applies to an individual
submitting an application for Part B only if they are already entitled
to Part A, or are enrolling in premium-free Part A within the timeframe
of this SEP. We are finalizing the Part D enrollment SEP at
423.38(c)(34) as proposed without modification.
D. Transitional Coverage and Retroactive Medicare Part D Coverage for
Certain Low-Income Beneficiaries Through the Limited Income Newly
Eligible Transition (LI NET) Program (Sec. Sec. 423.2500 Through
423.2536)
1. Background on the LI NET Demonstration and Introduction to the
Proposals
a. Background on the LI NET Demonstration
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA) established the Medicare Part D prescription drug
benefit, which became effective on January 1, 2006. Prior to 2006,
beneficiaries who were eligible for both Medicaid and Medicare (dually
eligible) received prescription drug benefits through Medicaid. When
the MMA went into effect, dually eligible beneficiaries began receiving
their prescription drug benefits through Medicare Part D.
From the beginning of Part D, CMS recognized the need to provide
both immediate and retroactive coverage for full-benefit dually
eligible (FBDE) beneficiaries who were newly identified by either CMS
or a State. Prior to 2010, CMS automatically enrolled newly identified
beneficiaries eligible for the Part D low-income subsidy (LIS) into a
Part D plan with a premium at or below the low-income benchmark
(``benchmark'' plans), which have no or reduced premiums for LIS-
eligible beneficiaries. Each benchmark plan receiving these
beneficiaries was required to grant retroactive coverage to the
beginning of a beneficiary's LIS-eligible status or their last
uncovered month, whichever date was later. At the time, there were
around 300 Part D benchmark plans, and each needed to develop the
capacity to provide transitional and retroactive coverage for these
beneficiaries. Conducting retroactive claims adjudication and providing
point-of-sale coverage was not efficient for Part D sponsors and
accordingly, in 2010, CMS established the Medicare Part D Demonstration
for Retroactive and Point of Sale Coverage for Certain Low-Income
Beneficiaries, also known as Medicare's Limited Income Newly Eligible
Transition (LI NET) demonstration. The LI NET demonstration
consolidates administration of transitional and retroactive Part D
coverage for eligible beneficiaries to a single Part D sponsor.
Part D coverage under the LI NET demonstration differs from
coverage under traditional Part D plans in that the LI NET
demonstration provides point-of-sale coverage for beneficiaries who
demonstrate an immediate need for prescriptions, and also provides
retroactive and/or temporary coverage for beneficiaries determined to
be eligible, or likely to be eligible, for the Part D LIS by the Social
Security Administration (SSA) or a State. The LI NET demonstration
provides temporary, transitional Part D prescription drug coverage for
LIS-eligible beneficiaries, including beneficiaries who are eligible
for the Part D LIS but who are not yet enrolled in a Part D drug plan,
or are enrolled in a plan but for whom coverage has not yet taken
effect.
The purposes of the demonstration are to provide the following:
<bullet> More efficient prescription drug coverage and claims
reimbursement for newly eligible low-income beneficiaries, including
periods of retroactive eligibility;
<bullet> More efficient prescription drug coverage and claims
reimbursement for individuals who are not enrolled in a PDP and whose
LIS status is not yet established in CMS' systems, but who arrive at a
pharmacy with an immediate need for their prescription. This may occur,
for instance, when a State has determined that a beneficiary is
eligible for Medicaid but that information does not yet appear in CMS'
systems;
<bullet> A seamless transition for LIS-eligible beneficiaries from
LI NET into a qualifying PDP with basic prescription drug coverage
absent a beneficiary's choice otherwise; and
<bullet> More efficient prescription drug coverage and claims
reimbursement for LIS-eligible beneficiaries who are losing existing
coverage in a PDP. For example, a beneficiary could be terminated for
moving out of the service area of their current PDP. The beneficiary
would be automatically enrolled into LI NET for that month and the
following month, with enrollment into a qualifying PDP with basic
prescription drug coverage that would become effective at the end of
the LI NET enrollment absent the beneficiary's choice otherwise.
b. Introduction to the Proposals To Implement LI NET as a Permanent
Program
Division CC, title I, subtitle B, section 118 of the Consolidated
Appropriations Act, 2021 (CAA) (Pub. L. 116-260) modified section
1860D-14 of the Act by redesignating subsection (e) of section 1860D-14
as subsection (f) and by establishing a new subsection (e) Limited
Income Newly Eligible Transition Program. New subsection (e)(1)
requires the Secretary to ``carry out a program to provide transitional
coverage for covered Part D drugs for LI NET eligible individuals . .
.'' no later than January 1, 2024. This directive in section 118 of the
CAA makes LI NET a permanent program within Part D, beginning in 2024.
The proposed rulemaking to establish the LI NET program is
consistent with President Biden's Executive Order 13985 on Advancing
Racial Equity and Support for Underserved Communities Through the
Federal Government (January 20, 2021) and Executive Order 14085 on
Transforming Federal Customer Experience and Service Delivery to
Rebuild Trust in Government (December 13, 2021). LI NET ensures that
low-income beneficiaries transitioning from Medicaid to Medicare do not
experience a gap in coverage for their prescription medications.
Executive Order 14085 calls for the Federal Government to design and
deliver services with ``a focus on the actual experience of the people
whom it is meant to serve'' and ``deliver services more equitably and
effectively, especially for those who have been historically
underserved.'' We have designed the LI NET program with beneficiary
needs foremost in mind, ensuring continuous drug coverage and access
for eligible low-income individuals.
[[Page 22138]]
LI NET policies, infrastructure, and operations have evolved over
the past 13 years to balance providing needed coverage with responsible
stewardship of taxpayer dollars and efficiency in administering the
program. The LI NET demonstration has proven successful in providing
low-income individuals transitional Part D coverage. Approximately 8
million low-income individuals received the benefits of the LI NET
program under the demonstration, with over 100,000 beneficiaries
enrolled in LI NET in any given month. It has become a program that
beneficiary advocacy groups rely on when supporting low-income
individuals and connecting them with services. LI NET works directly
with over a dozen advocacy groups and 51 State Health Insurance
Assistance Programs (SHIPs), which collectively work with LIS
beneficiaries to remove access barriers and provide health insurance
counseling.
We believe the LI NET demonstration is a reliable, stable program
that has been successful in providing transitional and retroactive Part
D coverage to millions of beneficiaries. In developing our proposals
for implementing the permanent LI NET program, we took into
consideration our experience under the LI NET demonstration. Where
appropriate, we discuss the policies and practices under the LI NET
demonstration that informed our proposals for how to implement aspects
of the LI NET program that are not directly specified by the statute.
We rely on the premise that Part D regulations apply to the LI NET
program and to the LI NET sponsor as part of the Part D program and as
a type of Part D sponsor, except for when the statute requires us to
deviate or when existing regulations would not apply. For example, as
discussed further in this final rule, because the LI NET sponsor is
required to have an open formulary, existing Part D requirements on
formulary development would not be applicable.
Our proposals to make LI NET a permanent program started with Sec.
423.2500. In Sec. 423.2500(a), we proposed the LI NET program would be
based on section 1860D-14 of the Act. We proposed in Sec. 423.2500(b)
the scope of the LI NET program, which would begin no later than
January 1, 2024. Under this program, eligible individuals would be
provided transitional coverage for Part D drugs. Section Sec. 423.2504
sets forth the LI NET eligibility and enrollment proposals and Sec.
423.2508 proposed LI NET benefits and beneficiary protections. Next, we
proposed in Sec. 423.2512 the requirements to be an LI NET sponsor and
Sec. 423.2516 proposed how the Part D sponsor administering LI NET in
partnership with CMS would be selected and the requirements set forth
in the LI NET contract to provide services and coverage. In Sec.
423.2518, we included a proposal for intermediate sanctions in the
event of contract violations. In Sec. 423.2520, we proposed how an LI
NET contract would be non-renewed or terminated. In Sec. 423.2524, we
included our proposals for bidding and determining the LI NET payment
rate. Finally, Sec. 423.2536 enumerated the Part D requirements we
proposed waiving for LI NET.
We proposed to align sunsetting the demonstration seamlessly with
the start of the LI NET program under this section. Specifically, the
LI NET demonstration will continue to operate until December 31, 2023,
and the LI NET program would start to operate on January 1, 2024
according to the regulations that we finalize.
2. Eligibility and Enrollment
a. Eligibility
Section 1860D-14(e)(2) of the Act provides that an individual is
eligible for LI NET coverage if they: (A) meet the requirements of
section 1860D-14(a)(3)(A)(ii) and (iii) of the Act; and (B) have not
yet enrolled in a prescription drug plan or an MA-PD plan, or, who have
so enrolled, but with respect to whom coverage under such plan has not
yet taken effect. This means that to be eligible, the individual would
need to be a full-benefit dual-eligible individual or low-income
subsidy (LIS) eligible individual as defined at Sec. 423.773 and--
<bullet> Not yet be enrolled in a prescription drug plan or an MA-
PD plan; or
<bullet> Be enrolled but their coverage has not yet taken effect.
Under these requirements, LI NET would be available to all
categories of individuals who are LIS-eligible, including--
<bullet> Full Subsidy-Full Benefit Dually Eligible (FBDE)
individuals, including institutionalized beneficiaries and
beneficiaries receiving home and community-based services;
<bullet> Full Subsidy-Non-FBDE Individuals, including those who
have applied or are eligible for QMB/SLMB/QI or SSI, with income and
resource thresholds at or below the amounts set by CMS each year; and
<bullet> Partial Subsidy Individuals, including those who have
applied and have income and resource amounts below the thresholds set
by CMS each year.
We proposed to codify at Subpart Y the LI NET eligibility
requirements set forth in section 1860D-14(e)(2) of the Act. We
proposed to establish in paragraph (a) of new Sec. 423.2504 two
categories of individuals eligible to enroll in LI NET that encompass
the previously noted categories of low-income individuals recognized by
Part D. The first category, which we term ``LIS-eligible'' in proposed
paragraph (a)(1), would be composed of individuals whose low-income
status has been confirmed either through CMS's data in our system of
record or because the individual can demonstrate their current or
future low-income status. The second category, which we term
``immediate need'' in proposed paragraph (a)(2), would consist of
individuals whose low-income status has not been confirmed, because
CMS's data do not yet reflect the individual's low-income status, but
the individual has indicated that they are eligible for the LIS.
We refer to the individuals in the category established in proposed
paragraph (a)(2) as ``immediate need'' because they present at a
pharmacy or to the LI NET sponsor in immediate need of a prescription
and have no Part D coverage. Ideally, these beneficiaries would be able
to show documentation of their pending LIS status, such as a letter
received from the State showing the beneficiary's LIS status. However,
we do not believe an absence of documentation in hand at the point-of-
sale should be a barrier to entry to LI NET for immediate need
individuals. This is because our experience in the demonstration is
that 80 percent of immediate need individuals do have their eligibility
confirmed,\4\ and we would not want to turn away these individuals who
imminently require access to their prescription drugs. Under the LI NET
demonstration, individuals can indicate the likelihood of their low-
income status by providing the evidence they have, which can include
verbal explanations of why they consider themselves eligible.
---------------------------------------------------------------------------
\4\ Of the 80 percent of immediate need LI NET beneficiaries
whose LIS status is ultimately confirmed, for 89 percent
confirmation was within 10 days, and for 97 percent confirmation was
within 21 days. In the demonstration, beneficiaries whose LIS status
is not able to be confirmed within 21 days continue to be enrolled
in LI NET for two months, but they can no longer fill prescriptions
after 21 days.
---------------------------------------------------------------------------
We proposed in Sec. 423.2504(a)(2) to grant immediate access to
covered Part D drugs at the point-of-sale for individuals whose
eligibility as defined at Sec. 423.773 cannot be confirmed at the
point-of-sale. We proposed to permit
[[Page 22139]]
immediate need individuals to provide documentation to the LI NET
sponsor to confirm LIS eligibility. Documentation could include, but
would not be limited to--
<bullet> A copy of the beneficiary's Medicaid card that includes
their name and eligibility date;
<bullet> A copy of a letter from the State or SSA showing LIS
status;
<bullet> The date that a verification call was made to the State
Medicaid agency, the name and telephone number of the State staff
person who verified the Medicaid period, and the Medicaid eligibility
dates confirmed on the call;
<bullet> A copy of a State document that confirms active Medicaid
status;
<bullet> A screen-print from the State's Medicaid systems showing
Medicaid status; or
<bullet> Evidence at point-of-sale of recent Medicaid billing and
payment in the pharmacy's patient profile.
Under our proposal, if an immediate need individual's LIS status
cannot be confirmed within a period of 2 months, that individual would
not be automatically enrolled into a Part D plan. This is the same as
current practice under the LI NET demonstration. We solicited comment
on the proposal to align the 2 months of enrollment with the ability to
fill prescriptions for these immediate need beneficiaries.
We proposed to permit immediate need beneficiaries whose
eligibility cannot be confirmed to continue to fill prescriptions
throughout their 2-month enrollment in LI NET. We believe this ensures
access to LI NET benefits and is an administratively simple approach as
compared with alternative ideas, such as the approach under the
demonstration of keeping immediate need beneficiaries with uncertain
eligibility enrolled in LI NET but unable to fill prescriptions. We
proposed that if, by the end of an immediate need individual's
enrollment in LI NET, neither CMS's systems nor the beneficiary's
provision of documentation confirms low-income status, then that
individual would not be auto-enrolled into a qualifying standalone Part
D plan following their LI NET coverage.
b. Enrollment
Section 1860D-14(e) of the Act does not specify a process for
enrollment into the LI NET program. Therefore, in forming our proposed
enrollment process, we looked to the process used in the demonstration.
Under the LI NET demonstration, there are four ways for eligible
individuals to be enrolled into the demonstration. They are as follows:
<bullet> Automatic enrollment. Individuals who are LIS-eligible but
do not yet have Part D coverage, and those individuals who have
selected a Part D plan but whose enrollment has not taken effect, are
enrolled by CMS into the LI NET demonstration unless the beneficiary
has affirmatively declined enrollment in Part D.
<bullet> Point of sale enrollment. Immediate need individuals whose
claims are submitted by the pharmacy at the point-of-sale and billed to
LI NET are enrolled into the LI NET demonstration by the LI NET
sponsor.
<bullet> Direct reimbursement request. Individuals who are LIS-
eligible and who submit receipts for reimbursement for claims paid out
of pocket are retroactively enrolled into the LI NET demonstration by
the LI NET sponsor, with 36-month retroactive coverage for full dually
eligible individuals and those who receive supplemental security income
(SSI) benefits.
<bullet> LI NET application form. Beneficiaries who are not
enrolled into LI NET through auto-enrollment, point-of-sale enrollment
or via an approved direct reimbursement request may submit an
application form to the LI NET sponsor with supporting documentation
demonstrating their LIS status. The LI NET sponsor will periodically
check for eligibility and enroll applicants once eligibility is
confirmed.
The majority of LI NET beneficiaries are enrolled into the LI NET
demonstration automatically by CMS; about 90 to 95 percent of LI NET
beneficiaries are those we identify in our systems and enroll into the
demonstration. To do this, CMS ``sweeps'' our data monthly to identify
all beneficiaries who are--
<bullet> Eligible for LIS;
<bullet> Eligible for Part D;
<bullet> Not enrolled in a Part D plan or receiving the Retiree
Drug Subsidy (RDS) or coverage through Veterans Affairs;
<bullet> Have not opted-out of Part D enrollment for any reason
(for example, because they declined it);
<bullet> Not incarcerated, are lawfully present in the US, and do
not live in another country; and
<bullet> Are not enrolled in a Part C plan that disallows
concurrent enrollment in a Part D plan.
Beneficiaries identified in the monthly sweep are automatically
enrolled into the LI NET demonstration for that month and the following
month. CMS then prospectively enrolls the beneficiary into a
traditional Part D plan, with coverage under that plan taking effect
immediately after the LI NET coverage ends. This population of
beneficiaries includes those who may be gaining Part D eligibility or
LIS status but have not made an election into a Part D plan.
A smaller number of beneficiaries, about five to ten percent of LI
NET beneficiaries, enroll in the LI NET demonstration outside of the
sweeps process. Some enroll at the point-of-sale, as described
previously. An even smaller number of beneficiaries contact the LI NET
sponsor directly to enroll in the LI NET demonstration. Individuals can
submit a request for reimbursement to the LI NET sponsor. If the person
is LIS-eligible, the LI NET sponsor enrolls them into the LI NET
demonstration and reimburses them for eligible out-of-pocket costs for
the duration of their retroactive enrollment. As with an individual who
is enrolled at the point-of-sale, the start date of LI NET enrollment
would be the first of the month the request is received. There may be
individuals who do not have an immediate need for medication and
believe they are eligible for LI NET. These individuals can either
bring documentation of LIS status to a pharmacy or fill out an
application form, which allows the LI NET sponsor to periodically check
their eligibility and enroll them into LI NET if they become eligible.
Consistent with the enrollment processes under the demonstration,
we proposed in Sec. 423.2504(b) to codify the ways in which
individuals can be enrolled into LI NET: auto-enrollment, point-of-sale
for immediate need individuals, direct reimbursement, and LI NET
enrollment form.
In Sec. 423.2504(b)(1), we proposed that individuals who are LIS-
eligible and whose auto-enrollment into a Part D plan (as outlined in
Sec. 423.34(d)(1)) has not taken effect will be automatically enrolled
by CMS into the LI NET program unless they have affirmatively declined
enrollment in Part D per Sec. 423.34(e). LIS-eligible beneficiaries
who have made the decision to opt out of enrollment in Part D must take
a proactive step to contact CMS for us to record that decision in our
systems by placing a flag on the beneficiary's record. Beneficiaries
may opt out of Part D enrollment if they have other insurance or do not
want to participate as a matter of principle. We assume that a
beneficiary who opts out of Part D enrollment would also want to opt
out of transitional coverage under the LI NET program. Therefore,
proposed Sec. 423.2504(b)(1) provided that when a beneficiary
affirmatively declines enrollment in Part D per Sec. 423.34(e),
[[Page 22140]]
that would also entail opting out of LI NET enrollment.
In defining ``transitional coverage'' for LI NET, the statute sets
forth requirements for the duration of LI NET coverage under section
1860D-14(e)(3) of the Act. Section 1860D-14(e)(3)(A) establishes that
``immediate access to covered part D drugs at the point of sale during
the period that begins on the first day of the month such individual is
determined to meet the requirements of clauses (ii) and (iii) of
subsection (a)(3)(A) and ends on the date that coverage under a
prescription drug plan or MA-PD plan takes effect with respect to such
individual.'' The starting point of enrollment into LI NET for these
types of LIS-eligible beneficiaries, whether they are automatically
enrolled or immediate need individuals, is required by statute but the
duration of time they prospectively remain enrolled in LI NET is not
specified. Under the demonstration, we typically cap non-retroactive
coverage in LI NET to 2 months. Consistent with the statute and with
our operations under the demonstration, in Sec. 423.2504(c), we
proposed that LI NET enrollment begins on the first day of the month an
individual is identified as eligible under Sec. 423.2504 and ends
after 2 months.
Section 1860D-14(e)(3)(B) of the Act sets a limit on how far back
retroactive LI NET coverage can extend. Full-benefit dually eligible
individuals (as defined in section 1935(c)(6)) and recipients of
supplemental security income (SSI) benefits under title XVI are
eligible for up to 36 months of retroactive coverage. In proposed Sec.
423.2504(c)(2), retroactive LI NET coverage would begin on the date an
individual is identified as full-benefit dual or an SSI benefit
recipient, or 36 months prior to the date such individual enrolls in
(or opts out of) Part D coverage, whichever is later. This duration of
time is similar to retroactive coverage under the demonstration, which
provides for a maximum retroactive period of 36 months for Full Subsidy
LIS eligible individuals.\5\ As with LI NET beneficiaries without
retroactive coverage, we proposed that LI NET coverage would end with
enrollment into a Part D plan or opting out of Part D coverage.
---------------------------------------------------------------------------
\5\ The LI NET demonstration provides an exception to the 36-
month maximum period of retroactive enrollment if there is a
Medicaid determination within the last 90 days that confers Medicaid
eligibility going back further than 36 months. In these situations,
LI NET enrollment under the demonstration goes back to the start of
Medicaid eligibility. We did not propose an exception to the 36-
month limit on retroactive coverage in this rulemaking as the
statute does not provide for such an exception.
---------------------------------------------------------------------------
We proposed in Sec. 423.2504(d) that enrollment in LI NET would
end on the date that coverage under Part D takes effect, consistent
with section 1860D-14(e)(3) of the Act. In the case of immediate need
beneficiaries for whom LIS-eligibility is not confirmed and who are not
enrolled into a PDP, enrollment would end 2 months after the immediate
need enrollment begins. No matter the method of enrollment, we proposed
that the minimum duration of LI NET enrollment is 2 months unless the
beneficiary elects to disenroll from LI NET or to enroll in a Part D
plan. For example, an individual whom we auto-assign into LI NET
starting April 1, 2024 would remain in LI NET for April and May 2024
before being enrolled into an appropriate Part D plan starting June 1,
2024.
We provided the following two examples to further explain how LI
NET enrollment and disenrollment would work under our proposals:
Example 1: Beneficiary Kristy is a full-benefit dually eligible
individual and arrives at a pharmacy on May 5, 2024, with documentation
showing that her LIS application is pending. She would have immediate
coverage in LI NET for May and June 2024. If, in the course of
adjudicating her LIS application, it is discovered that she was
actually LIS-eligible dating back to January 2016, Kristy would be
retroactively enrolled in LI NET as of July 1, 2021, which is the later
of 36 months prior to the date she is enrolled in a Part D plan or the
date she was first LIS eligible (since January 2016 is more than 36
months prior to her Part D plan enrollment, her retroactive coverage
under LI NET is capped at 36 months prior to such enrollment). Kristy's
LI NET coverage would end June 30, 2024, upon her enrollment into a
benchmark PDP starting July 1, 2024, unless she makes the choice to
opt-out.
Example 2: The Social Security Administration notifies CMS in
February 2024 that Beneficiary Ilan was eligible for both Medicare and
SSI starting in November 2022. CMS provides Ilan retroactive Medicare
drug coverage from November 2022, which is the later of 36 months prior
to enrollment in a Part D plan or the date Ilan was first LIS eligible,
through March 2024. After March 2024, if Ilan does not actively enroll
in a plan of their choosing, CMS would randomly enroll them into a
benchmark PDP with an April 1, 2024 effective date.
As noted previously, our goal in the proposals is to match current
eligibility and enrollment policy in effect in the demonstration and
the Part D program, to the extent the statute permits. We requested
comment on whether revised or additional regulations were needed to
achieve accurate, streamlined, and beneficiary-friendly eligibility
determinations and enrollment in the LI NET program.
3. Benefits and Beneficiary Protections
Section 1860D-14(e)(4)(B)(i) of the Act requires the LI NET program
to provide eligible beneficiaries with access to all Part D drugs under
an open formulary. The statute, at clauses (ii) and (iii) of section
1860D-14(e)(4)(B) of the Act, also requires the LI NET program to
permit all pharmacies that are determined by the Secretary to be in
good standing to process claims under the program, and to be consistent
with such requirements as the Secretary considers necessary to improve
patient safety and ensure appropriate dispensing of medication. These
requirements are consistent with how the LI NET demonstration has
operated, and we proposed to codify the requirement that the LI NET
program provide access to all Part D drugs under an open formulary in
Sec. 423.2508(a). We proposed in Sec. 423.2508(b) to require the LI
NET sponsor to permit all pharmacies that CMS determines to be in good
standing to process claims under the program, whether or not the
pharmacy is a network or out-of-network (OON) pharmacy for the LI NET
sponsor. Under the demonstration, we consider a pharmacy, including
retail, mail-order, and institutional pharmacies, to be ``in good
standing'' when it is licensed and does not have a fraud, waste, or
abuse determination against it. For the permanent LI NET program, we
proposed that a pharmacy would be in good standing if it is licensed,
has not been revoked from Medicare under Sec. 424.535, does not appear
on the Office of Inspector General's list of entities excluded from
Federally funded health care programs pursuant to section 1128 of the
Act and from Medicare under section 1156 of the Act (unless the OIG
waives the exclusion, which the OIG has authority to do in certain
specified circumstances), and does not appear on the preclusion list as
defined in Sec. 423.100. A pharmacy will appear on the preclusion list
if it:
<bullet> Is currently revoked from Medicare, is under an active
reenrollment bar, and CMS has determined that the underlying conduct
that led to the revocation is detrimental to the best interests of the
Medicare program, including LI NET;
<bullet> Has engaged in behavior for which CMS could have revoked
the entity to
[[Page 22141]]
the extent applicable if it had been enrolled in Medicare, and CMS
determines that the underlying conduct that would have led to the
revocation is detrimental to the best interests of the Medicare
program, including LI NET; or
<bullet> Has been convicted of a felony under Federal or State law
within the previous 10 years that CMS deems detrimental to the best
interests of the Medicare program, including LI NET.
In Sec. 423.2508(c), we proposed requirements we consider
necessary to improve patient safety and ensure appropriate dispensing
of medication consistent with subpart D of the Part D regulations.
Existing Part D requirements related to appropriate dispensing, patient
safety, electronic dispensing, quality improvement organization (QIO)
activities, compliance, and accreditation would improve patient safety
and appropriate dispensing. Specifically, we proposed to apply the
following provisions to the LI NET program and LI NET sponsor, as
appropriate:
<bullet> Sec. 423.153(b) and (c) for dispensing and point-of-sale
safety edits.
<bullet> Sec. 423.154 for appropriate dispensing of prescription
drugs in long-term care facilities.
<bullet> Sec. 423.159, requiring an electronic prescription drug
program.
<bullet> Sec. 423.160, excepting the requirements pertaining to
formulary standards in Sec. 423.160(b)(5), setting forth standards for
electronic prescribing.
<bullet> Sec. 423.162, for quality improvement organization (QIO)
activities.
<bullet> Sec. 423.165, regarding compliance deemed on the basis of
accreditation.
We solicited comment on whether any of these provisions would not
be compatible with the LI NET program as proposed.
Section 1860D-14(e)(4)(B)(iv) of the Act provides the Secretary the
authority to establish requirements for the LI NET coverage provided to
LI NET eligible individuals. As noted in the proposed rule, we drew
upon our experience under the demonstration to develop our proposed
cost sharing and appeals policies for LI NET, which we proposed to
codify in Sec. 423.2508(d) and (e), respectively.
We proposed in Sec. 423.2508(d)(1) that LI NET beneficiaries under
Sec. 423.2504(a)(1) (that is, beneficiaries whose LIS-eligibility is
established and who have not yet enrolled in a prescription drug plan
or MA-PD plan, or who have enrolled in a prescription drug or MA-PD
plan but coverage under such plan has not yet taken effect) would pay
the applicable cost sharing for their low-income category as
established in the yearly Announcement of Calendar Year Medicare
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies
(the Rate Announcement publication specified in Sec. 422.312). Under
the demonstration, LI NET beneficiaries pay the reduced cost-sharing
aligned with the LIS categories defined in the Part D program. Because
there is already the existing statutory requirement for CMS to update
the parameters for the LIS benefit each year using statutory indexing
methods, and because CMS and pharmacy systems are already set up to
reflect the appropriate cost-sharing based on the LIS category of the
individual, we believe it is reasonable to calculate and charge cost-
sharing in alignment with the Part D LIS categories. For immediate need
beneficiaries, we proposed in Sec. 423.2508(d)(2) these individuals
would by default pay the cost-sharing associated with the category of
non-institutionalized FBDE individuals with incomes above 100 percent
of the Federal poverty level and full-subsidy-non-FBDE individuals
(that is, Category Code 1).\6\ Of the four LIS eligibility categories,
this category has the highest level of cost-sharing. Proposed Sec.
423.2508(d)(2) would further provide that if the beneficiary is later
confirmed to belong to a different LIS category, the beneficiary would
be refunded by the LI NET sponsor for the difference between the cost
sharing they paid versus what they would have paid in their confirmed
LIS category. This approach allows for the least government liability
for individuals whose LIS eligibility is unable to be confirmed while
still allowing prescription drug access for immediate need individuals.
---------------------------------------------------------------------------
\6\ Cost-sharing amounts in Part D are established each year in
the Rate Announcement. Final Part D benefit parameters can be found
for a plan year 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>.
---------------------------------------------------------------------------
We proposed in Sec. 423.2508(e) that LI NET enrollees have rights
with respect to Part D grievances, coverage determinations, and appeals
processes set out in subpart M of the Part D regulations. The
established processes would adequately adjudicate LI NET beneficiary
concerns. This approach of using existing processes avoids needing to
devote resources to establishing separate processes for grievances,
coverage determinations, and appeals processes. Furthermore,
consistency with other Part D contracts with respect to grievances,
coverage determinations, and appeals would be simplest for the LI NET
sponsor.
4. LI NET Sponsor Requirements
Section 1860D-14(e)(4)(A) of the Act specifies that, as determined
appropriate by the Secretary, the LI NET program is to be administered
through a contract with a single administrator. Since the beginning of
the demonstration, CMS has had one Part D sponsor serve as the sole
contractor for administering LI NET. We have found that this approach
supports our goal of administrative simplicity by making it unnecessary
for each individual plan sponsor to check eligibility and conduct a
retroactive enrollment/reimbursement process. In our experience, the
benefits of having a single Part D sponsor administer LI NET include
the following:
<bullet> Providing a single point of contact for beneficiaries and
pharmacies attempting to have their claims paid.
<bullet> Providing a single point of contact for State Medicaid
agencies submitting Medicaid eligibility and attempting to reconcile
and coordinate claims.
<bullet> Simplifying the filing of retroactive beneficiary claims.
There may be circumstances in which CMS may want to consider
contracting with more than one Part D sponsor to administer LI NET.
Though we have had stability in LI NET in terms of only having a single
LI NET sponsor for the duration of the demonstration, we recognize the
need for some protections should it become necessary for another entity
to take over as LI NET sponsor and assume responsibility for providing
LI NET coverage. The downside of consolidating LI NET functions into a
single sponsor is the potential for beneficiary impact should there be
a reason that the single LI NET sponsor no longer continues its
functions. We believe that this potential for beneficiary impact is
mitigated by our proposals to non-renew or terminate the LI NET
contract per proposed Sec. 423.2520. Accordingly, while we proposed at
new Sec. 423.2512 that the program will be operated by ``one or more''
Part D sponsors, we intend to initially continue with the current
practice of operating the program through a single sponsor because we
determined the benefits outweigh potential beneficiary impacts, which
have not come to bear since the start of the demonstration in 2010.
We proposed to establish at Sec. 423.2512 the requirements the LI
NET sponsor must meet when administering the LI NET program:
<bullet> Because LI NET may enroll beneficiaries from across the
nation, we proposed to specify at Sec. 423.2512(a)(1) that the LI NET
sponsor would be selected from among the Part D sponsors
[[Page 22142]]
with a national presence, with an established contracted pharmacy
network in all geographic areas of the United States in which LIS is
available, which as of the date of this final rule is the 50 States and
the District of Columbia. Because LIS is not available in the
territories, CMS would not require the LI NET sponsor to have network
pharmacies in territories. LI NET beneficiaries could still access LI
NET benefits while in the territories if needed, however, through out-
of-network pharmacies.
<bullet> We find that some experience as a Part D sponsor should be
a pre-requisite for being the LI NET sponsor, and proposed at Sec.
423.2512(b) that any candidates to be the LI NET sponsor have a minimum
of 2 consecutive years contracting with CMS as a Part D sponsor.
<bullet> We proposed at Sec. 423.2512(c) some technical and
operational requirements of the LI NET sponsor. In Sec. 423.2512(c)(1)
and (c)(2) we proposed that the LI NET sponsor have the technical
capability and the infrastructure to provide immediate, current, and
retroactive coverage for LI NET enrollees and the technical capability
to develop the infrastructure necessary for verifying Medicaid dual
eligibility status for presumed eligible LI NET enrollees. In Sec.
423.2512(c)(3), we proposed requiring the LI NET sponsor to identify,
develop, and implement outreach plans in consultation with CMS
targeting key stakeholders to inform them about the LI NET program.
Under the demonstration, CMS enrolls over 90 percent of LI NET
beneficiaries into the LI NET plan and we expect CMS would continue to
be responsible for most enrollments in a permanent LI NET program. For
the beneficiaries who are not auto-enrolled, outreach is important so
that stakeholders like the states, SHIPs, and pharmacies have awareness
and knowledge about the LI NET program. Under the demonstration, the LI
NET sponsor routinely conducts outreach in consultation with CMS to
inform stakeholders about the program. We proposed to adopt this
approach for the permanent LI NET program.
As discussed further in this section of this rule, we proposed to
waive requirements under Sec. Sec. 423.128(d)(2)(ii),
423.128(d)(2)(iii), and 423.128(d)(4). We also proposed in Sec.
423.2512(c)(4) that the LI NET sponsor be required to establish and
manage a toll-free customer service telephone line and fax line that
can be accessed by pharmacy providers and beneficiaries, or others
acting on their behalf, for purposes that include but are not limited
to: handling inquiries about services under the LI NET program,
providing the status of eligibility or claims, and having the ability
to accept documentation for evidence of eligibility.
Reimbursement to beneficiaries with retroactive coverage is
provided for in section 1860D-14(e)(3)(B) of the Act, as the ``amounts
that would have been paid under this Part had such individual been
enrolled in a prescription drug plan or MA-PD plan.'' Implementing this
statutory provision entails establishing a process for beneficiaries to
request and receive such reimbursement. In the demonstration, we
provide a means for beneficiaries who receive retroactive coverage to
submit a direct member out-of-pocket reimbursement request for Part D
covered drugs for any past month(s) in which they were entitled to
retroactive coverage under LI NET. The LI NET sponsor provides
reimbursement to eligible beneficiaries based on the submitted cost
minus any applicable copayments. Once the LI NET sponsor receives a
written reimbursement request, they follow timeframes that are
consistent with the timeframes that apply when a Part D sponsor
authorizes payment for a benefit due to a reversal in its coverage
determination (see Sec. 423.636(a)(2)). That is, under the
demonstration, the LI NET sponsor has 14 calendar days to reply with
whether the claim is eligible for reimbursement, including the reason
for denying the request if applicable. If the request for reimbursement
is granted, the LI NET sponsor issues the reimbursement no later than
30 days after it determines the claim is eligible for reimbursement. As
these timeframes have proved workable under the demonstration, we
proposed in Sec. 423.2512(c)(5) that the LI NET sponsor meet these
deadlines related to direct reimbursement in the permanent LI NET
program.
In Sec. 423.2512(c)(6), we proposed requiring the LI NET sponsor
to adjudicate claims from OON pharmacies according to the LI NET
sponsor's standard reimbursement for its network pharmacies. As the LI
NET sponsor must provide access to all Part D drugs under an open
formulary, we believe there is the need for some protection against
unreasonably high drug costs for OON claims in LI NET. Other Part D
sponsors have the option to deny such claims, or to pay OON claims
according to their standard reimbursement for their network pharmacies
(with beneficiaries paying any difference between the cost of the OON
claim and the negotiated price). Because this restraint on unreasonable
drug costs borne by the Medicare Trust Funds would not otherwise be
present for LI NET, we believe a limit on how much the LI NET sponsor
can be reimbursed for OON claims is needed.
5. Selection of LI NET Sponsor and Contracting Provisions
Section 1860D-14(e)(6) of the Act authorizes us to implement LI NET
without regard to laws relating to the making, performance, amendment,
or modification of contracts of the United States as we may determine
to be inconsistent with the furtherance of the purpose of Title XVIII.
Thus, CMS is not required to follow the Federal Acquisition Regulation
(FAR) or the contracting authority used under the Part D program.
Neither is CMS required to contract with every qualified plan sponsor
to provide LI NET Part D coverage, as we are required to do for
qualified plan sponsors providing non-LI NET Part D coverage. If we
followed the same approach for LI NET, we could have many points of
contact for beneficiaries and pharmacies attempting to have their
retroactive claims paid and multiple points of contact for State
Medicaid agencies submitting Medicaid eligibility and attempting to
reconcile and coordinate claims. This approach would not serve the
purpose of providing smooth, transitional coverage for Part D drugs for
LI NET eligible individuals through the LI NET program, which is a Part
D program under Medicare in Title XVIII.
Using the authority in section 1860D-14(e)(6) of the Act, we
proposed to follow the contracting approach set forth in proposed Sec.
423.2516 to select the LI NET sponsor for the 2024 plan year and
onwards.
In Sec. 423.2516(a), we proposed that CMS would appoint a Part D
sponsor that meets the requirements at Sec. 423.2512 to serve as the
LI NET sponsor. To determine this appointment, we proposed that CMS may
choose to conduct discussions with potentially eligible entities to
establish mutual interest and ability to administer the program. This
circumstance could arise if, for example, CMS needs additional
information in any particular year to learn more about a Part D
sponsor's ability to administer the LI NET program. Under the
demonstration, there is a multi-year contract approved by the Office of
Management and Budget, and each year CMS and the LI NET sponsor have
executed an addendum to the contract that included such information as
the payment rates and risk corridors as determined in the final bid. As
we consider options for establishing regulations to implement the
permanent LI NET program, we find it is appropriate that we bring the
LI
[[Page 22143]]
NET contractor into closer alignment with other contracts in the Part D
program by executing an LI NET contract with a Part D plan sponsor each
plan year that contains, among other information, payment information
for that year. Our expectation is that unless circumstances shift to
prompt a change, the existing LI NET sponsor would continue in that
role in the succeeding year. Therefore, in Sec. 423.2516(b), we
proposed selection criteria CMS may use in appointing an LI NET sponsor
based on some features of the LI NET program that are related to a Part
D sponsor's ability to successfully administer the program. These are--
<bullet> Experience covering low-income beneficiaries, including
but not limited to enrolling and providing coverage to low-income
subsidy individuals as defined in Sec. 423.34;
<bullet> Pharmacy access as outlined in Sec. 423.120;
<bullet> Past performance consistent with Sec. 423.503(b),
including Star Ratings (as detailed in Sec. 423.186), and previous
intermediate sanctions (as detailed in Sec. 423.750); and
<bullet> Ability to meet the requirements listed in Sec. 423.505
that are not waived under Sec. 423.2536.
As noted in the proposed rule and consistent with our general
approach of applying Part D requirements to the LI NET program unless
waived, we stated our intention for Sec. 423.505 to apply to LI NET
with the exception of Sec. 423.505(k)(6), which we proposed to waive
in Sec. 423.2536(g). For example, the contract between the LI NET
sponsor and CMS would be required to contain provisions in which the LI
NET sponsor agrees to accept new enrollments, make enrollments
effective, process voluntary disenrollments, and limit involuntary
disenrollments (see Sec. 423.505(a) and (b)(2)). As another example,
consistent with Sec. 423.505(b)(22), the LI NET contract would be
required to include a provision in which the LI NET sponsor agrees to
use the CMS complaint tracking system to address and resolve complaints
received by CMS against the sponsor. Per Sec. 423.505(k), the LI NET
contract would also require the LI NET sponsor to submit certifications
of data that determine payment as applicable, such as for enrollment
and payment information, claims data, bid submission information, DIR
data, and overpayments. The only certification the LI NET sponsor would
not submit is the one pertaining to data for price comparison under
Sec. 423.505(k)(6); we believe this certification is unnecessary given
that the LI NET plan is not one for which beneficiaries shop and thus
would not be comparing against other plan options based on price
considerations. We intend to exclude LI NET from Medicare Plan Finder,
consistent with past practice under the demonstration. Therefore, it
would not make sense to require certification to data for price
comparison purposes, and we proposed to waive this requirement in Sec.
423.2536(g).
In Sec. 423.2516(c), we proposed that the term of the LI NET
sponsor's appointment would be ongoing provided mutual agreement
between CMS and the selected party, subject to an annual contracting
and bid process (per proposed Sec. 423.2524(c)) to determine payment
rates for the upcoming year. As explained in the proposed rule, this
approach has worked well during the demonstration, and we saw no reason
to adopt a different approach for the permanent program.
We proposed to establish in Sec. 423.2518 that, if the LI NET
sponsor violates its contract, CMS would have the authority to impose
intermediate sanctions as outlined in subpart O of the Part D
regulations, just as we would for any other Part D sponsor.
In Sec. 423.2520(a) we proposed that if the LI NET sponsor decides
for any reason to non-renew its existing LI NET contract, it must
notify CMS by January 1 of the year before the next contract year.
Except as provided in paragraph (c) of this section, if CMS decides for
any reason to non-renew the existing contract with the incumbent LI NET
sponsor, CMS would notify the LI NET sponsor by January 1 of the year
before the next contract year. We proposed that CMS could non-renew for
any reason, without cause, and the LI NET sponsor would not have a
right to appeal the non-renewal. To provide CMS the authority to non-
renew the LI NET contract with that particular sponsor for any reason
with no appeal, we proposed in Sec. 423.2536(e) waiving the appeals
requirements in Subpart N except for those relevant to a contract
termination. As there has only been a single LI NET sponsor for the
duration of the demonstration, and we are anticipating a single LI NET
sponsor for the permanent LI NET program, we do not want to assume the
risk of the appeals process not providing finality by the time an LI
NET sponsor would need to begin preparing the LI NET bid. Even if we
required the appeals process to be complete by the April timeframe and
while the appeal was pending moved forward with selection process, we
would be cutting into or needing to forgo entirely the transition time
of 3 months we proposed in Sec. 423.2520(b) to ensure seamless
transition of the LI NET program. Proposing to assume these risks would
not further the purpose of the LI NET program being ready and available
to provide immediate, current, and retroactive coverage for LI NET
enrollees. We note that non-renewal, whether at the election of CMS or
the LI NET sponsor, would not have an impact on the sponsor's
eligibility to be selected as the LI NET sponsor in future years. We
intend to initially contract with a single Part D sponsor to administer
the LI NET program. Unlike beneficiaries in traditional Part D plans,
beneficiaries enrolled in LI NET would not have the option of simply
choosing to enroll in LI NET under a different sponsor. For these
reasons, ample notice is needed if the LI NET sponsor does not intend
to continue as the LI NET sponsor in the following year. We anticipate
that CMS would be able to provide the same amount of notice to the LI
NET sponsor if we were contemplating changing the LI NET sponsor for
the following year. A decision to non-renew the LI NET contract with a
particular Part D sponsor would not bar or prohibit that sponsor from
being considered to be the LI NET sponsor in a future year. Any CMS
decisions regarding LI NET sponsor selection would have no bearing on a
Part D sponsor proceeding with the application process for other, non-
LI NET, Medicare prescription drug plans.
In Sec. 423.2520(b), we proposed that after a notice of non-
renewal, CMS would select a successor LI NET sponsor from among the
other eligible entities (as detailed in proposed Sec. 423.2516).
Similar to how our multi-year contracts with our contractors require an
outgoing contractor to coordinate with any successor contractor during
a transition period, proposed Sec. 423.2520(b) would require the
outgoing LI NET sponsor to coordinate with the successor LI NET sponsor
appointed by CMS for a period of no less than 3 months to ensure
seamless transition for LI NET enrollees, including timely transfer of
any data or files. All data, files, written materials, and LI NET work
products would be considered CMS's property. During the transition
period, the outgoing and incoming LI NET sponsors would work together
to develop a transition plan, including setting up a training schedule
and a schedule of events for a smooth changeover.
There may be exigent circumstances of risk to beneficiaries in
which a more immediate termination is warranted. Referencing portions
of CMS's immediate termination authority in Sec. 423.509, we proposed
to establish in
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Sec. 423.2520(c) that CMS may terminate the LI NET contract
immediately if:
<bullet> CMS determinates that a delay in termination, resulting
from non-compliance with the procedures provided in this Part prior to
termination, would pose an imminent and serious risk to the health of
the individuals enrolled with the LI NET sponsor, per Sec.
423.509(b)(2)(i)(A);
<bullet> The LI NET sponsor has experienced financial difficulties
so severe that its ability to make necessary health services available
is impaired to the point of posing an imminent and serious risk to
beneficiary health, or otherwise fails to make services available to
the extent that such a risk to health exists per Sec.
423.509(b)(2)(i)(B); or
<bullet> The LI NET sponsor has had one or more of the issues
enumerated in paragraphs (a)(4)(i) and (xii) of Sec. 423.509.
Proposed Sec. 423.2520(d) would provide that if CMS intends to
terminate the contract under proposed Sec. 423.2520(c), CMS provides
written notice to the LI NET sponsor informing it of its termination
appeal rights in accordance with subpart N of this Part.
We expect to identify the LI NET contract as X0001 and to advance
the plan benefit package number by one each year so that we can update
the payment rates in our systems for the new payment year. If the LI
NET contract with a particular LI NET sponsor is terminated, we would
not discontinue use of the contract number X0001. Instead, we would
terminate the relationship with that specific LI NET sponsor to provide
LI NET coverage and continue to allow enrollment under contract X0001.
6. Bidding and Payments to the LI NET Sponsor
Section 1860D-14(e) of the Act does not specify how CMS is to
determine the amounts that it pays to the LI NET sponsor under the
contract or how payments are to be made. We proposed to establish the
methodology and formulas that we would use to determine the amounts we
pay to the LI NET sponsor under the contract. As noted in the proposed
rule, we use our payment policies under the demonstration, including
the bidding requirements, as the basis for the proposed payment
policies for the LI NET program.
We proposed in Sec. 423.2524(a) that CMS payments for the LI NET
program would be made from the Medicare Prescription Drug Account, as
payments are made to other Part D sponsors.
In Sec. 423.2524(b) we proposed requirements related to the LI NET
bid. Because most of the provisions in Subpart F would not be
applicable to LI NET, we proposed to waive Subpart F except for those
provisions we proposed to apply to LI NET.
Section 423.2524(b)(1) proposed that the submission of LI NET bids
and related information will follow the requirements and limitations in
Part 423, Subpart F, Sec. 423.265(b), (c), (d)(1), (d)(2)(i),
(d)(2)(ii), (d)(2)(iv), (d)(2)(v), (d)(4), (d)(6), and (e). This
proposal would require the LI NET sponsor to submit a bid and
supplemental information in a format specified by CMS, with the same
deadline as other Part D bids of no later than the first Monday of June
each year. It also gives CMS the ability to request additional
information from the LI NET sponsor to support bid amounts, and the
ability to require revisions to the submitted LI NET bid before it is
accepted. As with other Part D bids, a qualified actuary, whether
internal or external to the plan sponsor, would certify the LI NET
sponsor's actuarial valuation (which may be prepared by others under
the qualified actuary's direction or review). The qualified actuary
would need to be a member of the American Academy of Actuaries.
We proposed in Sec. 423.2524(b)(2) that the following provisions
would apply in the review, negotiation, and approval of the LI NET bid:
Sec. 423.272(a), (b)(1), and (b)(4). This would allow CMS to review
the LI NET bid, conduct negotiations regarding the terms and conditions
of the proposed bid, and approve it only if the bidding LI NET sponsor
and the LI NET plan comply with all applicable CMS Part D requirements.
As in typical Part D bid reviews, CMS would be able to decline the LI
NET bid if it proposed significant increases in cost sharing (Sec.
423.272(b)(4)). This approach follows the bid process under the
demonstration, in which the LI NET sponsor submits a bid that estimates
their costs and includes assumptions for enrollment and utilization
based on prior experience. Starting with plan year 2021, the LI NET
sponsor began using an LI NET Bid Pricing Tool (BPT) and accompanying
instructions that were adapted from the traditional Part D BPT and
instructions. Once the LI NET bid is accepted, we update this
information in our systems for the new payment year for the LI NET
demonstration. Each year, we advance by one the number designating the
current plan benefit package. For example, the contract-PBP was X0001-
011 for plan year 2021 and X0001-012 for plan year 2022.
Proposed Sec. 423.2524(b)(3) specifies the basic rule and major
components of the LI NET bid, which are the LI NET sponsor's estimate
of its revenue needs for Payment Rates A and B, which are discussed in
greater detail in proposed Sec. 423.2524(d).
In Sec. 423.2524(c) we proposed that CMS would provide advance
monthly LI NET payments, on a per-member, per-month (PMPM) basis, equal
to the sum of Payment Rates A and B as established in the LI NET
sponsor's approved bid submitted annually under paragraph (b) of this
proposed section. Paying on a PMPM basis would align with other Part D
payments and with our operations under the LI NET demonstration in
which we provide a capitated PMPM amount established by the bid for
each beneficiary enrolled in the demonstration. Unlike typical Part D
monthly payments, the monthly LI NET payment under the demonstration is
a PMPM amount that represents the sum of Payment Rates A and B, as
determined by the LI NET bid. The bid represents the LI NET sponsor's
total expected cost, minus any beneficiary co-pays, and with a
reasonable margin that represents the LI NET sponsor's profit. Also,
unlike other Part D payments, payments under the LI NET demonstration
would not be risk adjusted. Because payments under the LI NET
demonstration are cost reconciled (with the exception of risk
corridors) and there is no concern about the LI NET sponsor cherry-
picking beneficiaries, we use a simpler payment methodology that does
not include risk adjustment.
We proposed in Sec. 423.2524(c)(1) that Payment Rate A would be a
monthly payment for projected administrative costs, constrained by an
annual percentage cap set as part of the bid review and negotiation
under Sec. 423.272(a). Payment Rate A would include two elements, as
it does under the demonstration. The first would be the LI NET
sponsor's estimated administrative costs, which would represent the
administrative costs to run the LI NET program inclusive of an amount
for the margin, which represents the LI NET sponsor's profit. The
second element in Payment Rate A would be the LI NET sponsor's
estimated costs to pay pharmacy claims for prescriptions filled by
immediate need individuals, for which the LI NET sponsor may not be
able to submit a prescription drug event (PDE) record to CMS due to the
individual's unconfirmed LIS status. We expect that these are generally
the ``immediate need'' beneficiaries who are not confirmed to be LIS-
eligible. We
[[Page 22145]]
proposed in Sec. 423.2524(c)(1)(i) that for the 2024 plan year, the LI
NET sponsor includes in its bid the assumption that Payment Rate A
cannot exceed a 2 percent increase from the prior year's Payment A,
which is a figure CMS will provide to the LI NET sponsor. For the 2025
plan year and subsequent plan years, proposed Sec. 423.2524(c)(1)(ii)
would require the LI NET sponsor to specify its assumption for any
increase needed to the prior year's Payment Rate A, submitting
justification to CMS in its bid if the cap exceeds 2 percent. Any
proposed increase in Payment Rate A from year-to-year would not be able
to exceed the percentage cap. Similar to how CMS determines
reasonableness in evaluating a plan's anticipated profit in the bid, we
would use the same reasonableness standard in setting and negotiating
the cap on Payment Rate A in the bid.
In Sec. 423.2524(c)(2), we proposed that Payment Rate B would
reflect the projected net costs of the Part D drugs dispensed to
individuals who receive the LI NET benefit. Payment Rate B would be the
estimated actual drug costs minus direct and indirect remuneration
(DIR). In the demonstration, we apply risk corridors to Payment Rate B
so that excess gains and losses are shared between CMS and the LI NET
sponsor. These risk corridors are symmetrical in sharing upside and
downside risk, but are narrower than the risk corridors provided for
under section 1860D-15(e) of the Act and applicable to other Part D
plans. Because the risk corridors in the demonstration are so narrow,
the LI NET sponsor has not assumed as much risk for LI NET as
traditional Part D plans assume. CMS has not shared risk on Payment
Rate A, in keeping with typical Part D plans for which CMS does not
share risk on margin or administrative costs. In 2012, CMS revised the
risk corridors under the LI NET demonstration to limit payment
adjustments on Payment Rate B. For the portion of a plan's cost for
drugs that is between the target amount and the threshold upper limit
(101 percent of the target amount), the LI NET sponsor pays 100 percent
of this amount. For the portion of the plan's cost for drugs that
exceeds the threshold upper limit, the government pays 99.9 percent and
the plan pays 0.1 percent. Similarly, if a plan's cost for drugs is
between the target amount and the threshold lower limit (99 percent of
the target amount), the LI NET sponsor keeps 100 percent of the
difference between the drug cost and the target amount. If a plan's
cost for drugs is lower than the threshold lower limit, the government
keeps 99.9 percent and the plan keeps 0.1 percent of the difference
between the plan's drug cost and the threshold lower limit.
Both under the demonstration and for other Part D plans, after a
payment year is over and the deadline for submitting payment data for
that payment year has passed, we reconcile the payments for the year.
This allows us to narrow the gap between what predicted and actual
costs were in a given year, as well as share risk with plan sponsor in
gains and losses. To provide for payment reconciliation and risk
sharing in the LI NET program, we proposed in Sec. 423.2524(d) to
establish the payment policies for reconciliation and risk corridors,
including adopting targeted provisions of existing risk sharing
requirements. Proposed Sec. 423.2524(d)(1) provides that CMS would
conduct LI NET payment reconciliation each year for Payment Rates A and
B after the annual PDE data submission deadline has passed and make the
resulting payment adjustment consistent with Sec. 423.343(a).
In Sec. 423.2524(d)(2), we proposed to establish the same risk
corridors for Payment Rate B that apply under the demonstration: no
risk sharing within 1 percent of the target amount and symmetrical 0.1
percent risk sharing beyond the 1 percent corridor. To carry out risk
sharing as part of reconciliation, we proposed to have Sec. 423.336(c)
apply to LI NET, which requires a plan sponsor to provide necessary
cost data information to CMS and authorizes CMS to make either lump-sum
payments or adjustments based on the risk corridor calculations.
Proposed Sec. 423.2524(e) would establish that the LI NET contract
is subject to the existing provision at Sec. 423.346 pertaining to
payment reopenings. Per Sec. 423.346, CMS may reopen and revise an
initial or reconsidered final payment determination for up to 5 payment
years. Under the demonstration, each LI NET reconciliation has been in
alignment with Sec. 423.346 and included the prior 5 years of PDEs.
The most recently completed payment year gets reconciled for the first
time along with reopening the prior 4 years. For example, in 2019, PBP
008 for payment year 2018 was reconciled for the first time while PBPs
004-007 (for payment years 2014 through 2017) were reopened.
Sequestration is not used or accounted for in reconciliation,
consistent with how we apply sequestration for other Part D plans.
Under the demonstration, we maintain consistency between LI NET's PDE
and DIR reporting deadlines and the reporting deadlines that apply to
Part D plans (for example, the yearly deadline for data used for
payment year reconciliation is June 30th). Enrollment, risk adjustment,
and PDE certifications (attestations) are collected under the LI NET
demonstration just like other contracts, and we proposed to adopt the
requirements in Sec. 423.505(k)(1) through (5), except for certifying
to reinsurance data because LI NET does not receive a reinsurance
subsidy. This proposal would require the LI NET sponsor to certify to
the accuracy, completeness, and truthfulness of all data related to
payment.
As noted earlier in this section of this final rule, as a general
matter, all payment rights and responsibilities under Part D that
otherwise apply and are not explicitly waived in proposed Sec.
423.2536 would apply to the LI NET program, as appropriate. Proposed
Sec. 423.2524(f) would provide that the LI NET sponsor could appeal
the payment calculation under Sec. 423.350. Proposed Sec. 423.2524(g)
would establish that the LI NET contractor is subject to the ``report
and return'' overpayment requirements under Sec. 423.360.
7. Part D Program Waivers
Because the LI NET sponsor is a Part D sponsor and the LI NET
contract is a PDP contract, many existing provisions in Part 423 apply
to LI NET. The exceptions are those provisions waived by the statute,
those provisions that are inapplicable to LI NET, and the requirements
we proposed to waive through this rulemaking.
Section 1860D-14(e)(5)(A) of the Act provides that paragraphs (1)
and (3)(B) of section 1860D-4(a) of the Act, subparagraphs (A) and (B)
of section 1860D-4(b)(3) of the Act, and paragraphs (1)(C) and (2) of
section 1860D-4(c) of the Act do not apply to the LI NET program; thus,
requirements relating to dissemination of general information and the
provision of formulary information, formulary requirements, and
medication therapy management (MTM) program requirements do not apply
to LI NET. For this reason, we proposed to waive formulary requirements
in Sec. Sec. 423.120(b), 423.128(e)(5), and 423.128(e)(6) and MTM
program requirements in Sec. 423.153.
Section 1860D-14(e)(5)(B) of the Act contains broad waiver
authority to ``waive such other requirements of title XI and this title
as may be necessary to carry out the purposes of the program
established under this subsection''. We also proposed to waive for LI
NET some of the cost control and quality improvement requirements in
Part 423
[[Page 22146]]
Subpart D, except for the provisions we explicitly proposed to adopt in
Sec. 423.2508(d)(1) through (d)(5) that relate to appropriate
dispensing, patient safety, electronic dispensing, QIO activities,
compliance, and accreditation. This proposal would waive requirements
that would not make sense in the context of temporary coverage with
access to an open formulary. The requirements we proposed to waive
pertain to drug utilization management programs, medication therapy
management programs, and consumer satisfaction surveys.
We solicited comment on whether we should waive any additional
regulatory provisions related to paragraphs (1) and (3)(B) of section
1860D-4(a) of the Act and subparagraphs (A) and (B) of section 1860D-
4(b)(3) of the Act.
We proposed that the LI NET sponsor submit most of the
certifications listed in Sec. 423.505(k), with the exception that we
are waiving the certification of accuracy of data for price comparison
in paragraph (k)(6), given that the LI NET plan is not one for which
beneficiaries shop.
Part D beneficiaries receiving a low-income subsidy are not
eligible for the coverage gap discount program, and under the
demonstration LI NET is not subject to coverage gap discount
requirements under subpart W of Part 423. Thus, we proposed in Sec.
423.2536(i) to waive subpart W in full for LI NET.
We proposed in Sec. 423.2536(j) to waive the MLR requirements in
subpart X of Part 423. Section 1857 of the Act as incorporated into
section 1860D-14(e) does not speak to MLR requirements for LI NET.
Under the LI NET demonstration, CMS does not require the LI NET sponsor
to meet the minimum medical loss ratio (MLR) requirement or to report
the MLR for the LI NET contract as it does for other Part D contracts.
This is due to the unique payment structure for the contract. Under
Part D, a sponsor submits a single bid including estimated
administrative costs, returns on investment, and drug costs, which are
risk-adjusted. After a payment year concludes, Part D sponsors are
required under subpart X of Part 423 to report the MLR for each
contract, and if the MLR for a contract is below 85 percent, the
sponsor is required to remit payment to CMS. Enrollment sanctions are
applied to contracts that fail to meet the minimum MLR requirement for
3 consecutive years, and contracts that fail to meet the requirement
for 5 consecutive years are subject to termination. The minimum MLR
requirement is intended to create incentives for Part D sponsors to
reduce administrative costs such as marketing costs, profits, and other
such uses of plan revenues, and to help ensure that taxpayers and
enrolled beneficiaries receive value from Medicare health plans.
Because of the limits we proposed to place on how much administrative
costs in LI NET under Payment Rate A can increase year over year and
because of the differing payment structure, we do not believe MLR
reporting should be applicable to LI NET.
The Affordable Care Act amended section 1893(h) of the Act to
expand the use of Recovery Audit Contractors (RACs) to include the MA
and Part D programs. Section 1893(h)(9) of the Act specifies that,
under contracts with the Secretary, Part D RACs are required to ensure
that each PDP has an anti-fraud plan in effect and to review the
effectiveness of each such anti-fraud plan, to examine claims for
reinsurance payments to determine whether PDPs submitting such claims
incurred costs in excess of the costs allowed, and to review estimates
submitted by PDPs with respect to the enrollment of high-cost
beneficiaries and compare such estimates with the numbers of such
beneficiaries actually enrolled by such plans. Because the LI NET
sponsor must enroll every eligible LI NET beneficiary, and because LI
NET does not receive reinsurance, a Part D RAC's review or examination
of LI NET claims would likely be extremely limited in scope. As other
audit, oversight, and compliance requirements would continue to apply
to the LI NET program, the other program integrity safeguards we have
proposed for the LI NET program would be adequate, and we therefore
proposed to waive application of the RAC requirements in subpart Z of
Part 423.
In surveying the items under Part 423 for the Voluntary Medicare
Prescription Drug Benefit, we attempted to categorize existing
requirements as applicable, inapplicable, or a candidate for waiver. We
solicited comment on whether there are additional provisions in part
423 that we did not mention in the proposed rule and that we should
address for LI NET.
8. Technical Corrections
In the course of this rulemaking, we noticed the need for a
technical correction in Sec. 423.505(b)(22), which requires Part D
sponsors to address and resolve complaints received by CMS against the
Part D sponsor. The regulation text currently refers to MA organization
when it should refer to Part D sponsor, and thus we proposed to make
the correction.
We also proposed to make a technical correction in the header of
subpart Z of Part 423. The header in regulation text currently is
``Recovery Audit Contractor Part C Appeals Process'' when it should be
referring to Part D. Thus, we proposed to make the technical correction
so the header correctly reads, ``Recovery Audit Contractor Part D
Appeals Process.''
We received a number of comments on the LI NET proposals. Summaries
of the comments and our responses follow.
Comment: All comments we received on the LI NET provision stated
broad support of our proposals to make LI NET a permanent program. One
commenter specifically noted that our proposal will simplify and expand
access for the dually eligible population, in addition to the partial-
benefit dually eligible population.
Response: We thank commenters for their support.
Comment: One commenter questioned whether each MA organization
needs to have programs in place to track low-income beneficiaries'
eligibility for LI NET, provide LI NET benefits, and manage LI NET
enrollment.
Response: Only the LI NET sponsor appointed by CMS in accordance
with Sec. 423.2516 will have responsibility for administering the LI
NET program. Other Part D benchmark plans may receive beneficiary
enrollments automatically from CMS, and such enrollments could include
beneficiaries who were enrolled in LI NET. The process of identifying
low-income beneficiaries who may be eligible for LI NET is set forth in
Sec. 423.2504.
Comment: A few commenters encouraged us to consider additional
outreach to LI NET beneficiaries during their temporary enrollment in
LI NET to support beneficiaries in selecting an appropriate Part D plan
for themselves if they so choose.
Response: All beneficiaries who are enrolled into the LI NET
demonstration receive information at the beginning of their LI NET
enrollment that describes how they can choose a specific plan for their
individual circumstances or allow CMS to automatically enroll them into
a benchmark plan following their enrollment in LI NET. In the
demonstration, the beneficiary's welcome letter states in plain
language that the LI NET beneficiary has the right to choose a plan,
and lists resources like 1-800-MEDICARE, a link to Plan Compare (Plan
Finder), and the phone number for Eldercare Locator. Under the
demonstration, CMS automatically enrolls beneficiaries into a benchmark
plan. LIS-eligible beneficiaries who wish to change plans may use a
special
[[Page 22147]]
election period (SEP) to move to another plan, and instructions for how
to join a different plan are also described in CMS' notices to
beneficiaries. As is routine for all beneficiary communications
regarding Medicare, instructions that include the phone number for LI
NET beneficiaries to call for language assistance services are provided
in numerous languages to broaden the reach of beneficiary
communications. We are finalizing Sec. 423.2512(c)(3), which will
require the LI NET sponsor to conduct outreach in consultation with
CMS, as proposed. We anticipate that outreach under the LI NET program
will be substantially similar to outreach that has been conducted under
the demonstration to date.
Comment: A few commenters believed that CMS was not intending to
allow a letter from the Social Security Administration indicating a
beneficiary's LIS eligibility to be sufficient evidence for enrollment
into LI NET. Two of the commenters also referenced ``best available
evidence'' (BAE) standards in relation to LI NET. One commenter relayed
a belief that the CMS contractor reviewing BAE is too strict and
improperly excludes LTC residents from receiving LIS status. According
to the commenter, this causes LTC pharmacies to unfairly absorb the
cost of prescription drugs and related LTC pharmacy services that they
are legally obligated to provide to LTC facility residents for whom LIS
status does not get established.
Response: We proposed at Sec. 423.2504(a)(2)(i)(A) through (F) a
list of documents that would be sufficient for an immediate need
beneficiary to demonstrate LIS eligibility. A copy of a letter from SSA
showing LIS status is item (B) on the list. The documentation listed in
proposed Sec. 423.2504(a)(2)(i)(A) through (F) would be appropriate
for any individual to submit in order to enroll in LI NET in
circumstances where they are not automatically enrolled. After
consideration of these comments, we are modifying our proposal to
clarify that these documents can be submitted by any individual to
determine LIS eligibility, regardless of whether they are enrolling in
LI NET at the POS, through a direct reimbursement request, or by
submitting an LI NET application form. We are modifying our proposed
regulations at Sec. 423.2504(b) to make conforming changes.
We also take this opportunity to clarify that the list of
documentation of LIS eligibility in proposed Sec. 423.2504(a)(2)(i)(A)
through (F) is a non-exhaustive list of types of ``best available
evidence'' as defined in Sec. 423.772. ``Best available evidence'' in
Sec. 423.772 means ``evidence recognized by CMS as documentation or
other information that is directly tied to State or Social Security
Administration systems that confirm an individual's low-income subsidy
eligibility status, and that must be accepted and used by the Part D
sponsor to change low-income subsidy status.'' As applied to LI NET,
when a beneficiary chooses to provide documentation at the POS, with
their direct reimbursement request form, or with their LI NET
application form, the documentation is reviewed by CMS and upon
approval the LI NET sponsor would change the beneficiary's LIS status
appropriately.
In Sec. 423.2504(b)(3), the proposed rule refers to individuals
submitting receipts for reimbursement for claims paid out of pocket
when making a direct reimbursement request. We finalize Sec.
423.2504(b)(3) with a modification to clarify that that we are
referring to ``eligible claims''. This change makes explicit that
eligible claims, namely those for Part D drugs from dates when the
person was retroactively LIS eligible, are needed for enrollment to
successfully occur using a direct reimbursement request.
In Sec. 423.2504(b)(4), for consistency in referring to the
documentation that may be optionally submitted along with the LI NET
application form, we revise the proposed language of ``supporting
documentation demonstrating their LIS status'' to ``optional
documentation of LIS eligibility listed in [new] paragraph (a)(3)'' and
clarify that if no documentation is submitted and accepted, the LI NET
sponsor will periodically check for eligibility and enroll applicants
once LIS eligibility is confirmed.
In making these clarifications, we note that LI NET individuals
will be enrolled via one of the four enrollment options. Though they
can, for example, submit an LI NET application form and a direct
reimbursement request form at the same time, the first in time to
effectuate the enrollment will be the way in which the beneficiary is
enrolled.
In sum, to clarify the role of documentation in LI NET, we are
finalizing Sec. 423.2504 with the following revisions:
<bullet> Renumber proposed Sec. 423.2504(a)(2)(i) to Sec.
423.2504(a)(3) and add a heading that reads ``Documentation of LIS
Eligibility'';
<bullet> Renumber the succeeding subsections under proposed Sec.
423.2504(a)(2)(i) accordingly;
<bullet> Insert Sec. 423.2504(a)(4) to say ``CMS uses
documentation submitted under paragraph (a)(3) of this section to
confirm LIS eligibility'';
<bullet> Renumber proposed Sec. 423.2504(a)(2)(ii) to Sec.
423.2504(a)(5) and revise to specify that ``If CMS cannot confirm an
immediate need individual's eligibility during the period of LI NET
coverage, the individual will not be auto-enrolled into a standalone
Part D plan in accordance with Sec. 423.34(d) following their LI NET
coverage'';
<bullet> Finalize Sec. 423.2504(b)(2) as follows: ``(2) Point-of-
sale enrollment. An individual who is not automatically enrolled in
accordance with paragraph (b)(1) of this section and whose claim is
submitted at the point-of-sale and accepted by the LI NET sponsor will
be enrolled into the LI NET program by the LI NET sponsor'';
<bullet> Finalize Sec. 423.2504(b)(3) as follows: ``(3) Direct
reimbursement request. An individual described in paragraph (a)(1) of
this section who is not automatically enrolled in accordance with
paragraph (b)(1) or at the point-of-sale as provided in paragraph
(b)(2) and who submits a direct reimbursement request form, receipts
for reimbursement for eligible claims paid out of pocket (with optional
documentation of LIS eligibility listed in paragraph (a)(3)), will be
retroactively enrolled into the LI NET program by the LI NET sponsor.
The LI NET sponsor has 14 calendar days to reply with a coverage
decision''; and
<bullet> Finalize Sec. 423.2504(b)(4) as follows: ``(4) LI NET
application form. An individual who is not enrolled through one of the
methods in paragraphs (b)(1) though (3) of this section may submit an
LI NET application form to the LI NET sponsor (with optional
documentation of LIS eligibility listed in paragraph (a)(3)). If no
documentation is submitted and accepted, the LI NET sponsor will
periodically check for eligibility and enroll applicants once LIS
eligibility is confirmed.''
Recognizing that the SSA letter uses the terminology ``Extra Help''
instead of ``LIS'', we also add for clarity the term ``Extra Help'' to
Sec. 423.2504(a)(3)(ii).
Comment: One commenter noted that the proposed definition for
point-of-sale enrollment in Sec. 423.2504(b)(2) would not adequately
capture the full range of POS enrollees, such as those who are eligible
for LI NET but do not necessarily demonstrate an immediate need for
medication.
Response: We agree that beneficiaries who present at the point-of-
sale who do not have an immediate need for medication as defined in
Sec. 423.2504(a)(2) may use the POS mechanism of enrollment if they
are otherwise eligible for LI NET and have
[[Page 22148]]
not been automatically enrolled. Thus, we finalize this provision to
include these beneficiaries by striking ``with an immediate need'' from
the description of point-of-sale enrollment in Sec. 423.2504(b)(2).
The change would allow for individuals to use the POS enrollment
mechanism if they are either an ``immediate need individual'' per Sec.
423.2504(a)(2) or if they present documentation as evidence of LIS
eligibility as listed in newly numbered Sec. 423.2504(a)(3). Note that
this change from the proposed regulation allows for individuals who are
not in immediate need of prescriptions to take advantage of the POS
enrollment mechanism when they have documentation specified in Sec.
423.2504(a)(3). Making this change allows for those with evidence of
LIS eligibility by way of presenting documentation to not be turned
away from the pharmacy counter at the POS and avoid an unnecessary
delay enrolling into LI NET. Under the demonstration, this subset of
non-immediate need individuals, though very few in number, can enroll
in LI NET at the POS with documentation, which is consistent with the
way we finalize this provision. Though beneficiaries with an immediate
need who state their LIS status are not required to show documentation
at the POS to have their prescription filled, they must either
successfully go through the BAE process or have their LIS status
reflected in CMS systems in order to be included in the auto-enrollment
process into a standalone Part D plan in accordance with Sec.
423.34(d) following their LI NET coverage.
We also note the need for a technical correction in Sec.
423.2504(b)(2), to specify that the claim submitted at the point-of-
sale must be accepted by the LI NET sponsor--it must pass the edits for
the LI NET sponsor to accept the claim into its system. For instance, a
claim that is billed but is rejected due to a misspelling of the
beneficiary's name would not be sufficient to complete an LI NET
enrollment.
We finalize Sec. 423.2504(b)(2) to say, ``An individual who is not
automatically enrolled in accordance with paragraph (b)(1) of this
section and whose claim is submitted at the point-of-sale and accepted
by the LI NET sponsor will be enrolled into the LI NET program by the
LI NET sponsor.''
Comment: One commenter suggested expanding the definition of
``pharmacies that are in good standing'' in LI NET to also prohibit
out-of-network pharmacies from submitting claims to the LI NET sponsor
if they are under a current payment suspension by any Part D sponsor
pursuant to Sec. 423.504(b)(4)(vi)(G)(4) or have been terminated from
the LI NET sponsor's network based on credible allegations of fraud.
The commenter recommends this change to avoid a situation in which a
pharmacy has been suspended or terminated from participation in a Part
D plan's network but can still serve LI NET beneficiaries.
Response: We agree with the commenter that we do not want to
consider pharmacies against which there are credible allegations of
fraud to be ``in good standing'' for purposes of participating in LI
NET. Currently, each Part D sponsor performs its own investigation to
determine whether a credible allegation of fraud against a pharmacy
exists, which may result in implementation of a payment suspension or
termination. CMS encourages Part D sponsors to use the information CMS
provides through Health Plan Management System's (HPMS) Program
Integrity (PI) Portal for FWA Reporting module regarding other plan
sponsors' payment suspensions, as well as information provided on
referrals of providers and suppliers by plan sponsors, to conduct their
own investigations of pharmacies. We remind sponsors that they should
not take any administrative action based solely on information within
CMS' HPMS PI Portal for FWA Reporting. Plan sponsors should perform
their own investigations and conduct oversight efforts to substantiate
information regarding potential pharmacy FWA.
It makes sense to similarly require the LI NET sponsor to make its
own determination of what is credible instead of adopting a standard
that any Part D sponsor's determination controls, as the commenter
suggests. Thus, we finalize the definition of ``good standing'' in
Sec. 423.2508(b) to also include pharmacies against which the LI NET
sponsor does not have a credible allegation of fraud as defined at
Sec. 423.4. With the addition of this element relying on the LI NET
sponsor's determination, and noting that there are specific, objective
standards comprising the definition of pharmacies that are in ``good
standing'' for LI NET, it is unnecessary for CMS to make a
determination about pharmacies' standings in this regard. Thus, we also
strike the phrase ``as determined by CMS'' from Sec. 423.2508(b).
Additionally, we noted an omission in Sec. 423.2508(b) of the
description of OIG's exclusion authority. OIG has the authority to
exclude individuals and entities from Medicare and State health care
programs under section 1156 of the Act. We omitted reference to State
Health care programs in proposed Sec. 423.2508(b), and take this
opportunity to fully cite the OIG's list of excluded entities under
section 1156 of the Act.
Thus, we finalize section 423.2508(b) to read, ``(b) Network. The
LI NET sponsor must allow its network and out-of-network pharmacies
that are in good standing to process claims under the program. Licensed
pharmacies are considered to be in good standing for the LI NET program
so long as they: are not revoked from Medicare under Sec. 424.535; do
not appear on the Office of Inspector General's list of entities
excluded from Federally funded health care programs pursuant to section
1128 of the Act or from Medicare and State health care programs under
section 1156 of the Act (unless waived by the OIG); do not appear on
the preclusion list as defined at Sec. 423.100; and do not have a
determination by the LI NET sponsor of a credible allegation of fraud
as defined at Sec. 423.4.''
Comment: One commenter raised a concern about an LI NET sponsor's
ability to audit and recover overpayments from out-of-network
pharmacies, which would not be contracted with the LI NET sponsor. The
commenter suggested modifying proposed Sec. 423.2512(c)(6) to
incorporate the good standing standard proposed in Sec. 423.2508(b)
and to state that pharmacies that submit claims to the LI NET sponsor
would be subject to the LI NET sponsor's standard pharmacy audit and
overpayment recovery processes.
Response: We agree with the commenter that the requirement to
adjudicate out-of-network claims would apply only to pharmacies in good
standing and have modified Sec. 423.2512(c)(6) to include a cross
reference to the good standing standard we are adopting in Sec.
423.2508(b).
We note that Sec. 423.504(b)(4)(vi)(G) is not waived for LI NET
and requires the LI NET sponsor to establish and implement ``procedures
and a system for promptly responding to compliance issues as they are
raised, investigating potential compliance problems as identified in
the course of self-evaluations and audits, correcting such problems
promptly and thoroughly to reduce the potential for recurrence, and
ensure ongoing compliance with CMS requirements.'' Further, Sec.
423.504(b)(4)(vi)(G)(2) says that the Part D sponsor must conduct
appropriate corrective actions (for example, repayment of overpayments
and disciplinary actions against responsible individuals) in response
to the potential violation, as previously referenced.
We believe the commenter is requesting that the LI NET regulations
[[Page 22149]]
expressly state that the LI NET sponsor has the ability to audit out-
of-network pharmacies and subject them to overpayment recovery
processes. The commenter does not suggest what a ``standard'' pharmacy
audit and overpayment recovery process could mean. One possibility is
for it to be the same as is used for network pharmacies, similar to how
we require the LI NET sponsor to adjudicate claims from out-of-network
pharmacies according to the LI NET sponsor's standard reimbursement for
its network pharmacies. However, given that out-of-network pharmacies
that are in good standing under Sec. 423.2508(b) must be permitted to
process claims under LI NET--a distinguishing feature of LI NET--we
believe that defining a ``standard'' pharmacy audit and overpayment
recovery process would not provide the LI NET sponsor the level of
flexibility that is already provided under Sec. 423.504(b)(4)(vi)(G).
Thus, we take this opportunity to state that the LI NET sponsor must
meet the requirements in Sec. 423.504(b)(4)(vi)(G), including for out-
of-network pharmacies, without incorporating these concepts into Sec.
423.2512(c)(6).
Thus, we finalize these concepts as proposed in Sec.
423.2512(c)(6), and add the cross-reference to the good reference
standard in Sec. 423.2508(b) to say that the LI NET sponsor must
``[a]djudicate claims from out-of-network pharmacies that are in good
standing (as defined in Sec. 423.2508(b)) according to the LI NET
sponsor's standard reimbursement for their network pharmacies.''
Comment: One commenter recommended that we require the LI NET
sponsor to maintain telephone and fax lines 24 hours a day, 7 days a
week, and every day of the year, as well as setting customer service
standards that include limits on average hold times and disconnect
rates, and availability of interpreters.
Response: The LI NET sponsor will be held to the same customer
service requirements as other Part D sponsors under Sec. 423.128(d).
Under Sec. 423.128(d)(1)(i)(B), any call center serving pharmacists
must be open so long as any network pharmacy in the region is open.
Given that the LI NET sponsor's ``region'' is nationwide because of the
requirement in Sec. 423.2512(a)(1) to have a contracted pharmacy
network in all geographic areas of the United States in which low-
income subsidies are available, practically speaking we would expect
some network pharmacies to be open 24 hours a day and therefore, by
extension, the call center serving pharmacists would also need to be
open 24 hours a day.
Section 423.128(d) also sets forth requirements for interactive
voice response systems, timeframes for return calls, average wait
times, disconnect rates, provision of interpreters (including how
quickly the interpreters are made available), and provision of
effective real-time communication with individuals using auxiliary aids
and services like TTY.
We note that the requirement to maintain a fax line is not
separately discussed in Sec. 423.128(d), but we believe as a practical
matter that it will be necessary for the LI NET sponsor to maintain a
fax line in order to conduct point-of-sale enrollments in accordance
with Sec. 423.2504(b)(2).
Comment: One commenter encouraged CMS and our contractors to
regularly educate and communicate with pharmacists about LI NET. The
same commenter called for consistent outreach to LI NET eligible
beneficiaries to make them aware of the program.
Response: We agree with the importance of making stakeholders as
well as beneficiaries who are likely eligible for LI NET aware of the
program. In Sec. 423.2512(c)(3), we require the LI NET sponsor to
identify, develop, and conduct outreach plans in consultation with CMS
targeting key stakeholders to inform them about the LI NET program.
Under the demonstration, CMS enrolls over 90 percent of LI NET
beneficiaries into the LI NET plan, and we expect CMS would continue to
be responsible for most enrollments in the permanent LI NET program.
For beneficiaries who are not auto-enrolled, we agree that outreach is
important so that stakeholders such as states, SHIPs, and pharmacies
have awareness and knowledge about the LI NET program. Beneficiary
education and outreach is also important, though it has been our
experience that pharmacists and SHIP counselors are the most effective
at connecting eligible beneficiaries with LI NET. We finalize Sec.
423.2512(c)(3) as proposed, except for an editorial change to more
concisely say ``conduct outreach plans'' instead of ``carry out
outreach plans.''
Comment: One commenter expressed support for our proposal to define
the LI NET sponsor as a Part D sponsor selected by CMS to administer
the LI NET program.
Response: We thank the commenter for the support.
Comment: One commenter noted that the LI NET demonstration is
sometimes referred to by its full name of (``Limited Income Newly
Eligible Transition program''), in addition to abbreviated forms, such
as ``LI NET'' or ``LINET''. The commenter encourages us to use program
nomenclature consistently to avoid beneficiary confusion.
Response: We agree that using consistent nomenclature for the LI
NET program can minimize confusion. We take this opportunity to state
that the proper, full name of the program in this provision is the
Limited Income Newly Eligible Transition program, which may also be
referred to as the ``LI NET program''.
Comment: One commenter expressed support for the proposed LI NET
payment policies under Sec. 423.2524 with the exception of Sec.
423.2524(c)(1)(i), which proposed to require that the LI NET sponsor
assume in its 2024 plan year bid that Payment Rate A cannot exceed a 2
percent increase from the prior year's Payment A, which is a figure CMS
would provide to the LI NET sponsor. The commenter noted that under the
demonstration program, CMS instituted a per-member, per-month cap on
administrative expenses for plan year 2012 that has not been updated,
and recommended reestablishing a baseline for Payment Rate A beginning
in plan year 2024. The commenter recommended that the LI NET sponsor
and CMS engage in a collaborative rate setting process, which the
commenter suggested would contribute to the long-term stability of the
LI NET program, and provide necessary flexibility to manage the program
over the long term, particularly in light of factors like inflation or
extreme or unpredictable circumstances like the COVID-19 Public Health
Emergency (PHE).
Response: We thank the commenter for their general support of our
LI NET payment provisions. As the commenter notes, under the
demonstration we have long had a 2 percent cap on Payment Rate A, the
portion of the LI NET payment comprised of two components: estimated
administrative costs to run the LI NET program, which is inclusive of
the LI NET sponsor's profit, and the LI NET sponsor's estimated costs
to pay pharmacy claims for prescriptions filled by immediate need
individuals, for which the LI NET sponsor might not be able to submit a
prescription drug event (PDE) record to CMS due to the individual's
unconfirmed LIS status. Over this time, the Part D sponsor
administering the LI NET demonstration and CMS have had multiple
discussions about the appropriateness of the 2 percent cap. To date,
CMS has not received adequate justification to increase the cap,
including for the past few years during an ongoing PHE. We note that
Sec. 423.2524(c)(1)(i) fixes the cap at 2 percent cap for the 2024
plan year
[[Page 22150]]
only. This will maintain stability and continuity in Payment Rate A in
this year of transition from LI NET as a demonstration to a permanent
Part D program. The flexibility and collaboration the commenter seeks
is provided from the 2025 plan year onward, in Sec.
423.2524(c)(1)(ii).
Comment: One commenter expressed support for our proposal to
enumerate those Part D requirements that will be explicitly waived
under the LI NET program, concurring with the list of proposed waivers
in Sec. 423.2536. The commenter encourages CMS to partner with the LI
NET sponsor as new Part D program requirements are introduced, so there
is clarity about whether new requirements apply to the LI NET program.
Response: We thank the commenter for the support. With respect to
new Part D program requirements that may be adopted in the future, we
would consider at the time of their adoption whether they ought to
apply to the LI NET program or be added to the list of waived
requirements specified in Sec. 423.2536, as appropriate. We finalize
as proposed Sec. 423.2536, Waiver of Part D program requirements:
``CMS waives the following Part D program requirements for the LI
NET program:
(a) General information. Paragraphs (1) and (3)(B) of section
1860D-4(a) of the Act (relating to dissemination of general
information; availability of information on changes in formulary
through the internet).
(b) Formularies. Subparagraphs (A) and (B) of section 1860D-4(b)(3)
of the Act (relating to requirements on development and application of
formularies; formulary development) and formulary requirements in
Sec. Sec. 423.120(b) and 423.128(e)(5) and (6).
(c) Cost control and quality improvement requirements. Provisions
under subpart D of this part, including requirements about medication
therapy management, are waived except for the provisions in Sec.
423.2508(d)(1) through (5).
(1) Section 423.153(b) and (c) for dispensing and point-of-sale
safety edits;
(2) Section 423.154 for appropriate dispensing of prescription
drugs in long-term care facilities;
(3) Sections 423.159 and 423.160 for electronic prescribing,
excepting the requirements pertaining to formulary standards in Sec.
423.160(b)(5);
(4) Section 423.162 for QIO activities; and
(5) Section 423.165 for compliance deemed on the basis of
accreditation.
(d) Out-of-network access. Section 423.124 Special rules for out-
of-network access to Part D drugs at out-of-network pharmacies, except
for Sec. 423.124(a)(2), which applies to LI NET.
(e) Medicare contract determinations and appeals. Subpart N, except
for the provisions that apply to LI NET in Sec. 423.2520(d).
(f) Risk-sharing arrangements. Section 423.336(a), (b), and (d).
(g) Certification of accuracy of data for price comparison. Section
423.505(k)(6).
(h) Part D communication requirements. Portions of subpart V of
this part related to Part D communication requirements that are
inapplicable to LI NET, including:
(1) Section 423.2265(b)(4), (5), (11), and (13);
(2) Section 423.2265(c);
(3) Section 423.2266(a);
(4) Section 423.2267(e)(3) through (5), (9) through (12), (14)
through (17), (25), (29), and (33); and
(5) Section 423.2274.
(i) Medicare Coverage Gap Discount Program. Subpart W of this part.
(j) Requirements for a minimum medical loss ratio. Subpart X of
this part.
(k) Recovery audit contractor Part C appeals process. Subpart Z of
this part.''
Comment: One commenter raised concerns about CMS' proposal to
sunset the demonstration program on December 31, 2023 and start the
permanent LI NET program on January 1, 2024. The commenter requested we
begin the permanent program before sunsetting the demonstration program
in case glitches arise in the transition, particularly recognizing that
the start of a calendar year can be busy for pharmacists assisting
beneficiaries with new coverage. The commenter recommended that CMS
still begin the permanent program on January 1, 2024, but allow the
demonstration program to continue until at least the second quarter of
2024 or until all potential unforeseen glitches are worked out,
whichever is later.
Response: We share the commenter's desire to take precautions
against any risk of disruptions in care or LI NET beneficiaries' access
to Part D drugs. If the current Part D sponsor administering LI NET
under demonstration authority is selected to be the LI NET sponsor for
the 2024 plan year, then the change from LI NET operating as a
demonstration versus a permanent program is largely a matter of the
authority under which LI NET is operated rather than significant
operational differences. If there is a change in the Part D sponsor
administering LI NET in 2024, the new sponsor would be vetted by CMS to
confirm that the sponsor has the ability to administer the program. CMS
would work closely with that sponsor during a transition period to
ensure that there are no disruptions to beneficiaries who enroll in LI
NET.
We appreciate the feedback we received from the commenters. After
consideration of all public comments, we are finalizing the LI NET
largely as proposed, with modifications to Sec. Sec. 423.2504,
423.2508, and 423.2512, as previously discussed in our responses to
comments. The revisions include:
<bullet> Sec. 423.2504: renumber proposed Sec. 423.2504(a)(2)(i)
to Sec. 423.2504(a)(3) and add a heading that reads ``Documentation of
LIS Eligibility''; renumber the succeeding subsections under proposed
Sec. 423.2504(a)(2)(i) accordingly; insert Sec. 423.2504(a)(4) to say
``CMS uses documentation submitted under paragraph (a)(3) of this
section to confirm LIS eligibility''; and renumber proposed Sec.
423.2504(a)(2)(ii) to Sec. 423.2504(a)(5) and revise to specify that
``If CMS cannot confirm an immediate need individual's eligibility
during the period of LI NET coverage, the individual will not be auto-
enrolled into a standalone Part D plan in accordance with Sec.
423.34(d) following their LI NET coverage''; striking ``with an
immediate need'' from the description of point-of-sale enrollment in
Sec. 423.2504(b)(2); revise Sec. 423.2504(b)(2) to say, ``(2) Point-
of-sale enrollment. An individual who is not automatically enrolled in
accordance with paragraph (b)(1) of this section and whose claim is
submitted at the point-of-sale and accepted by the LI NET sponsor will
be enrolled into the LI NET program by the LI NET sponsor''; finalize
Sec. 423.2504(b)(3) as follows: ``(3) Direct reimbursement request. An
individual described in paragraph (a)(1) of this section who is not
automatically enrolled in accordance with paragraph (b)(1) or at the
point-of-sale as provided in paragraph (b)(2) and who submits a direct
reimbursement request form, receipts for reimbursement for eligible
claims paid out of pocket (with and optional documentation of LIS
eligibility listed in paragraph (a)(3)), will be retroactively enrolled
into the LI NET program by the LI NET sponsor. The LI NET sponsor has
14 calendar days to reply with a coverage decision''; and finalize
Sec. 423.2504(b)(4) as follows: ``(4) LI NET application form. An
individual who is not enrolled through one of the methods in paragraphs
(b)(1) though (3) of this section may submit an LI NET application form
to the LI NET sponsor (with optional documentation of LIS eligibility
listed in paragraph
[[Page 22151]]
(a)(3)). If no documentation is submitted and accepted, the LI NET
sponsor will periodically check for eligibility and enroll applicants
once LIS eligibility is confirmed; add for clarity the term ``Extra
Help'' to Sec. 423.2504(a)(3)(ii).
<bullet> Sec. 423.2508: removing CMS' role in determining
pharmacies' ``good standing'' for LI NET and adding a reference to
OIG's authority to exclude State health care programs; and
<bullet> Sec. 423.2512(c)(6): adding a cross reference to the good
standing standard we are adopting in Sec. 423.2508(b).
E. Expanding Eligibility for Low-Income Subsidies Under Part D of the
Medicare Program (Sec. Sec. 423.773 and 423.780)
The Part D low income subsidy (LIS) helps people with Medicare who
meet certain statutory income and resource criteria pay for
prescription drugs and lowers the costs of prescription drug coverage.
Individuals who qualify for the full LIS receive assistance to pay
their full premiums and deductibles (in certain Part D plans) and have
reduced cost sharing. Individuals who qualify for the partial LIS pay
reduced premiums (on a sliding scale based on their income) and also
have reduced deductibles and cost sharing.
Section 11404 of the IRA (Pub. L. 117-169), enacted on August 16,
2022, amended section 1860D-14 of the Act to expand eligibility for the
full LIS to individuals who are determined to have incomes below 150
percent of the FPL and who meet either the resource standard in
paragraph (3)(D) or paragraph (3)(E) of section 1860D-14(a) of the Act,
with respect to plan years beginning on or after January 1, 2024. This
change will provide the full LIS for individuals who currently qualify
for the partial subsidy.
To implement the changes to the LIS income requirements, we
proposed to amend Sec. 423.773(b)(1) to add that to be eligible for
the full subsidy for plan years beginning on or after January 1, 2024,
an individual must have an income below 150 percent of the FPL. To
coordinate with this change, we also proposed to amend Sec. 423.773(d)
to specify that the requirement that an individual have an income below
150 percent of the FPL to be eligible for the partial subsidy applies
only to plan years beginning before January 1, 2024. This latter change
is consistent with the IRA effectively sunsetting the partial LIS after
2023.
To implement the changes to the resource limits, we proposed to
amend Sec. 423.773 to state that the current resource limits
applicable for the full subsidy at paragraph (b)(2)(ii) apply to years
2007 through 2023. We also proposed to add a new Sec.
423.773(b)(2)(iii) to state that for years beginning on or after
January 1, 2024, the resource limits at paragraph (d)(2) of Sec.
423.773--the resource standards currently applicable for the partial
subsidy--would apply to full subsidy eligible individuals. This result
of this change is that individuals are able to have a higher value of
resources and still be eligible for the full subsidy.
Lastly, we proposed to amend Sec. 423.780(d) to specify that the
sliding scale premium amounts currently applicable for individuals with
the partial subsidy apply with respect to plan years beginning before
January 1, 2024. These individuals who have incomes between 135 and 150
percent of the FPL and who meet the resource requirements will now
qualify for the full subsidy beginning in 2024, and will be entitled to
a premium subsidy of 100 percent of the premium subsidy amount, as
outlined in Sec. 423.780(a).
We received the following comments, and our responses follow.
Comment: Commenters overwhelmingly supported our proposal to
implement section 11404 of the IRA and expand eligibility for the Part
D LIS. Commenters stated that this change will advance health equity,
increase the affordability of prescription drugs, and facilitate access
to care, especially for individuals with ESRD, and Black and Hispanic
beneficiaries, who may disproportionately fall within the partial
subsidy category. Commenters also believed that the change would
simplify the LIS benefit structure, resulting in less beneficiary
confusion and a reduction in administrative burden.
Response: We appreciate the support for the proposa
[…truncated; see source link]Indexed from Federal Register on April 12, 2023.
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