Rule2024-07105
Medicare Program; Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Program for Contract Year 2024-Remaining Provisions and Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (PACE)
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 23, 2024
Effective
June 3, 2024
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, agent/broker compensation, health equity, dual eligible special needs plans (D-SNPs), utilization management, network adequacy, and other programmatic areas. This final rule also codifies existing sub-regulatory guidance in the Part C and Part D programs.
Full Text
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[Federal Register Volume 89, Number 79 (Tuesday, April 23, 2024)]
[Rules and Regulations]
[Pages 30448-30848]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-07105]
[[Page 30447]]
Vol. 89
Tuesday,
No. 79
April 23, 2024
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; Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Program for Contract Year 2024--Remaining
Provisions and Contract Year 2025 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the
Elderly (PACE); Final Rule
Federal Register / Vol. 89 , No. 79 / Tuesday, April 23, 2024 / Rules
and Regulations
[[Page 30448]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 417, 422, 423, and 460
Office of the Secretary
[CMS-4201-F3 and CMS-4205-F]
RINs 0938-AV24 and 0938-AU96
Medicare Program; Changes to the Medicare Advantage and the
Medicare Prescription Drug Benefit Program for Contract Year 2024--
Remaining Provisions and Contract Year 2025 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription Drug
Benefit Program, Medicare Cost Plan Program, and Programs of All-
Inclusive Care for the Elderly (PACE)
AGENCY: Centers for Medicare & Medicaid Services (CMS), Office of the
National Coordinator for Health Information Technology (ONC),
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, agent/broker compensation, health equity, dual eligible
special needs plans (D-SNPs), utilization management, network adequacy,
and other programmatic areas. This final rule also codifies existing
sub-regulatory guidance in the Part C and Part D programs.
DATES: Effective date: These regulations are effective June 3, 2024.
Applicability dates: The provisions in this rule are applicable to
coverage beginning January 1, 2025, except as otherwise noted. The
updates to marketing and communication provisions at Sec. Sec.
422.2267(e)(34), 422.2274, and 423.2274 are applicable for all contract
year 2025 marketing and communications beginning October 1, 2024. The
updated provisions at Sec. Sec. 422.2267(e)(31)(ii) and
423.2267(e)(33)(ii) are applicable for all contract year 2026 marketing
and communications beginning September 30, 2025, however, at plan
option for contract year 2025 marketing and communications beginning
September 30, 2024, the plan may use the model notice described in
Sec. Sec. 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii) to satisfy the
MLI requirements set forth in Sec. Sec. 422.2267(e)(31)(i) and
423.2267(e)(33)(i).
Sections 422.111(l) and 423.530 are applicable beginning January 1,
2026. This final rule also includes revisions to existing regulations
in the Risk Adjustment Data Validation (RADV) audit appeals process,
the appeals process for quality bonus payment determination at Sec.
422.260, weighting of new Part C and D Star Ratings measures at
Sec. Sec. 422.166(e)(2) and 423.186(e)(2), and the rule for Part C and
D Star Ratings non-substantive measure updates at Sec. Sec. 422.164(d)
and 423.184(d) applicable 60 days after the date of publication. The
use and release of risk adjustment data provisions at Sec. Sec.
422.310(f)(1)(vi), 422.310(f)(1)(vii), and 422.310(f)(3)(v) are
applicable 60 days after the date of publication.
FOR FURTHER INFORMATION CONTACT:
Carly Medosch, (410) 786-8633--General Questions.
Naseem Tarmohamed, (410) 786-0814--Part C and Cost Plan Issues.
Lucia Patrone, (410) 786-8621--Part D Issues.
Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and Appeal
Issues.
Kelley Ordonio, (410) 786-3453--Parts C and D Payment Issues.
Hunter Coohill, (720) 853-2804--Enforcement Issues.
Lauren Brandow, (410) 786-9765--PACE Issues.
Sara Klotz, (410) 786-1984--D-SNP Issues.
Joe Strazzire, (410) 786-2775--RADV Audit Appeals Issues.
<a href="/cdn-cgi/l/email-protection#257544575166444b4161765144577744514c4b4256654648560b4d4d560b424a53"><span class="__cf_email__" data-cfemail="27774655536446494363745346557546534e49405467444a54094f4f5409404851">[email protected]</span></a>--Parts C and D Star Ratings
Issues.
SUPPLEMENTARY INFORMATION:
I. Executive Summary and Background
A. Executive Summary
1. Purpose
The primary purpose of this final rule is to amend the regulations
for the Medicare Advantage (Part C) program, Medicare Prescription Drug
Benefit (Part D) program, Medicare cost plan program, and Programs of
All-Inclusive Care for the Elderly (PACE). This final rule includes a
number of new policies that will improve these programs beginning with
contract year 2025 and will codify existing Part C and Part D sub-
regulatory guidance.
Additionally, this final rule will implement certain sections of
the following Federal laws related to the Parts C and D programs:
<bullet> The Bipartisan Budget Act (BBA) of 2018.
<bullet> The Consolidated Appropriations Act (CAA), 2023.
2. Summary of the Major Provisions
a. Part D Medication Therapy Management (MTM) Program: Eligibility
Criteria
Section 1860D-4(c)(2) of the Act requires all Part D sponsors to
have an MTM program designed to assure, with respect to targeted
beneficiaries, that covered Part D drugs are appropriately used to
optimize therapeutic outcomes through improved medication use, and to
reduce the risk of adverse events, including adverse drug interactions.
Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to
target those Part D enrollees who have multiple chronic diseases, are
taking multiple Part D drugs, and are likely to meet a cost threshold
for covered Part D drugs established by the Secretary. CMS codified the
MTM targeting criteria at Sec. 423.153(d)(2).
Through this final rule, CMS establishes improved targeting
criteria for the Part D MTM program that will help ensure more
consistent, equitable, and expanded access to MTM services. After
consideration of the comments received, we are finalizing proposed
changes to the MTM eligibility criteria with modifications that are
effective for January 1, 2025, as follows:
We are finalizing the provision at Sec. 423.153(d)(2)(iii) that
Part D sponsors must include all core chronic diseases in their
targeting criteria for identifying beneficiaries who have multiple
chronic diseases, as provided under Sec. 423.153(d)(2)(i)(A). As part
of this provision at Sec. 423.153(d)(2)(iii), we are codifying the
nine core chronic diseases currently identified in guidance and adding
HIV/AIDS, for a total of 10 core chronic diseases. The 10 core chronic
diseases are: (1) Alzheimer's disease; (2) Bone disease-arthritis
(including osteoporosis, osteoarthritis, and rheumatoid arthritis); (3)
Chronic congestive heart failure (CHF); (4) Diabetes; (5) Dyslipidemia;
(6) End-stage renal disease (ESRD); (7) Human immunodeficiency virus/
acquired immunodeficiency syndrome (HIV/AIDS); (8) Hypertension; (9)
Mental health (including depression, schizophrenia, bipolar disorder,
and other chronic/disabling mental health conditions); and (10)
Respiratory disease (including asthma, chronic obstructive pulmonary
disease (COPD), and other chronic lung disorders). Sponsors retain the
flexibility to target
[[Page 30449]]
additional chronic diseases beyond those codified as core chronic
diseases.
We are not finalizing the proposal at Sec. 423.153(d)(2)(i)(B) to
decrease the maximum number of Part D drugs a sponsor may require from
eight to five for Contract Year 2025. At this time, we are retaining
the maximum number of drugs a plan sponsor may require for targeting
beneficiaries taking multiple Part D drugs as eight at Sec.
423.153(d)(2)(i)(B). Part D sponsors will maintain the flexibility to
set a lower threshold (a number between two and eight Part D drugs) for
targeting beneficiaries taking multiple Part D drugs. We may consider
revisiting this or similar policies in future rulemaking.
We are finalizing the provision at Sec. 423.153(d)(2)(iv) to
require sponsors to include all Part D maintenance drugs in their
targeting criteria with minor modifications to the regulatory text to
clarify that sponsors must include all Part D maintenance drugs and to
provide flexibility for sponsors to include all Part D drugs in their
targeting criteria. However, sponsors will not be permitted to limit
the Part D maintenance drugs included in MTM targeting criteria to
specific Part D maintenance drugs or drug classes. We are also
finalizing the requirement at Sec. 423.153(d)(2)(iv) that, for the
purpose of identifying Part D maintenance drugs, plans must rely on
information in a widely accepted, commercially or publicly available
drug information database.
We are finalizing the provision at Sec. 423.153(d)(2)(i)(C) with
modification to set the MTM cost threshold at the average cost of eight
generic drugs, as defined at Sec. 423.4. CMS will calculate the dollar
amount of the MTM cost threshold based on the average daily cost of a
generic drug using the PDE data specified at Sec.
423.104(d)(2)(iv)(C).
We are also codifying longstanding guidance at Sec.
423.153(d)(1)(vii)(B)(2) to provide that a beneficiary must be unable
to accept the offer to participate in the CMR due to cognitive
impairment. We are also finalizing other technical changes at Sec.
423.153(d)(1)(vii)(B)(1)(i) to clarify that the CMR must include an
interactive consultation that is conducted in person or via synchronous
telehealth.
b. Improving Access to Behavioral Health Care Providers
We are finalizing regulatory changes that will improve access to
behavioral health care by adding a new behavioral health provider
specialty to our MA network adequacy standards. Specifically, we are
finalizing requirements to add a new facility-specialty type to the
existing list of facility-specialty types evaluated as part of network
adequacy requirements and reviews. The new facility-specialty type,
``Outpatient Behavioral Health,'' will be included in network adequacy
evaluations and can include providers of various types: Marriage and
Family Therapists (MFTs), Mental Health Counselors (MHCs), Opioid
Treatment Program (OTP) providers, Community Mental Health Centers or
other behavioral health and addiction medicine specialists and
facilities, including addiction medicine physicians, other providers.
Other providers may include nurse practitioners (NPs), physician
assistants (PAs) and Clinical Nurse Specialists (CNSs), who furnish
addiction medicine and behavioral health counseling or therapy services
and meet other specific criteria. Beginning January 1, 2024, MFTs and
MHCs were eligible to enroll in Medicare and start billing for services
due to the new statutory benefit category established by the
Consolidated Appropriations Act (CAA) 2023. We aim to strengthen
network adequacy requirements and improve beneficiary access to
behavioral health services and providers by expanding our network
adequacy evaluation requirements for MA organizations.
To address concerns that NPs, PAs, and CNSs might lack the
necessary skills, training, or expertise to effectively address the
behavioral health needs of enrollees and that the absence of criteria
for incorporating these provider types could result in the creation of
``ghost networks'' (where providers may be listed in a provider
directory without actively treating patients for behavioral health), we
are also adopting specific criteria that MA organizations must use to
determine when an NP, PA or CNS can be considered part of a network to
meet the Outpatient Behavioral Health network adequacy standard. MA
organizations must independently verify that the provider has furnished
or will furnish such services to 20 patients within a recent 12-month
period using reliable information about services furnished by the
provider such as the MA organization's claims data, prescription drug
claims data, electronic health records, or similar data.
c. Distribution of Personal Beneficiary Data by Third Party Marketing
Organizations (TPMOs)
Third-Party Marketing Organizations (TPMOs) are selling and
reselling beneficiary contact information to skirt existing CMS rules
that prohibit cold calling so they can aggressively market MA and Part
D Plans. Beneficiaries are unaware that by placing a call or clicking
on a generic-looking web-link they are unwittingly agreeing and
providing consent for their personal contact information to be
collected and sold to other entities for future marketing activities.
As a result, we are finalizing requirements to prohibit personal
beneficiary data collected by TPMOs for marketing or enrolling a
beneficiary into an MA or Part D plan to be shared with other TPMOs,
unless prior express written consent is given by the beneficiary.
Furthermore, we are finalizing a one-to-one consent structure where
TPMOs must obtain prior express written consent through a clear and
conspicuous disclosure for each TPMO that will be receiving the
beneficiary's data. This provision is designed to address complaints we
have received from beneficiaries and their advocates and caregivers
about receiving harassing and unwanted phone and email solicitations
from individuals attempting to enroll them in MA and Part D plans. This
final rule protects beneficiaries against unwanted calls, texts, email
solicitations, and other contacts, while still ensuring that
beneficiaries have control over their personal data and can connect
with the TPMOs they would like to speak with, creating a more
transparent and safer environment for beneficiaries to find the plan
that best fits their health needs.
d. Establish Guardrails for Agent and Broker Compensation
Section 1851(j) of the Act requires that CMS develop guidelines to
ensure that the use of agent and broker compensation creates incentives
to enroll individuals in the MA plan that is intended to best meet
their health care needs. To that end, for many years CMS has set upper
limits on the amount of compensation agents and brokers can receive for
enrolling Medicare beneficiaries into MA and PDP plans. We have
learned, however, that many MA and PDP plans, as well as third-party
entities with which they contract (such as Field Marketing
Organizations (FMOs)) have structured payments to agents and brokers
that allow for separate payments for these agents and brokers and have
the effect of circumventing compensation caps. We also note that that
these separate payments appear to be increasing. In this rule, we are
finalizing requirements that will generally prohibit contract terms
between MA organizations and agents, brokers or other TPMOs that may
interfere with the agent's or broker's ability to objectively assess
and
[[Page 30450]]
recommend the plan that best fits a beneficiary's health care needs;
set a single, increased compensation rate for all plans to be updated
annually; revise the scope of items and services included within agent
and broker compensation; and eliminate the regulatory framework which
currently allows for separate payment to agents and brokers for
administrative services. We are also making conforming edits to the
Part D agent broker compensation rules at Sec. 423.2274. Collectively,
we believe the impact of these changes will better align with statutory
requirements to ensure that the use of compensation creates incentives
for agents and brokers to enroll individuals in the plan that best fits
a beneficiary's health care needs. Further, such changes align with the
Biden-Harris Administration's commitment to promoting fair, open, and
competitive markets and ensuring beneficiaries can make fully informed
choices among a robust set of health insurance options.
e. Special Supplemental Benefits for the Chronically Ill (SSBCI)
We are finalizing regulatory changes that will help ensure that
SSBCI items and services offered by MA plans are appropriate and meet
applicable statutory and regulatory standards, including that the SSBCI
items and services are reasonably expected to improve or maintain the
health or overall function of chronically ill enrollees. First, we are
finalizing requirements that, by the date on which it submits its bid
to CMS, an MA organization must establish a bibliography of relevant
acceptable evidence that an item or service offered as SSBCI has a
reasonable expectation of improving or maintaining the health or
overall function of a chronically ill enrollee. Second, we are
clarifying in the regulation that an MA plan must follow its written
policies based on objective criteria for determining an enrollee's
eligibility for an SSBCI when making such eligibility determinations.
Third, we are requiring that the MA plan document both denials and
approvals of SSBCI eligibility. Additionally, we are codifying CMS's
authority to review and deny approval of an MA organization's bid if
the MA organization has not demonstrated, through relevant acceptable
evidence, that its proposed SSBCI has a reasonable expectation of
improving or maintaining the health or overall function of the
chronically ill enrollee. Finally, we are codifying CMS's authority to
review SSBCI offerings annually for compliance, considering the
evidence available at the time. We believe these revisions to Sec.
422.102(f) will better ensure that the benefits offered as SSBCI are
reasonably expected to improve or maintain the health or overall
function of the chronically ill enrollee while also guarding against
the use of MA rebate dollars for SSBCI that are not supported by
acceptable evidence.
The new SSBCI requirements regarding creation of a bibliography and
documentation of SSBCI eligibility for enrollees will apply to plans
beginning with the CY2025 bid process. The codification of other SSBCI
requirements regarding plans' obligation to follow written SSBCI
eligibility policies, and our authority to decline to accept a bid if
the MA organization has not demonstrated that its proposed SSBCI has a
reasonable expectation of improving or maintaining the health or
overall function of the chronically ill enrollee do not represent a
change in policy and CMS will continue in practice during the CY2025
bid process and in subsequent years.
In addition, we are finalizing new policies to protect
beneficiaries and improve transparency regarding SSBCI so that
beneficiaries are aware that SSBCI are only available to enrollees who
meet specific eligibility criteria. We are modifying and strengthening
the current requirements for the SSBCI disclaimer that MA organizations
offering SSBCI must use whenever SSBCI are mentioned. Specifically, we
are requiring that the SSBCI disclaimer list the relevant chronic
condition(s) the enrollee must have to be eligible for the SSBCI
offered by the MA organization. The MA organization must convey in its
SSBCI disclaimer that even if the enrollee has a listed chronic
condition, the enrollee may not receive the benefit because other
eligibility and coverage criteria also apply. We are also finalizing
specific font and reading pace parameters for the SSBCI disclaimer in
print, television, online, social media, radio, other voice-based ads,
and outdoor advertising (including billboards). Finally, we are
requiring that MA organizations include the SSBCI disclaimer in all
marketing and communications materials that mention SSBCI. We believe
that imposing these new SSBCI disclaimer requirements will help to
ensure that the marketing of and communication about these benefits is
not misleading or potentially confusing to enrollees who rely on these
materials to make enrollment decisions.
f. Mid-Year Enrollee Notification of Available Supplemental Benefits
In addition, over the past several years, the number of MA plans
offering supplemental benefits has increased. The benefits offered are
broader in scope and variety and we are seeing an increasing amount of
MA rebate dollars directed towards these benefits. At the same time,
plans have reported that enrollee utilization of many of these benefits
is low. To help ensure MA enrollees are fully aware of all available
supplemental benefits and to promote equitable access to care, we will
now require MA plans to notify enrollees mid-year of the unused
supplemental benefits available to them. The notice will list any
supplemental benefits not utilized by the enrollee during the first 6
months of the year (January 1 to June 30). Currently, MA plans are not
required to send any communication specific to an enrollee's usage of
supplemental benefits and CMS believes such a notice could be an
important part of a plan's overall care coordination efforts. As
finalized, this policy will educate enrollees on their access to
supplemental benefits to encourage greater utilization of these
benefits and ensure MA plans are better stewards of the rebate dollars
directed towards these benefits.
g. Annual Health Equity Analysis of Utilization Management Policies and
Procedures
We are finalizing regulatory changes to the composition and
responsibilities of the Utilization Management (UM) committee. These
policies will require that at least one member of the UM committee have
expertise in health equity. These policies will also require that the
UM committee conduct an annual health equity analysis of the use of
prior authorization at the plan-level. The analysis will examine the
impact of prior authorization on enrollees with one or more of the
following social risk factors (SRFs): (i) receipt of the low-income
subsidy or being dually eligible for Medicare and Medicaid (LIS/DE); or
(ii) having a disability. To enable a more comprehensive understanding
of the impact of prior authorization practices on enrollees with the
specified SRFs at the plan level, the analysis must compare metrics
related to the use of prior authorization for enrollees with the
specified SRFs to enrollees without the specified SRFs. Finally, the
policies will require MA organizations to make the results of the
analysis publicly available on their plan's website in a manner that is
easily accessible and without barriers.
h. Amendments to Part C and Part D Reporting Requirements
In this final rule, we are affirming our authority to collect
detailed information from MA organizations and Part D plan
[[Page 30451]]
sponsors under current regulations, in keeping with the Biden-Harris
administration's focus on improving transparency and data in MA and
Part D. We are revising Sec. Sec. 422.516(a)(2) and 423.514(a)(2) as
proposed (with a minor clarification in Sec. 422.516(a)) to be
consistent with the broad scope of the reporting requirements. This
will lay the groundwork for new program-wide data collections to be
established through the Paperwork Reduction Act (PRA) process, which
will provide advance notice to interested parties and be subject to
public comment. An example of increased data collection could be
service level data for all initial coverage decisions and plan level
appeals, such as decision rationales for items, services, or diagnosis
codes to have better line of sight on utilization management and prior
authorization practices, among many other issues.
i. Enhance Enrollees' Right To Appeal an MA Plan's Decision To
Terminate Coverage for Non-Hospital Provider Services
Beneficiaries enrolled in Traditional Medicare and MA plans have
the right to a fast-track appeal by an Independent Review Entity (IRE)
when their covered skilled nursing facility (SNF), home health, or
comprehensive outpatient rehabilitation facility (CORF) services are
being terminated. Currently, Quality Improvement Organizations (QIO)
act as the IRE and conduct these reviews. Under current regulations, MA
enrollees do not have the same access to QIO review of a fast-track
appeal as Traditional Medicare beneficiaries in connection with
terminations of these types of services. In this final rule, we are
finalizing proposals to: (1) require the QIO, instead of the MA plan,
to review untimely fast-track appeals of an MA plan's decision to
terminate services in an HHA, CORF, or SNF; and (2) fully eliminate the
current provision that requires the forfeiture of an enrollee's right
to appeal a termination of services to the QIO when the enrollee leaves
the CORF or SNF or ends HHA services. These will bring MA regulations
in line with the parallel reviews available to beneficiaries in
Traditional Medicare and expand the rights of MA beneficiaries to
access the fast-track appeals process in connection with terminations
of HHA, CORF, or SNF services.
j. Changes to an Approved Formulary--Including Substitutions of
Biosimilar Biological Products
Current regulations permit Part D sponsors to immediately remove
from their formularies a brand name drug and substitute its newly
released generic equivalent. Part D sponsors meeting the requirements
can provide notice of specific changes, including direct notice to
affected beneficiaries, after they take place; do not need to provide a
transition supply of the substituted drug; and can make these changes
at any time including in advance of the plan year. Consistent with
these requirements, we proposed in the proposed rule titled ``Medicare
Program; Contract Year 2024 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment
Provisions of the Affordable Care Act and Programs of All-Inclusive
Care for the Elderly; Health Information Technology Standards and
Implementation Specifications,'' which appeared in the December 27,
2022 Federal Register (hereinafter referred to as the December 2022
proposed rule), to permit Part D sponsors also to immediately
substitute: (i) a new interchangeable biological product for its
corresponding reference product; (ii) a new unbranded biological
product for its corresponding brand name biological product; and (iii)
a new authorized generic for its corresponding brand name equivalent.
Our proposed regulatory text in the December 2022 proposed rule did
not specify how Part D sponsors could treat substitution of biosimilar
biological products other than interchangeable biological products.
Under current policy, Part D sponsors have to obtain explicit approval
from CMS prior to making a midyear formulary change that removes a
reference product and replaces it with a biosimilar biological product
other than an interchangeable biological product. Further, if such a
change is approved, the Part D sponsor may apply the change only to
enrollees who begin therapy after the effective date of the change. In
other words, enrollees currently taking the reference product are able
to remain on the reference product until the end of the plan year
without having to obtain an exception. In response to comments received
on our initial proposal in the December 2022 proposed rule (discussed
in section III.P. of this final rule), and to increase access to
biosimilar biological products consistent with the Biden-Harris
Administration's commitment to competition as outlined in Executive
Order (E.O.) 14036: ``Promoting Competition in the American Economy,''
we proposed in the proposed rule titled ``Medicare Program; Contract
Year 2025 Policy and Technical Changes to the Medicare Advantage
Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan
Program, and Programs of All-Inclusive Care for the Elderly; Health
Information Technology Standards and Implementation Specifications,''
which appeared in the November 16, 2023 Federal Register (hereinafter
referred to as the November 2023 proposed rule) to add substitutions of
biosimilar biological products other than interchangeable biological
products to the type of formulary changes that apply to all enrollees
(including those already taking the reference product prior to the
effective date of the change) following a 30-day notice.
Having now considered comments (discussed in section III.P. of this
final rule) received on the proposals in both the December 2022 and
November 2023 proposed rules, we are finalizing regulations to permit
Part D sponsors that meet all requirements: (1) to immediately
substitute an interchangeable biological product for its reference
product, a new unbranded biological product for its corresponding brand
name biological product, and a new authorized generic for its brand
name equivalent; and (2) to substitute upon 30 days' notice any
biosimilar biological product for its reference product.
k. Increasing the Percentage of Dually Eligible Managed Care Enrollees
Who Receive Medicare and Medicaid Services From the Same Organization
We are finalizing, with some modifications, interconnected
proposals to: (a) replace the current quarterly special enrollment
period (SEP) with a one-time-per month SEP for dually eligible
individuals and others enrolled in the Part D low-income subsidy
program to elect a standalone PDP, (b) create a new integrated care SEP
to allow dually eligible individuals to elect an integrated D-SNP on a
monthly basis, (c) limit enrollment in certain D-SNPs to those
individuals who are also enrolled in an affiliated Medicaid managed
care organization (MCO), and (d) limit the number of D-SNP plan benefit
packages an MA organization can offer for full-benefit dually eligible
individuals in the same service area that it, its parent organization,
or any entity that shares a parent organization with the MA
organization offers an affiliated Medicaid MCO. This final rule will
increase the percentage of full-benefit dually eligible MA enrollees
who are in plans that--directly by the MA
[[Page 30452]]
organization or indirectly through the parent organization or a related
entity--are also contracted to cover Medicaid benefits, thereby
expanding access to integrated materials, unified appeal processes
across Medicare and Medicaid, and continued Medicare services during an
appeal. It will also reduce the number of MA plans overall that can
enroll dually eligible individuals outside the annual coordinated
election period, thereby reducing the number of plans deploying
aggressive marketing tactics toward dually eligible individuals
throughout the year.
l. For D-SNP PPOs, Limit Out-of-Network Cost Sharing
We are finalizing a limitation on out-of-network cost sharing for
D-SNP preferred provider organizations (PPOs) for specific services.
The final rule will reduce cost shifting to Medicaid, increase payments
to safety net providers, expand dually eligible enrollees' access to
providers, and protect dually eligible enrollees from unaffordable
costs.
m. Contracting Standards for Dual Eligible Special Needs Plan Look-
Alikes
Under existing regulations, CMS does not contract with and will not
renew the contract of a D-SNP look-alike--that is, an MA plan that is
not a SNP but in which dually eligible enrollees account for 80 percent
or more of total enrollment. We are finalizing a reduction to the D-SNP
look-alike threshold from 80 percent to 70 percent for plan year 2025
and 60 percent for plan year 2026 and subsequent years. This provision
will help address the continued proliferation of MA plans that are
serving high percentages of dually eligible individuals without meeting
the requirements to be a D-SNP.
n. Standardize the Medicare Advantage (MA) Risk Adjustment Data
Validation Appeals Process
We are finalizing regulatory language to address gaps and
operational constraints included in existing RADV appeal regulations.
Currently, if MA organizations appeal both medical record review
determinations and payment error calculations resulting from RADV
audits, both issues must be appealed and move through the appeals
process concurrently, which we foresee could result in inconsistent
appeal adjudications at different levels of appeal that impact
recalculations of the payment error. This has the potential to cause
burden, confuse MA organizations, and negatively impact the operations
and efficiency of CMS's appeals processes. This final rule will
standardize and simplify the RADV appeals process for CMS and MA
organizations, as well as address operational concerns at all three
levels of appeal. We are finalizing requirements that MA organizations
must exhaust all three levels of appeal for medical record review
determinations before beginning the payment error calculation appeals
process. This will ensure adjudication of medical record review
determinations are final before a recalculation of the payment error is
completed and subject to appeal. We are also finalizing several other
revisions to our regulatory appeals process to conform these changes to
our procedures.
Finally, we are clarifying and emphasizing our intent that if any
provision of this final rule is held to be invalid or unenforceable by
its terms, or as applied to any person or circumstance, or stayed
pending further agency action, it shall be severable from this final
rule and not affect the remainder thereof or the application of the
provision to other persons not similarly situated or to other,
dissimilar circumstances. Through this rule, we adopt provisions that
are intended to and will operate independently of each other, even if
each serves the same general purpose or policy goal. Where a provision
is necessarily dependent on another, the context generally makes that
clear (such as by a cross-reference to apply the same standards or
requirements).
BILLING CODE P
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BILLING CODE C
B. Background and Summary of the Final Rule
In this final rule, CMS addresses many of the remaining proposals
from the December 2022 proposed rule in addition to the proposals from
the November 2023 proposed rule. There are several proposals from the
December 2022 proposed rule that were not finalized. CMS may address
these proposals in a future final rule.
We received 3,463 timely pieces of correspondence containing one or
more comments on the November 2023 proposed rule. 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.
C. General Comments on the December 2022 Proposed Rule and the November
2023 Proposed Rule Proposed Rule
We received some overarching comments related to the December 2022
and the November 2023 proposed rules, which we summarize in the
following paragraphs:
Comment: A commenter expressed concern that CMS had not provided
sufficient time for plan sponsors to understand the impact of recently
finalized regulations, and the changes they have implemented, before
proposing more policies that build on these areas. They recommended
that in future years CMS allows time to measure and observe the impact
of policy changes on plan sponsors and their members prior to layering
new proposals.
Response: We appreciate the commenter's concern regarding the plans
having enough time to understand the impact of finalized regulations.
We will take their recommendation into consideration for future
rulemaking.
Comment: A commenter requested that CMS extend the comment period
by 60 days, through March 5, 2024, so they could effectively use the
extended period in planning and preparing a response.
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 November 3, 2023. We did not
extend the comment period because we believe the required 60 days
provided the public with adequate time to prepare and submit responses.
Comment: In response to CMS-4201-P, 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
[[Page 30457]]
parties to provide input on the provisions of the proposed rule.
D. Status of the Overpayment Proposal in the December 27, 2022,
Proposed Rule
Under the governing statute, any Medicare Advantage Organization
(MA organization) that ``has received an overpayment,'' 42 U.S.C.
1320a-7k(d)(1), must ``report and return the overpayment,'' 42 U.S.C.
1320a-7k(d)(1)(A), no later than ``60 days after the date on which the
overpayment was identified'' 42 U.S.C. 1320a-7k(d)(2)(A). CMS
implemented this statutory overpayment provision through a May 23,
2014, final rule titled ``Medicare Program; Contract Year 2015 Policy
and Technical Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Programs''. See 79 FR 29844. A group of MA
organizations challenged that rule's inclusion of instances where an MA
organization ``should have determined through the exercise of
reasonable diligence . . . that [it] has received an overpayment'' in
the regulation's definition of ``identified,'' 42 CFR 422.326(c). The
District Court for the District of Columbia held that this regulatory
provision was impermissible under the statute. See UnitedHealthcare
Ins. Co. v. Azar, 330 F. Supp. 3d 173, 191 (D.D.C. 2018), rev'd in part
on other grounds sub nom. UnitedHealthcare Ins. Co. v. Becerra, 16
F.4th 867 (D.C. Cir. 2021), cert. denied, 142 S. Ct. 2851 (U.S. June
21, 2022) (No. 21-1140). CMS views the District Court's ruling as
having invalidated the definition of ``identified'' set out in 42 CFR
422.326(c). However, MA organizations remain obligated to report and
return all overpayments that they have identified within the meaning of
the statute, 42 U.S.C. 1320a-7k(d)(2)(A). In the December 27, 2022
proposed rule titled ``Medicare Program; Contract Year 2024 Policy and
Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare
Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act
and Programs of All-Inclusive Care for the Elderly; Health Information
Technology Standards and Implementation Specifications'' (the December
2022 proposed rule), CMS proposed revisions to regulations primarily
governing Medicare Advantage (MA or Part C) and the Medicare
Prescription Drug Benefit (Part D) (87 FR 79452). CMS proposed in the
December 2022 proposed rule to remove the existing definition of
``identified'' in the Parts C and D overpayment regulations at 42 CFR
422.326 and 423.360 (as well as the corresponding Parts A and B
regulation) (see 87 FR 79559). Under the Parts C and D overpayment
proposal, an MA organization or Part D sponsor would have identified an
overpayment when it had actual knowledge of the existence of the
overpayment or acted in ``reckless disregard'' or ``deliberate
ignorance'' of the overpayment. CMS has received inquiries regarding
this proposal and want to be clear that it remains under consideration
and that CMS intends to issue a final rule to revise the definition of
``identified'' in the overpayment rules as soon as is reasonably
possible.
E. Information on Cyber Resiliency
In light of recent cybersecurity events impacting health care
operations nationally, we expect all payers to review and implement
HHS's voluntary HPH Cyber Performance Goals (CPGs). These CPGs are part
of HHS' broader cybersecurity strategy and designed to help health care
organizations strengthen cyber preparedness, improve cyber resiliency,
and ultimately protect patient health information and safety. We
welcome input on our approach via email at <a href="/cdn-cgi/l/email-protection#fd95958e9e849f988fbd95958ed39a928b"><span class="__cf_email__" data-cfemail="4820203b2b312a2d3a0820203b662f273e">[email protected]</span></a>.
II. Strengthening Current Medicare Advantage and Medicare Prescription
Drug Benefit Program Policies
A. Definition of Network-Based Plan (Sec. Sec. 422.2 and 422.114)
Private-fee-for-service (PFFS) plans were established by the
Balanced Budget Act of 1997 (Pub. L. 105-33) and were originally not
required to have networks. The Medicare Improvements for Patients and
Providers Act of 2008 (Pub. L. 110-275) (MIPPA) revised the PFFS
requirements to require that, beginning with contract year 2011, PFFS
plans have a network when operating in the same service area as two or
more network-based plans. For purposes of this requirement, section
1852(d)(5)(C) of the Act and Sec. 422.114(a)(3)(ii) define network-
based plans as a coordinated care plan (as described in section
1851(a)(2)(A) of the Act and Sec. 422.4(a)(1)(iii)), a network-based
MSA plan, and a section 1876 reasonable cost plan. The statutory and
regulatory definitions both specifically exclude an MA regional plan
that meets access requirements substantially through means other than
written contracts, per Sec. 422.112(a)(1)(ii).
When codifying this requirement in the final rule that appeared in
the Federal Register September 18, 2008, titled ``Medicare Program;
Revisions to the Medicare Advantage and Prescription Drug Benefit
Programs,'' (73 FR 54226), we included the definition of network-based
plan in the section of the regulations for PFFS plans, as the
definition was integral to the new requirement for PFFS plans (73 FR
54249). A network-based plan, however, has meaning in contexts other
than PFFS. To ensure that the definition is readily and more broadly
accessible for those seeking requirements related to network-based
plans, we proposed in the December 2022 proposed rule (87 FR 79569) to
move the definition of a network-based plan from Sec.
422.114(a)(3)(ii) to the definitions section in Sec. 422.2. Further,
we proposed that the PFFS provision at Sec. 422.114(a)(3)(ii) will
continue to include language specifying the network requirement.
This proposed change has no policy implications for other
provisions in part 422 in which the definition or description of
network plans plays a role, for example, the network adequacy
provisions at Sec. 422.116 and the plan contract crosswalk provisions
at Sec. 422.530. However, in specifying the network adequacy
requirements for the various plan types, Sec. 422.116(a)(1)(i)
references the current definition of a network-based plan at Sec.
422.2 even though the definition for network-based plan currently
remains at Sec. 422.114(a)(3)(ii) because CMS inadvertently finalized
what was intended to be a conforming change to Sec. 422.116(a)(1)(i)
\1\ before we finalized our proposal to move the definition of network-
based plan to Sec. 422.2. In this final rule, we are moving the
definition to Sec. 422.2, making the current cross reference at Sec.
422.116(a)(1)(i) correct. With respect to the regulation at Sec.
422.530(a)(5), that provision specifically addresses the types of plans
to which it applies and when CMS considers a crosswalk to be to a plan
of a different type and refers to network-based PFFS plans without
citing a specific definition. Therefore, we do not believe any
amendment to Sec. 422.530 is necessary in connection with moving the
definition of network-based plan to Sec. 422.2.
---------------------------------------------------------------------------
\1\ Medicare Program; Contract Year 2024 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription
Drug Benefit Program, Medicare Cost Plan Program, and Program of
All-Inclusive Care for the Elderly (88 FR 22120).
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We did not receive any public comments on our proposal to move the
definition and are finalizing the proposal for the reasons outlined in
the December 2022 proposed rule with slight modifications to reorganize
the regulation text for additional clarity.
[[Page 30458]]
B. Past Performance
We established at Sec. Sec. 422.502(b) and 423.503(b) that we may
deny an application submitted by MA organizations and Part D sponsors
that failed to comply with the requirements of a previous MA or Part D
contract, which we refer to as ``past performance.'' We proposed
several technical changes to the regulation text related to past
performance. These changes are intended to clarify the basis for
application denials due to past performance and to ensure that the
factors adequately account for financial difficulties that should
prevent an organization from receiving a new or expanded MA or Part D
contract.
One factor we consider regarding the past performance of MA
organizations and Part D sponsors is their record of imposition of
intermediate sanctions, because intermediate sanctions represent
significant non-compliance with MA or Part D contract requirements. To
clarify the basis for application denials due to intermediate
sanctions, at Sec. Sec. 422.502(b)(1)(i)(A) and 423.503(b)(1)(i)(A) we
proposed to change ``Was subject to the imposition of an intermediate
sanction'' to ``Was under an intermediate sanction.'' We proposed this
revision because MA organizations and Part D sponsors may have a
sanction imposed in one 12-month past performance review period and
effective for all or part of the subsequent 12-month review period. For
instance, CMS could impose a sanction in December 2022 that remains in
effect until September 2023. The sanction would be in effect for the
past performance review period that runs from March 2022 through
February 2023 (for Contract Year 2024 MA and Part D applications filed
in February 2023) and for the past performance review period that runs
from March 2023 through February 2024 (for Contract Year MA and Part D
applications filled in February 2024). Our proposal reflects our stated
intent to deny applications from MA organizations and Part D sponsors
when an active sanction existed during the relevant 12-month review
period when we previously codified that intermediate sanctions are a
basis for denial of an application from an MA organization or Part D
sponsor in ``Medicare and Medicaid Programs; Contract Year 2022 Policy
and Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan
Program, and Programs of All-Inclusive Care for the Elderly,'' which
appeared in the Federal Register on January 19, 2021 (86 FR 5864)
hereinafter referred to as the ``January 2021 final rule.'' When we
codified this requirement, a commenter requested that sanctions lifted
during the 12 months prior to the application denial be excluded from
past performance. We responded that ``The applying organization will
receive credit for resolving the non-compliance that warranted the
sanction during the next past performance review period, when,
presumably, the organization will not have an active sanction in place
at any time during the applicable 12-month review period'' (86 FR 6000
through 6001). Since an intermediate sanction may be active during
multiple consecutive review periods, our proposed language clarifies
that an organization's application may be denied as long as the
organization is under sanction, not just during the 12-month review
period when the sanction was imposed.
An additional factor we consider regarding the past performance of
MA organizations and Part D sponsors is involvement in bankruptcy
proceedings. At Sec. Sec. 422.502(b)(1)(i)(C) and 423.503(b)(1)(i)(C)
we proposed to incorporate federal bankruptcy as a basis for
application denials due to past performance and to conform the two
paragraphs by changing the text to ``Filed for or is currently in
federal or state bankruptcy proceedings'' from ``Filed for or is
currently in State bankruptcy proceedings,'' at Sec.
422.502(b)(1)(i)(C) and ``Filed for or is currently under state
bankruptcy proceedings'' at Sec. 423.503(b)(1)(i)(C). We codified
state bankruptcy as a basis for an application denial for the past
performance of an MA or Part D sponsor in ``Medicare Program; Contract
Year 2023 Policy and Technical Changes to the Medicare Advantage and
Medicare Prescription Drug Benefit Programs; Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency;
Additional Policy and Regulatory Revisions in Response to the COVID-19
Public Health Emergency,'' which appeared in the Federal Register on
May 9, 2022 (87 FR 27704). We codified that requirement because
bankruptcy may result in the closure of an organization's operations
and entering into a new or expanded contract with such an organization
is not in the best interest of the MA or Prescription Drug programs or
the beneficiaries they serve. This concern is equally applicable to
both federal and state bankruptcy, so we proposed to revise the
regulation so that applications from MA organizations or Part D
sponsors that have filed for or are in state or federal bankruptcy
proceedings may be denied on the basis of past performance. In
addition, we also proposed to correct two technical issues identified
since the final rule was published in May 2022. At Sec.
422.502(b)(1)(i)(B), we proposed to change the reference to the
requirement to maintain fiscally sound operations from Sec.
422.504(b)(14) to the correct reference at Sec. 422.504(a)(14). We
also proposed to remove the duplication of Sec. 422.502(b)(1)(i)(A)
and (B).
We invited public comment on this proposal and received several
comments in support of this proposal. We received no comments opposing
this proposal. Therefore, we are finalizing this proposal without
modification.
III. Enhancements to the Medicare Advantage and Medicare Prescription
Drug Benefit Programs
A. Effect of Change of Ownership Without Novation Agreement (Sec. Sec.
422.550 and 423.551)
In accordance with standards under sections 1857 and 1860 of the
Act, each Medicare Advantage (MA) organization and Part D sponsor is
required to have a contract with CMS to offer an MA or prescription
drug plan. Further, section 1857(e)(1) and 1860D-12(b)(3)(D) of the Act
authorizes additional contract terms consistent with the statute and
which the Secretary finds are necessary and appropriate. Pursuant to
this authority and at the outset of the Part C and Part D programs, we
implemented regulations at Sec. Sec. 422.550 and 423.551,
respectively. These regulations require the novation of an MA or Part D
contract in the event of a change of ownership involving an MA
organization or Part D sponsor (63 FR 35106 and 70 FR 4561).
Our current regulations at Sec. Sec. 422.550 and 423.551, as well
as our MA guidance under ``Chapter 12 of the Medicare Managed Care
Manual--Effect of Change of Ownership'' \2\ require that when a change
of ownership occurs, as defined in the regulation, advance notice must
be provided to CMS and the parties to the transaction must enter into a
written novation agreement that meets CMS's requirements. If a change
of ownership occurs and a novation agreement is not completed and the
entities fail to provide advance notification to CMS, the current
regulations at Sec. Sec. 422.550(d) and 423.551(e) indicate that the
existing contract is invalid. Furthermore, Sec. Sec. 422.550(d) and
423.551(e) provide that if the contract is not transferred to
[[Page 30459]]
the new owner through the novation agreement process, the new owner
must enter into a new contract with CMS after submission of an MA or
Part D application, if needed.
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\2\ <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf</a>.
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The current regulations do not fully address what happens when the
contract becomes ``invalid'' due to a change of ownership without a
novation agreement and/or advance notice to CMS, or in other words,
what happens to the existing CMS contract that was held by the
purchased entity. In that circumstance, CMS would still recognize the
original entity as the owner, even if the contract is now held by a
different entity. Therefore, we proposed to revise Sec. Sec.
422.550(d) and 423.551(e) to make it clear that in such a circumstance,
CMS may unilaterally terminate the affected contract in accordance with
Sec. Sec. 422.510(a)(4)(ix) and 423.509(a)(4)(ix), which establish
that failure to comply with the regulatory requirements contained in
part 422 or part 423 (if applicable) is a basis for CMS to unilaterally
terminate an MA or Part D contract.
In addition, we are strengthening CMS's enforcement authority
regarding this process through the proposed amendments to Sec. Sec.
422.550(d) and 423.551(e). Pursuant to CMS's authority under sections
1857 and 1860 of the Act, we proposed to amend the regulations at
Sec. Sec. 422.550(d) and 423.551(e) to outline the enforcement process
CMS will follow, which includes imposing applicable sanctions before
terminating a contract that has a change in ownership without a
novation agreement in accordance with CMS requirements.
In the interest of protecting and effectively managing the MA and
Part D programs, CMS, through either the novation agreement or the
application process, must ensure that MA organizations and Part D
Sponsors--through their respective legal entities--are eligible to
contract with CMS. If CMS has no chance to assess the qualifications of
the new entity and a change in ownership from one legal entity to
another occurs without CMS approval of a novation agreement, CMS's
ability to ensure the integrity of the MA and Part D programs and
ability to monitor a contract's activity under the new legal entity
would be compromised, thereby putting enrollees at risk. Thus, any
change in ownership from one legal entity to another requires CMS to
determine whether the new entity meets the statutory and regulatory
requirements for operating a contract under the MA or Part D programs.
We proposed to impose enrollment and marketing sanctions, as
outlined in Sec. Sec. 422.750(a)(1) and (a)(3) and 423.750(a)(1) and
(a)(3) on the affected contract. Such sanctions will remain in place
until CMS approves the change of ownership, (including execution of an
approved novation agreement) or the contract is terminated. We also
proposed to provide an opportunity for organizations to demonstrate
that the legal entity assuming ownership by way of a change of
ownership without a novation agreement meets the requirements set forth
by our regulations. This may be completed in the following ways:
<bullet> If the new owner does not participate in the same service
area as the affected contract, at the next available opportunity, it
must apply for and be conditionally approved for participation in the
MA or Part D program and, within 30 days of the conditional approval
(if not sooner), submit the documentation required under Sec. Sec.
422.550(c) or 423.551(d) for review and approval by CMS (note that
organizations may submit both the application and the documentation for
the change of ownership concurrently); or
<bullet> If the new owner currently participates in the MA or Part
D program and operates in the same service area as the affected
contract, it must, within 30 days of imposition of intermediate
sanctions, submit the documentation required under Sec. Sec.
422.550(c) or 423.551(d) for review and approval by CMS.
<bullet> If the new owner is not operating an MA or Part D contract
in the same service area and fails to apply for an MA or Part D
contract in the same service area at the next opportunity to apply, the
existing contract will be subject to termination in accordance with
Sec. Sec. 422.510(a)(4)(ix) or 423.509(a)(4)(x). Or, if the new owner
is operating in the same service area and fails to submit the required
documentation within 30 days of imposition of intermediate sanctions,
the existing contract will be subject to termination in accordance with
Sec. Sec. 422.510(a)(4)(ix) or 423.509(a)(4)(x).
Imposition of intermediate sanctions under Sec. Sec. 422.750(a)(1)
and (a)(3) and 423.750(a)(1) and (a)(3) triggers the past performance
rules applicable under Sec. Sec. 422.502(b)(1) or 423.503(b)(1).
Imposition of intermediate sanctions is a factor considered under CMS's
evaluation and determination of an organization's information from a
current or prior contract during the MA and Part D application process.
We solicited comments on these proposals. We appreciate
stakeholders' input on the proposed changes. We received the following
comments and have provided responses.
Comment: A commenter suggested that CMS not terminate a contract
when a change of ownership has occurred without notification to CMS,
but rather suggested CMS apply a substantial penalty or fine to the new
legal entity.
Response: In the interest of managing the MA and Part D programs
and protecting all enrollees, CMS must ensure, through the application
process, that MA organizations and Part D sponsors are eligible to
contract with CMS. This is existing policy that is also consistent with
statutory requirements under sections 1855 and 1857 and 1860D-12 of the
Act. The option to terminate the contract is a critical tool for CMS to
ensure that only qualified entities can contract with CMS to serve
enrollees. Imposing a substantial penalty or fine on the new owner
would not protect enrollees who are already in MA or Part D plans that
cannot adequately serve them. Moreover, under Sec. Sec. 422.550(d)(2)
and 423.551(e)(2), entities can cure any deficiencies within 30 days of
the imposition of intermediate sanctions. If an entity wishes to avoid
termination, it will have the opportunity to do so.
Comment: A commenter indicated that the proposed approach should
not apply to those changes of ownership that occur under the same
parent organization.
Response: In order to ensure the integrity of the MA and Part D
programs, CMS must review any change in ownership from one legal entity
to another, regardless of the relationship to the parent organization,
to confirm whether the new legal entity meets the regulatory
requirements for operating a contract in a given service area. As
previously indicated, our current regulations at Sec. Sec. 422.550 and
423.551, as well as our MA guidance under ``Chapter 12 of the Medicare
Managed Care Manual--Effect of Change of Ownership,'' \3\ require that
when a change of ownership occurs, as defined in the regulation,
advance notice must be provided to CMS and the parties to the
transaction must enter into a written novation agreement that meets
CMS's requirements.
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\3\ <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf</a>.
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Comment: A commenter expressed concern that CMS's application
timelines would negatively impact potential changes of ownership and
suggested instead that CMS not impose the proposed sanctions or that
CMS implement the sanctions for a period of
[[Page 30460]]
time that is less time than the application cycle.
Response: As previously noted, CMS must determine whether the new
legal entity involved in the change in ownership meets all CMS
requirements for operating a MA contract. CMS must also have the
opportunity to review and evaluate the new entity. When a change in
ownership from one legal entity to another occurs without CMS approval,
it compromises CMS's ability to ensure the integrity of the MA and Part
D programs and hampers CMS's ability to monitor a contract's activity
under the new legal entity, thereby putting enrollees at risk. The
ability of CMS to ensure that MA and Part D plans are adequate to cover
enrollees' health care needs outweighs concerns about potential
timeline issues.
We believe that our process provides a sufficient opportunity for
organizations to demonstrate, and CMS to determine, that they meet all
CMS's requirements as set forth in our regulations.
Comment: A commenter asked CMS to clarify the types of sanctions
that would be applicable when a change of ownership without novation
agreement occurs.
Response: CMS would impose enrollment and marketing sanctions,
which are outlined in our regulations at Sec. 422.750(a)(1) and (a)(3)
and Sec. 423.750(a)(1) and (a)(3). These sanctions will remain in
place until CMS approves the change of ownership (including execution
of an approved novation agreement) or the contract is terminated.
After considering the comments received and for the reasons
discussed in the proposed rule and our responses to comments, we are
finalizing our proposal to amend the regulations at Sec. Sec.
422.550(d) and 423.551(e) with technical corrections to the cross-
references proposed in Sec. 423.551(e). The cross-references in
paragraphs (e)(1) and (e)(2) have been corrected to reflect the
appropriate Part D sections in the final regulatory text in this final
rule. In addition, we are finalizing minor grammatical and
organizational revisions to the regulations to improve the readability
and clarity of the text.
B. Part D Global and Targeted Reopenings (Sec. Sec. 423.308 and
423.346)
1. Executive Summary
2. Provisions of the Proposed Regulation (Preamble)
Pursuant to the authority under section 1860D-15(f)(1)(B) of the
Act, the Secretary has the right to inspect and audit any books and
records of a Part D sponsor or MA organization that pertain to the
information regarding costs provided to the Secretary. We stated in the
January 2005 Part D final rule (70 FR 4194, 4316) that this right to
inspect and audit would not be meaningful, if upon finding mistakes
pursuant to such audits, the Secretary was not able to reopen final
payment determinations. Therefore, we established that CMS may rectify
any final payment determination issues in a reopening provision at
Sec. 423.346. In the January 2005 Part D final rule, we established
that a reopening was at CMS' discretion and could occur within the
following timeframes after the final payment determination was issued:
(1) 12 months for any reason, (2) 4 years for good cause, or (3) at any
time when there is fraud or similar fault. We operationalized this
provision by conducting program-wide reopenings (that is, global
reopenings) and, when necessary, reopenings targeted to specific
sponsors' contracts (that is, targeted reopenings).
In our December 2022 proposed rule, we proposed to codify the
definitions of ``global reopening'' and ``targeted reopening.'' We also
proposed to modify the timeframe CMS may perform a reopening for good
cause from within 4 years to within 6 years to align with the 6-year
overpayment look-back period described at Sec. 423.360(f) and to help
ensure that payment issues, including overpayments, can be rectified.
In addition, we proposed to codify the circumstances under which CMS
will notify the sponsor(s) of our intention to perform a final payment
determination reopening and the requirement for CMS to announce when it
has completed a reopening. We are finalizing our proposed changes
without modifications.
a. Summary of the Current Process
Under the current process and under Sec. 423.346, CMS performs a
reopening of a Part D payment reconciliation (that is, the initial
payment determination) as a result of revisions of prescription drug
event (PDE) data and/or direct and indirect remuneration (DIR) data due
to plan corrections, CMS system error corrections, post reconciliation
claims activity, and audit and other post reconciliation oversight
activity. Based on our experience in the Part D program and the PDE and
DIR data changes, we understood that this process would require CMS to
perform an initial payment determination reopening every contract year.
By calendar year 2013, CMS had reopened the 2006, 2007, and 2008
Part D payment reconciliations and, approximately 4 years after those
reopenings were completed, began subsequent Part D payment
reconciliation reopenings (consistent with the timing described at
Sec. 423.346(a)(2)). These reopenings included all Part D contracts
that met the following criteria: (1) were in effect during the contract
year being reopened, and (2) were either in effect at the time CMS
completed the reopening or, if nonrenewed or terminated pursuant to
Sec. 423.507 through Sec. 423.510 (collectively referred to as
``terminated'' for the purposes of these reopening provisions), had not
completed the final settlement process by the time CMS completed the
reopening. CMS has referred to this type of program-wide reopening as a
``global reopening.'' See, for example, HPMS memorandum, ``Reopening of
the 2006, 2007, and 2008 Part D Payment Reconciliations,'' April 2,
2012 (available at <a href="https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/part%20dreopeningannoucement_199.pdf">https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/part%20dreopeningannoucement_199.pdf</a>).
In addition to ``global reopenings,'' CMS has performed reopenings
as part of our process to correct certain issues. We would consider
performing a reopening to correct issues such as those associated with
CMS-identified problems with an internal CMS file that CMS used in a
Part D payment reconciliation, a coverage gap discount program
reconciliation, or a reopening; CMS corrections to a PDE edit that
impacted a specific plan type (for example, EGWPs); fraud or similar
fault of the Part D sponsor or any subcontractor of the Part D sponsor;
or a Part D sponsor's successful appeal of a reconciliation result.
See, for example, HPMS memorandum, ``Second reopening of the 2011 Final
Part D Payment Reconciliation,'' July 7, 2017 (available at <a href="https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf">https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf</a>) and HPMS memorandum, ``Reopening of the 2014 Final Part D
Reconciliation for Employer Group Waiver Plans (EGWPs),'' January 11,
2017 (available at <a href="https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/cy14%20egwp%20reopening%20announcement_01-11-17_404.pdf">https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/cy14%20egwp%20reopening%20announcement_01-11-17_404.pdf</a>). These reopenings are not program-wide, but rather are
targeted to the Part D contracts that are impacted by the particular
issue that needs to be addressed by CMS (that is, ``targeted
reopenings''). The targeted reopenings
[[Page 30461]]
are not performed on a predictable schedule, and instead are utilized
by CMS in the confines of the reopening timeframes described in the
current regulation at Sec. 423.346(a)(1) through (3).
Although CMS has in recent experience utilized targeted reopenings
as part of our process to correct certain issues, under the current
process, if a particular issue was program-wide, CMS would perform a
global reopening to address that issue. This global reopening could be
in addition to the scheduled global reopening that CMS has performed
approximately 4 years after the Part D payment reconciliation for that
year.
b. Aligning the Timing of Reopenings to the Overpayment Look-Back
Period
Pursuant to the current Sec. 423.346(a)(2), CMS may reopen and
revise an initial or reconsidered final payment determination within 4
years after the date of the notice of the initial or reconsidered
determination to the Part D sponsor, upon establishment of good cause
for reopening. As already discussed, this paragraph (a)(2) has set up
our current global reopening schedule. CMS performs the Part D payment
reconciliation (that is, the initial payment determination) for a
contract year, and then within 4 years of announcing the completion of
that reconciliation, CMS performs a global reopening on that contract
year.
This reopening process is used to recoup overpayments associated
with PDE and DIR related overpayments. Pursuant to the current
overpayment provision at Sec. 423.360(f), there is a ``look-back
period'' in which a Part D sponsor must report and return any
overpayment identified within the 6 most recent completed payment
years. As described at Sec. 423.360, an overpayment occurs after the
``applicable reconciliation.'' The applicable reconciliation refers to
the deadlines for submitting data for the Part D payment
reconciliation.
The following example illustrates the timing of the look-back
period. The deadlines for submitting data for the 2021 Part D payment
reconciliation were in June 2022. Prior to the deadlines for submitting
data for the 2021 Part D payment reconciliation, a PDE or DIR related
overpayment could not exist for 2021, and the latest year for which an
overpayment could occur was 2020. Therefore, prior to the deadlines for
submitting data for the 2021 Part D payment reconciliation, the look-
back period was 2015-2020.
This 6-year look-back period along with the 4-year reopening
timeframe described at Sec. 423.346(a)(2) results in overpayments
being reported for a contract year after CMS has performed the global
reopening for that contract year. Continuing the prior example, if a
Part D sponsor identified a PDE or DIR related overpayment associated
with contract year 2016 in May 2022 (that is, prior to the deadlines
for submitting data for the 2021 Part D payment reconciliation), that
overpayment falls within the 2015-2020 look-back period, and the
sponsor would have reported the overpayment to CMS mid-2022. However,
CMS completed the global reopening of the 2016 Part D payment
reconciliation in January 2022. This discrepancy between the 4-year
reopening timeframe and the 6-year overpayment look-back period results
in operational challenges for CMS, as discussed subsequently in this
section.
CMS had described a process for recouping PDE and DIR related
overpayments after the global reopening for the contract year at issue
had been completed. In the preamble to our final rule, ``Contract Year
2015 Policy and Technical Changes to the Medicare Advantage and the
Medicare Prescription Drug Benefit Programs,'' 79 FR 29843 (May 23,
2014) and in subsequent subregulatory guidance, we stated that
overpayments reported after the global reopening would be reported by
the sponsor with an auditable estimate and that CMS would recoup the
overpayment by either requesting a check or offsetting monthly
prospective payments for the amount provided in the auditable estimate.
See HPMS memorandum, ``Reopening Process and Updates to the PDE/DIR-
related Overpayment Reporting,'' April 6, 2018 (available at <a href="https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms%2520memo_reopen%2520and%2520overpay_04-06-2018_205.pdf">https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms%2520memo_reopen%2520and%2520overpay_04-06-2018_205.pdf</a>). For PDE
and DIR related overpayments, that approach presents challenges
primarily because sponsors have also reported PDE and DIR related
underpayments after the global reopening, which we do not have a method
to process other than the reopening process.
We have contemplated doing targeted reopenings to reconcile the
changes in PDE and DIR data, but that also presents operational
challenges. Targeted reopenings are conducted using the same payment
reconciliation system that conducts the Part D payment reconciliation,
the coverage gap discount program reconciliation, and the scheduled
global reopening. Given the volume of reporting after the scheduled
global reopening, it would be challenging to find the time and
resources to run multiple targeted reopenings.
Therefore, we proposed to modify Sec. 423.346(a)(2) such that CMS
may reopen and revise an initial or reconsidered final payment
determination after the 12-month period (described at Sec.
423.346(a)(1)), but within 6 years after the date of the notice of the
initial or reconsidered determination to the Part D sponsor, upon an
establishment of good cause for reopening. This change will allow CMS
to process all changes to PDE data and DIR data after the overpayment
look-back period for a contract year. Once a contract year falls
outside of the look-back period, we would perform the global reopening
for that contract year within the new 6-year timeframe, to recoup the
PDE and DIR related overpayments reported by sponsors for that contract
year (and process underpayments).
Prior to the new reopening timeframe going into effect, CMS will
provide operational guidance, as has been done for past regularly
scheduled global reopenings. The following example describes the timing
for performing the scheduled global reopening. The data for the 2020
Part D payment reconciliation was due in June 2021. That reconciliation
was completed in November 2021. Assuming a 4-year schedule, the DIR
data for the contract year 2020 global reopening would be due to CMS by
the end of July 2025, PDE data would be due in September 2025, and the
2020 global reopening would be completed the end of 2025 or early 2026.
However, the 2020 contract year remains in the overpayment look-back
period through June 2027. Under the 6-year timeframe, data for the 2020
global reopening would be due middle to late 2027, and the global
reopening would be completed late 2027 or early 2028, after the 6-year
look-back period.
Comment: We received a comment that supported our proposal and our
efforts to align the look-back period with the reopening timeframe.
Response: We thank the commenter for the support.
Comment: A commenter stated that while they do not have a
conceptual problem with expanding the timeframe for overpayments
associated with PDE record data and DIR data, they were concerned that
looking back more than 4 years would result in administrative costs
that exceed the value of the overpayment recoupment and recommended
that CMS withdraw the proposal unless an analysis demonstrates that the
expanded timeframe would result in overpayment
[[Page 30462]]
recoupments that exceed increased administrative costs.
Response: We are not, as the commenter states, expanding the
timeframe for overpayments. Under the existing requirements, described
at Sec. 423.360(f), sponsors are required to report and return any
overpayment identified within the 6 most recently completed payment
years. To clarify, we proposed to modify the reopening timeframe,
described at Sec. 423.346(a)(2), which does not have any impact on the
existing timeframe for reporting and returning overpayments.
We decline the commenter's recommendation to withdraw the proposal
unless an analysis demonstrates that the expanded timeframe would
result in overpayment recoupments that exceed increased administrative
costs. We do not believe that expanding the reopening timeframe from
within 4 years to within 6 years will result in any additional burden.
Additionally, the intent of the proposed change is not strictly focused
on overpayment recoupment, but rather, is a remedy to operational
challenges associated with the misalignment of the overpayment look-
back period and the reopening timeframe.
Comment: A commenter expressed concerns that DIR fees collected
from pharmacies challenge patient access and pharmacies' viability. The
commenter was concerned that extending the timeframe at Sec.
423.346(a)(2) from within 4 years to within 6 years without any
guardrails or protections in place for community pharmacies could lead
to instances in which sponsors take advantage of the process to further
claw back payments from pharmacies. To address this concern, the
commenter requested that CMS consider establishing protections to
prevent sponsors from recouping pharmacy overpayments.
Response: The intent of the proposed change is to remedy
operational challenges associated with the misalignment of the
reopening timeframe, described at Sec. 423.346(a)(2), and 6-year
overpayment look-back period, described at Sec. 423.360(f). The change
in the reopening timeframe from within 4 years to within 6 years does
not, in any way, change a sponsor's responsibility to report and return
overpayments within the 6-year look-back period. The impact of DIR fees
collected from pharmacies, pharmacy claw backs, and the recoupment of
overpayments from pharmacies are outside of the scope of the proposed
change.
After consideration of comments, we are finalizing the proposed
requirements related to aligning the timing of reopenings to the
overpayment look-back period without modification.
c. Standards for Performing Global and Targeted Reopenings
Consistent with the existing regulation at Sec. 423.346(a) and
(d), reopenings are at CMS's discretion. Under the current process, CMS
has used its discretion to perform a scheduled global reopening on a
Part D payment reconciliation within the timeframe specified at Sec.
423.346(a)(2). Given the significant time and costs associated with
conducting a reopening, it is expected that CMS will use its discretion
to conduct a targeted reopening (or an additional global reopening for
a program-wide issue) only under limited circumstances. We would
contemplate using our discretion to perform a targeted reopening (or an
additional global reopening) to correct or rectify a CMS file or CMS-
created PDE edit-type issue, revise a payment determination that was
based on PDE and/or DIR data that was submitted due to fraudulent
activity of the sponsor or the sponsor's contractor, or pursuant to a
successful appeal under Sec. 423.350. CMS will not use its discretion
to conduct a reopening to reconcile data that will be, or should have
been, reconciled in the scheduled global reopening, which would include
data from plan corrections, claims activity, and audits completed after
the deadline to submit data for the scheduled global reopening. In
addition, we are unlikely to conduct a reopening solely pursuant to a
sponsor's request.
We proposed that in order to be included in a reopening, a contract
must have been in effect (that is, receiving monthly prospective
payments and submitting PDE data for service dates in that year) for
the contract year being reopened. Intuitively, if a contract was not in
the reconciliation for a particular contract year, it cannot be
included in the reopening of that contract year's reconciliation. We
also proposed that if CMS has sent a nonrenewed or terminated contract
the ``Notice of final settlement,'' as described at Sec. 423.521(a),
by the time CMS completes the reopening, described at proposed Sec.
423.346(f), CMS will exclude that contract from that reopening. We
established the proposed exclusion based on the timing of the issuance
of the ``Notice of final settlement'' and completion of the reopening,
as opposed to the announcement of the reopening, due to the potentially
lengthy reopening process and the likelihood that the ``Notice of final
settlement'' will be issued prior to CMS completing the reopening
process. For example, under the current timeframe for the scheduled
global reopening, CMS has typically announced in the Spring and
completed the reopening in December of that year or January of the
next. During that timeframe, nonrenewed or terminated contracts will
likely go through the final settlement process, and as a result, will
not be able to complete the reopening process. This is because,
pursuant to Sec. 423.521, after the final settlement amount is
calculated and the ``Notice of final settlement'' is issued to the Part
D sponsor, CMS will no longer apply retroactive payment adjustments,
and there will be no adjustments applied to amounts used in the
calculation of the final settlement amount. We proposed to codify these
inclusion criteria at Sec. 423.346(g).
We also proposed at Sec. 423.346(g)(2) that, specifically for
targeted reopenings, CMS will identify which contracts or contract
types are to be included in the reopening. This is because targeted
Part D contract reopenings are impacted by the particular issue that
CMS needs to address. Therefore, in order to be included in a targeted
reopening, the Part D contract must have been impacted by the issue
that causes CMS to perform a reopening. To date, most targeted
reopenings have been performed because of a CMS-identified issue that
most sponsors were not aware of prior to CMS completing the targeted
reopening. Accordingly, sponsors would not be aware of this specific
inclusion criteria unless CMS informed the sponsors of the CMS-
identified issue and the sponsors' contracts were impacted. Therefore,
we proposed that CMS notify sponsors of this specific inclusion
criteria via the proposed reopening notification and/or the proposed
reopening completion announcement.
We did not receive comments on this section of the proposal and are
finalizing the proposed requirements related to the standards for
performing global and targeted reopenings without modification.
c. Reopening Notification and Reopening Completion Announcement
We proposed to add new paragraphs (e) and (f) at Sec. 423.346 to
codify our existing policy regarding reopening notifications and
reopening completion announcements, respectively. We proposed to codify
at Sec. 423.346(e) that CMS will notify the sponsor(s) that will be
included in the global or targeted reopening of its intention to
perform a global or a targeted reopening--that is, the sponsor would
receive prior notice
[[Page 30463]]
of the reopening--only when it is necessary for the sponsor(s) to
submit PDE data and/or DIR data prior to the reopening. In contrast, if
it is not necessary for the sponsor(s) to submit data prior to a
reopening, we proposed to notify the sponsor(s) only after CMS
completes the reopening. For example, if CMS identifies an error in an
internal CMS file that CMS used in the reconciliation or reopening, CMS
may correct that file and reopen (holding all other data originally
used constant), without the need for the sponsor(s) to submit PDE data
or DIR data. See, for example, HPMS memorandum, ``Second reopening of
the 2011 Final Part D Payment Reconciliation,'' July 7, 2017 (available
at <a href="https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf">https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf</a>).
We proposed at Sec. 423.346(e)(1) that CMS will include in the
notification the deadline for submitting PDE data and/or DIR data to be
included in the reopening. We also proposed that the deadline to submit
this data will be at least 90 calendar days after the date of the
notice.
In addition, we proposed at Sec. 423.346(e)(2) that the reopening
notification will include inclusion criteria in the form of a
description of the contract(s) (either specifically by contract number
or generally by contract-type or contract status) that will be included
in the reopening. This will put a sponsor on notice of whether its
contracts are included in the reopening.
We proposed to codify at Sec. 423.346(f) that CMS will announce
when it has completed a reopening, including in cases where CMS issued
a notice under proposed paragraph (e). This announcement is consistent
with existing policy and past practice. At paragraph (f)(1), we
proposed to specify that CMS will provide a description of the data
used in the reopening. As in past reopenings, this data could include
PDE data described by the processed date on the Prescription Drug
Front-end System (PDFS) response report, DIR data described by the date
received in the Health Plan Management System (HPMS), as well as any
other relevant data used to perform the reopening.
At paragraph Sec. 423.346(f)(2), we proposed to include in the
announcement a statement of the contract(s) (either specifically by
contract number or generally by contract-type or contract status) that
were included in the reopening, consistent with proposed Sec.
423.346(e)(2). We proposed to specify which contracts or contract types
are included in the reopening in both the announcement of the
completion of the reopening and the reopening notification because CMS'
proposal would not require issuing a reopening notification when it is
not necessary for the sponsor(s) to submit PDE data and/or DIR data
prior to the reopening.
At paragraph Sec. 423.346(f)(3), we proposed to include in the
announcement of the completion of the reopening the date by which
reports describing the reopening results will be available to the
sponsor. In addition, at paragraph (f)(4), we proposed to include the
date by which a sponsor must submit an appeal, pursuant to Sec.
423.350, if the sponsor disagrees with the reopening results.
We did not receive comments on this section of the proposal and are
finalizing the proposed requirements related to the reopening
notification and the announcement of the completion of the reopening
without modification.
d. Definitions of ``Global Reopening'' and ``Targeted Reopening''
We proposed to establish definitions of global reopening and
targeted reopening at Sec. 423.308. We proposed to define a global
reopening as a reopening under Sec. 423.346 in which CMS includes all
Part D sponsor contracts that meet the inclusion criteria described at
proposed Sec. 423.346(g). We proposed to define a targeted reopening
as a reopening under Sec. 423.346 in which CMS includes one or more
(but not all) Part D sponsor contracts that the meet the inclusion
criteria described at proposed Sec. 423.346(g). Finally, consistent
with these proposed definitions, we proposed to include the terms
``global reopening'' and ``targeted reopening'' at the beginning of
existing Sec. 423.346(a) to clarify that the reopenings that CMS may
perform under Sec. 423.346(a) may be global or targeted, as defined in
proposed Sec. 423.308.
Comment: We received a comment supporting our proposal to codify
the definitions of ``global reopening'' and ``targeted reopening.''
Response: We thank the commenter for the support.
We are finalizing the proposed definitions of ``global reopening''
and ``targeted reopening'' without modification.
The proposals described in this section of the final rule are
consistent with our current guidance and requirements. None of the
proposed changes would place additional requirements on Part D
sponsors, nor do the proposed changes to Sec. Sec. 423.308 and 423.346
place any additional burden on the Part D sponsors or their pharmacy
benefit managers (PBMs). Our proposed rule does not change the extent
to which Part D sponsors comply with the reopening process. Part D
sponsors' compliance with this reopening process is evidenced by each
Part D sponsor's signed attestation certifying the cost data (pursuant
to Sec. 423.505(k)(3) and (5)) that CMS uses in each of the
reopenings. In addition, the burden associated with the submission of
cost data is already approved under the OMB control numbers 0938-0982
(CMS-10174) and 0938-0964 (CMS-10141). Therefore, as our changes do not
result in additional burden, we have not included a discussion a of
this provision in the COI section of this rule. In addition, we are not
scoring this provision in the Regulatory Impact Analysis section
because industry is already complying with this process.
Based on the comments received and for the reasons outlined in the
proposed rule and our responses to comments, we are finalizing the
proposed changes to the reopening provision at Sec. 423.346 and the
related changes to Sec. 423.308 without modification.
C. Medicare Final Settlement Process and Final Settlement Appeals
Process for Organizations and Sponsors That Are Consolidating,
Nonrenewing, or Otherwise Terminating a Contract (Sec. Sec.
422.500(b), 422.528, 422.529, 423.501, 423.521, and 423.522)
In our December 2022 proposed rule, we proposed to amend 42 CFR
part 422, subpart K, and part 423, subpart K, to codify in regulation
our final settlement process for Medicare Advantage (MA) organizations
and Part D sponsors whose contracts with CMS have been consolidated
with another contract, nonrenewed, or otherwise terminated. As
described subsequently in this section, we are finalizing our proposed
changes.
Sections 1857(a) and 1860D-12(b)(1) of the Act require contracts
between CMS and the legal entity that offers, respectively, one or more
MA plans or Part D plans to beneficiaries. Sections 1857(e)(1) and
1860D-12(b)(3)(D)(i) of the Act provide that these contracts shall
contain terms and conditions that the Secretary may find necessary and
appropriate in addition to the applicable requirements and standards
set forth in the statute and the terms of payment set by the statute.
At Part 422, subpart K, and Part 423, subpart K, we have codified
provisions relating to the contracts between CMS and MA
[[Page 30464]]
organizations and Part D sponsors, including a description of minimum
terms that must be included in the contract; the duration of contracts;
minimum enrollment, reporting, and prompt payment requirements; and
provisions regarding the consolidation, nonrenewal, or termination of a
contract. In addition, these contracts require compliance with the
regulations governing the program, which are adopted as standards
implementing and interpreting the statutory requirement and as new
terms and conditions that are not inconsistent with, and necessary and
appropriate for administration of, the MA and Part D programs. This
final rule will add to those requirements.
CMS makes monthly payments to MA organizations and Part D sponsors
for each beneficiary enrolled in a plan for that month. If there is an
update to the payment amount that was paid for a month, CMS will make
an adjustment to a month's payment for a beneficiary in a later month.
For example, if a beneficiary's Medicaid eligibility for a month is
changed, CMS will recalculate the payment for that month after receipt
of the updated Medicaid eligibility status for a beneficiary and make a
retroactive payment update to that month's payment in a later month. In
addition, CMS reconciles a number of different payment amounts after
specified periods of time to permit plan data submission for a payment
year as described subsequently in this section. These reconciliations
typically take place the year after a payment year and result in
retroactive payment adjustments for the prior payment year.
Generally, MA organizations and Part D sponsors continue to offer
plans to beneficiaries from one year to the next. From time to time, a
contract between CMS and an MA organization or Part D sponsor may
consolidate, nonrenew, or otherwise terminate as a result of a plan-
initiated termination, mutual termination, or CMS-initiated
termination. Once a contract has consolidated, nonrenewed, or otherwise
terminated, the retroactive payment adjustments for a year that would
have been made had the contract remained in effect are not paid to the
MA organization or Part D sponsor but are held until after the
reconciliations for the final payment year are calculated as described
subsequently in this section. After such time, all retroactive
adjustments to payment for the consolidated, nonrenewed, or otherwise
terminated contract are totaled and either a net payment amount is made
to the MA organization or Part D sponsor, or an amount is charged to
the MA organization or Part D sponsor.\4\
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\4\ In the case of a bankrupt or liquidated plan that owes CMS
money, CMS still completes the reconciliations, final settlement
process, and issues a notice of final settlement, but refers the
plan to the Department of Justice to collect the money owed.
---------------------------------------------------------------------------
The process used to determine the final net payments for an MA
organization or Part D sponsor, provide notice of these amounts to the
MA organization or Part D sponsor, adjudicate disputes, and receive or
remit payment constitutes the final settlement process and begins at
least 18 months following the end of the last contract year in which
the contract was in effect.
Before CMS determines the final settlement amount owed to or from
an MA organization or Part D sponsor whose contract has consolidated,
nonrenewed, or otherwise terminated, CMS first completes a series of
reconciliation activities and calculates the related payment
adjustments for both consolidated, nonrenewed, or otherwise terminated
contracts as well as ongoing contracts: (1) MA risk adjustment
reconciliation (described in Sec. 422.310(g)), (2) Part D annual
reconciliation (described in Sec. Sec. 423.336 and 423.343), (3)
Coverage Gap Discount Program annual reconciliation (described in Sec.
423.2320), and (4) medical loss ratio (MLR) report submission and
remittance calculation (described in Sec. Sec. 422.2460, 422.2470.
423.2460, and 423.2470). Each individual reconciliation process allows
the MA organization or Part D sponsor to raise concerns about the
calculation of that particular reconciliation amount. Once each
reconciliation is complete and no errors have been identified, the MA
organization or Part D sponsor is presumed to accept that
reconciliation amount and it is not reconsidered during the final
settlement process.
For a given consolidated, nonrenewed, or otherwise terminated
contract, the final settlement amount is then calculated by summing the
applicable reconciliation amounts from these 4 processes and any
retroactive payment adjustments that accumulated after a contract has
consolidated, nonrenewed, or otherwise terminated. Note that these
reconciliation amounts represent all of the reconciliation amounts that
could be included in the final settlement calculation. Whether each
reconciliation amount will factor into the final settlement amount for
a particular contract will depend on the specifics of that contract.
For example, MA risk adjustment reconciliation would not be performed
for a prescription drug plan contract.
The final settlement adjustment period is the period of time
between when the contract consolidates, nonrenews, or otherwise
terminates and the date the MA organization or Part D sponsor is issued
a notice of the final settlement amount (also referred to herein as the
notice of final settlement). The length of the final settlement period
is determined by the time it takes for these reconciliations and
related payment adjustments to be completed. During this time, CMS
continues to calculate payment adjustments that reflect changes in
beneficiary status.\5\ CMS tracks all payment adjustments for a
terminated contract for use in the final settlement for that contract.
---------------------------------------------------------------------------
\5\ A beneficiary profile status change reflects a change in a
beneficiary's economic or health status, such as low-income status
for Part D, Medicaid status, Hospice or ESRD status.
---------------------------------------------------------------------------
The final settlement adjustment period ends on the date on the
notice of final settlement that CMS issues to MA organizations and Part
D sponsors. At the end of the final settlement adjustment period, CMS
will no longer make adjustments to reconciliations for a contract that
has consolidated, nonrenewed, or otherwise terminated, that would
otherwise have been made for a continuing contract. Once the notice of
final settlement has been issued, contracts that have been
consolidated, nonrenewed, or otherwise terminated will also be excluded
from reopenings, including program-wide reopenings, or reconciliations
for prior payment years when the contract was in effect. For example,
under Sec. 423.346, CMS has the authority to reopen and revise an
initial or reconsidered Part D final payment determination, including
the Part D reconciliation amounts included in the final settlement
amount, for a prior payment year. However, this reopening would not
apply to consolidated, nonrenewed, or otherwise terminated contracts
that have already received a notice of final settlement. This allows
CMS to largely close out any outstanding financial responsibilities
associated with consolidated, nonrenewed, or otherwise terminated
contracts, either on the part of CMS or on the part of the MA
organization or Part D sponsor.\6\
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\6\ Once a contract has completed final settlement, the MA
organization or Part D sponsor may still have financial
responsibilities under any other applicable statute or regulation.
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After determining the final settlement amount, CMS issues a notice
of final settlement to the MA organization or Part D sponsor for each
contract that has consolidated, nonrenewed, or otherwise
[[Page 30465]]
terminated, even if the final settlement amount is $0. The notice of
final settlement explains whether the MA organization or Part D sponsor
will receive or owe a final settlement amount and provides the
information needed to conduct the associated financial transaction. The
notice of final settlement includes the information CMS used to
calculate the final settlement amount, including the payment
adjustments that are reported on all monthly membership reports created
from the date the contract ended until the month the final settlement
amount was calculated. It also includes information on the process and
timeline for requesting a review concerning the accuracy of the final
settlement amount calculation.
In our proposed rule, we proposed to codify longstanding and
existing guidance pertaining to procedures for the final settlement
process described in the previous paragraphs. In addition, we proposed
to add a new appeals process for MA organizations or Part D sponsors
that disagree with the final settlement amount. MA organizations or
Part D sponsors may request an appeal of the final settlement amount
within 15 calendar days of the date of issuance of the notice of final
settlement. We believe that will provide organizations with sufficient
time to request an appeal, as MA organizations and Part D sponsors will
already be aware of the reconciliation amounts that factor into the
final settlement amount at the time the notice of final settlement is
issued, and requiring a request for appeal within this timeframe will
help ensure accurate and timely payment of final settlement amounts. If
an MA organization or Part D sponsor agrees with the final settlement
amount, no response will be necessary or required. Failure to request
appeal within 15 calendar days of the date of issuance of the notice of
final settlement will indicate acceptance of the final settlement
amount. We strongly encourage MA organizations and Part D sponsors to
communicate their acceptance to CMS to facilitate prompt payment.
Finally, in addition to codifying our longstanding and existing
review process under which MA organizations and Part D sponsors are
able to request a reconsideration of CMS's final settlement amount
calculation, we proposed to add two additional levels of appeal: (1) an
informal hearing conducted by the CMS Office of Hearings to review
CMS's initial determination, following a request for appeal of the
reconsideration of CMS's initial determination, and (2) a review by the
CMS Administrator of the hearing officer's determination if there is an
appeal of the hearing officer's determination. We believe that these
additional levels of appeal will afford MA organizations and Part D
sponsors sufficient opportunities to present objections to the
calculation of the final settlement amount. This additional process
will only be available to appeal CMS's final settlement amount
calculation and will not be used to review any prior payments or
reconciliation amounts. MA organizations and Part D sponsors seeking
review of prior payments or reconciliation amounts must do so during
the appropriate reconciliation process. CMS believes that these
additional levels of appeal will only be used in exceptional
circumstances given the narrow, mathematical nature of the final
settlement process. We anticipate that calculation errors will be rare,
and, if they do occur, that they will be quickly corrected to the
mutual satisfaction of both parties without a need for further review.
1. Process for MA Organizations and Part D Sponsors That Do Not Request
an Appeal
If an MA organization or Part D sponsor that owes a final
settlement amount to CMS does not request an appeal or provides an
optional response acknowledging and confirming the amount owed to CMS
within 15 calendar days of the date of the notice of final settlement,
the MA organization or Part D sponsor will be required to remit full
payment to CMS within 120 calendar days of receiving the notice of
final settlement. If an MA organization or Part D sponsor is owed money
and does not appeal the final settlement amount, CMS will remit payment
to the MA organization or Part D sponsor within 60 calendar days of the
date of issuance of the notice of final settlement. If an MA
organization or Part D sponsor does not owe or is not owed a final
settlement amount and does not request an appeal of the $0 final
settlement amount within 15 calendar days of the date of issuance of
the notice of final settlement, no further actions will occur. If an MA
organization or Part D sponsor does not appeal the final settlement
amount indicated in the notice of final settlement within 15 calendar
days of the issuance of the notice of final settlement, no subsequent
requests for appeal will be considered.
CMS did not receive comments on this section of the proposal.
2. Process for Appealing the Final Settlement Amount
In cases in which the MA organization or Part D sponsor submits a
request for an appeal of the final settlement amount within 15 calendar
days of the date of the notice of final settlement, the MA organization
or Part D sponsor will have to specify the calculation with which they
disagree and the reasons for their disagreement, as well as provide
evidence supporting the assertion that CMS's calculation of the final
settlement amount described in the notice of final settlement is
incorrect. MA organizations and Part D sponsors will not be able to
submit new reconciliation data or data that was submitted to CMS after
the final settlement notice was issued. CMS will not consider
information submitted for the purpose of retroactively adjusting a
prior reconciliation.
CMS will not accept requests for appeal that are submitted more
than 15 calendar days after the date of issuance of the notice of final
settlement. As noted previously, if an MA organization or Part D
sponsor does not reply within 15 calendar days, they will be deemed to
accept the final settlement amount indicated in the notice of final
settlement.
Once CMS has reconsidered the calculation of the final settlement
amount in light of the evidence provided by the MA organization or Part
D sponsor, CMS will provide written notice of the reconsideration
decision to the MA organization or Part D sponsor.
If the MA organization or Part D sponsor does not agree with CMS's
reconsideration decision, it will be able to request an informal
hearing from a CMS hearing officer. The MA organization or Part D
sponsor will have to submit a request for review within 15 calendar
days of the date of CMS's reconsideration decision. The MA organization
or Part D sponsor will be required to provide a copy of CMS's decision,
the findings or issues with which it disagrees, and the reasons why it
disagrees with CMS's decision. As the hearing officer's review will be
limited to a review of the existing record, the MA organization or Part
D sponsor will not be able to submit new evidence to support its
assertion that CMS's calculation of the final settlement amount
described in the notice of final settlement is incorrect in addition to
the evidence submitted during CMS's reconsideration.
The CMS hearing officer will provide written notice of the time and
place of the informal hearing at least 30 days before the scheduled
date and the CMS
[[Page 30466]]
reconsideration official will provide a copy of the record that was
before CMS when CMS made its reconsideration decision to the hearing
officer. The CMS hearing officer will not receive new testimony or
accept new evidence in addition to the evidence submitted by the MA
organization or Part D sponsor during CMS's reconsideration to support
its assertion that CMS's calculation of the final settlement amount is
incorrect.
Once the hearing officer has reviewed the record, the hearing
officer will send a written decision to the MA organization or Part D
sponsor explaining the basis of the hearing officer's decision. The
hearing officer's decision will be final and binding unless the
decision is reversed or modified by the CMS Administrator.
If the MA organization or Part D sponsor does not agree with the
hearing officer's decision, they will be able to request an additional,
final review from the CMS Administrator. The MA organization or Part D
sponsor will have to submit a request for review within 15 calendar
days of the date of the issuance of CMS hearing officer's decision. The
MA organization or Part D sponsor will be able to submit written
arguments to the Administrator for review but will not be able to
submit evidence in addition to the evidence submitted during CMS's
reconsideration.
The CMS Administrator will have the discretion to elect to review
the hearing officer's decision or decline to review the hearing
officer's decision within 30 calendar days of receiving the request for
review. If the Administrator declines to review the hearing officer's
decision, the hearing officer's decision will be final and binding. If
the Administrator elects to review the hearing officer's decision and
any written argument submitted by the MA organization or Part D
sponsor, the Administrator will review the information included in the
record of the hearing officer's decision and any written argument
submitted by the MA organization or Part D sponsor. Based on this
review, the Administrator may uphold, reverse, or modify the hearing
officer's decision. The Administrator's decision will be final and
binding and no other requests for review will be considered.
If an MA organization or Part D sponsor requests an appeal of the
final settlement amount, the financial transaction associated with the
issuance or payment of the final settlement amount will be stayed until
all appeals are exhausted. Once all levels of appeal are exhausted or
the MA organization or Part D sponsor fails to request further review
within the 15-day timeframe, CMS will communicate with the MA
organization or Part D sponsor to complete the financial transaction
associated with the issuance or payment of the final settlement amount,
as appropriate.
At all levels of review, the MA organization or Part D sponsor's
appeal will be limited to CMS's calculation of the final settlement
amount. CMS will not consider information submitted for the purposes of
retroactively adjusting a prior reconciliation. The MA organization or
Part D sponsor will bear the burden of proof by providing evidence
demonstrating that CMS's calculation of the final settlement amount is
incorrect.
CMS did not receive comments on this section of the proposal.
3. Proposed Amendments to Regulations (Sec. Sec. 422.500(b), 422.528,
422.529, 423.501, 423.521, and 423.522)
a. Definitions
We proposed to amend Sec. Sec. 422.500(b) and 423.501 to add
several definitions relevant for the codification of the final
settlement process.
First, we proposed to add a definition for the term final
settlement amount, which will be the final payment amount CMS
calculates and ultimately pays to the MA organization or Part D sponsor
or that an MA organization or Part D sponsor pays to CMS for a Medicare
Advantage or Part D contract that has terminated through consolidation,
nonrenewal, or other termination. The proposed definition provides that
CMS will calculate the final settlement amount by summing retroactive
payment adjustments for a contract that accumulate after that contract
consolidates nonrenews, or otherwise terminates, but before the
calculation of the final settlement amount, including the applicable
reconciliation amounts that have been completed as of the date the
notice of final settlement has been issued, without accounting for any
data submitted after the data submission deadlines for calculating the
reconciliation amounts. These reconciliation amounts used in this
process are: (1) MA risk adjustment reconciliation (described in Sec.
422.310), (2) Part D annual reconciliation (described in Sec. Sec.
423.336 and 423.343), (3) Coverage Gap Discount Program annual
reconciliation (described in Sec. 423.2320), and (4) MLR report
submission, including calculation of remittances (described in
Sec. Sec. 422.2470 and 423.2470).
We proposed to add a definition for the term final settlement
process as the process by which CMS will calculate the final settlement
amount for a Medicare Advantage or Part D contract that has been
consolidated, nonrenewed, or otherwise terminated, issue the final
settlement amount along with supporting documentation (described
previously in section XXX) in the notice of final settlement to the MA
organization or Part D sponsor, receive responses from MA organizations
and Part D sponsors requesting an appeal of the final settlement
amount, and take final actions to adjudicate an appeal (if requested)
and make payments to or receive final payments from MA organizations or
Part D sponsors. The proposed definition of final settlement process
will specify that the final settlement process begins after all
applicable reconciliations have been completed.
b. Final Settlement Process and Payment
We proposed to add Sec. Sec. 422.528 (for MA) and 423.521 (for
Part D) to our regulations to codify our process for notifying MA
organizations and Part D sponsors of the final settlement amount and
how payments to or from CMS will be made.
CMS will calculate and notify MA organizations and Part D sponsors
of the final settlement amount. At paragraph (a) of proposed Sec. Sec.
422.528 (for MA) and 423.521 (for Part D), we proposed to codify that
CMS will send a notice of final settlement to MA organizations and Part
D sponsors. Specifically, proposed paragraphs (a)(1), (a)(2), (a)(3),
and (a)(4) specify that the notice will contain at least the following
information: a final settlement amount; relevant banking and financial
mailing instructions for MA organizations and Part D sponsors that owe
CMS a final settlement amount; relevant CMS contact information; and a
description of the steps for the MA organizations or Part D sponsor to
request an appeal of the final settlement amount calculation.
At paragraph (b) of proposed Sec. Sec. 422.528 and 423.521, we
proposed to establish that MA organizations and Part D sponsors will
have 15 calendar days from the date of issuance of the notice to
request an appeal. We proposed at paragraphs (b)(1) and (b)(2) of these
new regulation sections that, if an MA organization or Part D sponsor
agrees with the final settlement amount, no response will be required,
and that, if an MA organization or Part D sponsor does not request an
appeal within 15 calendar days, CMS will not consider any subsequent
requests for appeal of the final settlement amount.
[[Page 30467]]
At paragraph (c) of proposed Sec. Sec. 422.528 and 423.521, we
proposed to codify the actions that will take place if an MA
organization or Part D sponsor does not appeal the final settlement
amount. Specifically, at paragraph (c)(1), we proposed to specify that,
if an MA organization or Part D sponsor owed a final settlement amount
from CMS does not appeal, CMS will remit payment within 60 calendar
days of the date of the issuance of the notice of final settlement. At
proposed paragraph (c)(2), we proposed that an MA organization or Part
D sponsor that owes money to CMS and does not appeal will have to remit
payment in full to CMS within 120 calendar days from issuance of the
notice of final settlement. We further specify that an MA organization
or Part D sponsor that does not appeal and does not remit payment
within 120 calendar days of issuance of the notice will be subject to
having any debts owed to CMS referred to the Department of the Treasury
for collection.\7\
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\7\ In the case of a bankrupt or liquidated plan that owes CMS
money, CMS still completes the reconciliations and the final
settlement process and issues a notice of final settlement, but
refers the plan to the Department of Justice to collect the money
owed.
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At paragraph (d) of proposed Sec. Sec. 422.529 (for MA) and
423.522 (for Part D), we proposed to establish the actions following
submission of a request for an appeal that will be taken.
At paragraph (e) of proposed Sec. Sec. 422.529 (for MA) and
423.522 (for Part D), we proposed that after the final settlement
amount is calculated and the notice of final settlement is issued to
the MA organization or Part D sponsor, CMS will no longer apply
retroactive payment adjustments for the terminated contract and there
will be no adjustments applied to the final settlement amount.
c. Requesting an Appeal of the Final Settlement Amount
We proposed to add Sec. Sec. 422.529 (for MA) and 423.522 (for
Part D) to our regulations to codify that an MA organization or Part D
sponsor will be able to request an appeal of the calculation of the
final settlement amount, and the process and requirements for making
such a request.
At paragraph (a) of proposed Sec. Sec. 422.529 and 423.522, we
proposed to establish requirements that will apply to MA organizations'
and Part D sponsors' requests for appeal of the final settlement amount
calculation.
Specifically, at proposed paragraph (a)(1), we proposed to
establish the process under which an MA organization or Part D sponsor
may request reconsideration of the final settlement amount. We proposed
to specify that the 15-calendar-day period for filing the request will
begin on the date the notice of final settlement from CMS is issued. We
also proposed that MA organizations and Part D sponsors will have to
include in their request: (1) the calculation with which they disagree
and (2) evidence supporting the assertion that the CMS calculation of
the final settlement amount is incorrect. We further specify that CMS
will not consider (for purposes of retroactively adjusting a prior
reconciliation), and MA organizations and Part D sponsors should not
submit, new reconciliation data or data that was submitted to CMS after
the final settlement notice was issued.
At proposed paragraph (a)(1)(iii), we proposed to establish that
the CMS reconsideration official will review the final settlement
calculation and evidence timely submitted by the MA organization or
Part D sponsor supporting the assertion that the CMS calculation of the
final settlement amount is incorrect. We further proposed to establish
that the CMS reconsideration official will inform the MA organization
or Part D sponsor of their decision on the reconsideration in writing
and that their decision will be final and binding unless the MA
organization or Part D sponsor requests a hearing officer review.
At proposed paragraph (a)(2), we proposed to establish that MA
organizations and Part D sponsors that disagree with CMS's
reconsideration decision under paragraph (a)(1) of this section will be
able to request an informal hearing by a CMS hearing officer.
Specifically, at paragraph (a)(2)(i), we establish that MA
organizations and Part D sponsors will have to submit their requests
for an informal hearing within 15 calendar days of the date of the
reconsideration decision. At paragraph (a)(2)(ii), we proposed that MA
organizations and Part D sponsors will have to include in their request
a copy of CMS's decision, the specific findings or issues with which
they disagree, and the reasons for which they disagree. At paragraph
(a)(2)(iii), we proposed to establish the informal hearing procedures.
Specifically, we proposed that the CMS hearing officer will provide
written notice of the time and place of the informal hearing at least
30 calendar days before the scheduled date and the CMS reconsideration
official will provide a copy of the record that was before CMS when CMS
made its reconsideration decision to the hearing officer. We further
proposed that the hearing will be conducted by a hearing officer who
will neither receive testimony nor accept new evidence. We finally
proposed that the hearing officer will be limited to the review of the
record that CMS had when making its decision. At paragraph (a)(2)(iv),
we proposed that the CMS hearing officer will send a written decision
to the MA organization or Part D sponsor explaining the basis for the
decision. At proposed paragraph (a)(2)(v), we proposed to establish
that the hearing officer's decision is final and binding, unless the
decision is reversed or modified by the CMS Administrator.
We further proposed to establish at paragraph (a)(3) that MA
organizations and Part D sponsors that disagree with the hearing
officer's decision will be able to request a review by the CMS
Administrator.
At paragraph (a)(3)(i), we establish that MA organizations and Part
D sponsors will have to submit their requests for a review by the
Administrator within 15 calendar days of the date of the decision and
may submit written arguments to the Administrator for review. At
paragraph (a)(3)(ii), we proposed that the CMS Administrator will have
the discretion to elect or decline to review the hearing officer's
decision within 30 calendar days of receiving the request for review.
We further proposed that if the Administrator declines to review the
hearing officer's decision, the hearing officer's decision will be
final and binding. We proposed at paragraph (a)(3)(iii) that, if the
Administrator elects to review the hearing officer's decision, the
Administrator will review the hearing officer's decision, as well as
any information included in the record of the hearing officer's
decision and any written arguments submitted by the MA organization or
Part D sponsor, and determine whether to uphold, reverse, or modify the
decision. At proposed paragraph (a)(3)(iv), we proposed that the
Administrator's determination will be final and binding.
At proposed paragraph (b), we proposed to establish the matters
subject to appeal and that an MA organization or Part D sponsor bears
the burden of proof. At proposed paragraph (b)(1), we proposed to
establish that the Part D sponsor's appeal will be limited to CMS's
calculation of the final settlement amount. We further proposed that
CMS will not consider information submitted for the purposes of
retroactively adjusting a prior reconciliation. At proposed paragraph
(b)(2), we proposed that the MA organization or Part D sponsor will
bear the burden of proof by providing evidence demonstrating that
[[Page 30468]]
CMS's calculation of the final settlement amount is incorrect.
At proposed paragraph (c), we proposed that if an MA organization
or Part D sponsor requests an appeal of the final settlement amount,
the financial transaction associated with the issuance or payment of
the final settlement amount will be stayed until all appeals are
exhausted. Once all levels of appeal are exhausted or the MA
organization or Part D sponsor fails to request further review within
the 15-calendar-day timeframe, CMS will communicate with the MA
organization or Part D sponsor to complete the financial transaction
associated with the issuance or payment of the final settlement amount,
as appropriate.
Proposed paragraph (d) clarifies that nothing in this section will
limit an MA organization or Part D sponsor's responsibility to comply
with any other applicable statute or regulation.
CMS did not receive comments on this section of the proposal.
Based on the lack of comments received, we are finalizing the
additions to Sec. Sec. 422.500(b), 422.528, 422.529, 423.501, 423.521,
and 423.522 to codify the final settlement process as proposed.
D. Civil Money Penalty Methodology (Sec. Sec. 422.760 and 423.760)
Sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act provide CMS
with the ability to impose Civil Money Penalties (CMPs) of up to
$25,000 per determination (determinations are those which could
otherwise support contract termination, pursuant to Sec. 422.509 or
Sec. 423.510), as adjusted annually under 45 CFR part 102, when the
deficiency on which the determination is based adversely affects or has
the substantial likelihood of adversely affecting an individual covered
under the organization's contract. Additionally, as specified in
Sec. Sec. 422.760(b)(2) and 423.760(b)(2), CMS is permitted to impose
CMPs of up to $25,000, as adjusted annually under 45 CFR part 102, for
each enrollee directly adversely affected or with a substantial
likelihood of being adversely affected by a deficiency. CMS has the
authority to issue a CMP up to the maximum amount permitted under
regulation, as adjusted annually \8\ for each affected enrollee or per
determination, however CMS does not necessarily apply the maximum
penalty amount authorized by the regulation in all instances because
the penalty amounts under the current CMP calculation methodology are
generally sufficient to encourage compliance with CMS rules.
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\8\ Per the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015, which amended the Federal Civil Penalties
Inflation Adjustment Act of 1990, the maximum monetary penalty
amounts applicable to Sec. Sec. 422.760(b), 423.760(b), and
460.46(a)(4) will be published annually in 45 CFR part 102. Pursuant
to Sec. 417.500(c), the amounts of civil money penalties that can
be imposed for Medicare Cost Plans are governed by section
1876(i)(6)(B) and (C) of the Act, not by the provisions in part 422.
Section 1876 of the Act solely references per determination
calculations for Medicare Cost Plans. Therefore, the maximum
monetary penalty amount applicable is the same as Sec.
422.760(b)(1).
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On December 15, 2016, CMS released on its website, the first public
CMP calculation methodology for calculating CMPs for MA organizations
and Part D sponsors starting with referrals received in 2017. On March
15, 2019, CMS released for comment a proposed CMP calculation
methodology on its website that revised some portions of the
methodology released in December 2016. Subsequently, on June 21, 2019,
CMS finalized the revised CMP calculation methodology document, made it
available on its website, and applied it to CMPs issued starting with
referrals received in contract year 2019 and beyond.\9\
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\9\ CMS Civil Money Penalty Calculation Methodology, Revised.
June 21, 2019. <a href="https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/Downloads/2019CMPMethodology06212019.pdf">https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/Downloads/2019CMPMethodology06212019.pdf</a>.
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On January 19, 2021, CMS published a final rule in the Federal
Register titled ``Medicare and Medicaid Programs; Contract Year 2022
Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare
Cost Plan Program, and Programs of All-Inclusive Care for the
Elderly.'' (86 FR 5864. <a href="https://www.federalregister.gov/documents/2021/01/19/2021-00538/medicare-and-medicaid-programs-contract-year-2022-policy-and-technical-changes-to-the-medicare">https://www.federalregister.gov/documents/2021/01/19/2021-00538/medicare-and-medicaid-programs-contract-year-2022-policy-and-technical-changes-to-the-medicare</a>. Hereinafter referred to
as the January 2019 final rule). In January 2019 final rule, CMS
finalized a policy, effective beginning in CY 2022, to update the
minimum CMP penalty amounts no more often than every three years. Under
this policy, CMS updates the CMP penalty amounts by including the
increases that would have applied if CMS had multiplied the minimum
penalty amounts by the cost-of-living multiplier released by the Office
of Management and Budget (OMB) \10\ each year during the preceding
three-year period. CMS also tracks the yearly accrual of the penalty
amounts and announces them on an annual basis.
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\10\ Per OMB Memoranda M-19-04, Implementation of Penalty
Inflation Adjustments for 2019, Pursuant to the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015,
published December 14, 2018, the cost-of-living adjustment
multiplier for 2019 is 1.02522.
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The intent of the minimum penalty increase policy was to establish
the CMP calculation methodology document in regulation to ensure
consistency and transparency with CMP penalty amounts. Although parts
of the regulations at Sec. Sec. 422.760(b)(3) and 423.760(b)(3) have
set standards for CMP penalties, in hindsight, CMS believes that other
parts of the regulations unnecessarily complicated CMS's approach to
calculating CMPs, which has the effect of limiting CMS's ability to
protect beneficiaries when CMS determines that an organization's non-
compliance warrants a CMP amount that is higher than would normally be
applied under the CMP methodology. In addition, although CMS always has
had the authority to impose up to the maximum authorized under sections
1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act, parts of the minimum
penalty increase policy may have inadvertently given the impression
that CMS was limiting its ability to take up to the maximum amount
permitted in statute and regulation. This was not the intent of the
rule. For example, there may be instances where an organization's non-
compliance has so substantially adversely impacted one or more
enrollees that CMS determines it is necessary to impose the maximum CMP
amount permitted under statute, or an amount that is higher than the
amount set forth in the CMP methodology guidance, to adequately address
the non-compliance. In order to clarify its ability to adequately
protect beneficiaries and encourage compliance, CMS proposed to modify
its rules pertaining to minimum penalty amounts.
Specifically, we proposed to remove Sec. Sec. 422.760(b)(3)(i)(E)
and 423.760(b)(3)(i)(E), respectively, which is the cost-of-living
multiplier. We also proposed to remove Sec. Sec. 422.760(b)(3)(ii)(A)-
(C) and 423.760(b)(3)(ii)(A)-(C), which describes how CMS calculates
and applies the minimum penalty amount increase. Lastly, we proposed to
revise and add new provisions Sec. Sec. 422.760(b)(3) and
423.760(b)(3), which explain that CMS will set standard minimum penalty
amounts and aggravating factor amounts for per determination and per
enrollee penalties in accordance with paragraphs (b)(1) and (b)(2) of
paragraph (b) on an annual basis, and restates that CMS has the
discretion to issue penalties up to the maximum amount under paragraphs
(b)(1) and (2) when CMS determines that an organization's
[[Page 30469]]
non-compliance warrants a penalty that is higher than would be applied
under the minimum penalty amounts set by CMS.
Once finalized, CMS would continue to follow our existing CMP
methodology and would only impose up to the maximum CMP amount in
instances where we determine non-compliance warrants a higher penalty.
This update will also be incorporated in forthcoming revised CMP
calculation methodology guidance.
Comment: A commenter suggested that removing the minimum penalty
amount increase policy would lead to inconsistencies, and a lack of
parity, in the CMP amounts we impose.
Response: We disagree with this comment. First, as discussed above
and in the proposed rule, CMS has always had the statutory authority to
impose up to the maximum CMP amount authorized under sections
1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act. Second, CMS would
continue to follow our existing CMP methodology, which allows for
parity, fairness, and consistency in calculating CMP amounts. We would
only impose up to the maximum CMP amount in instances where we
determine non-compliance warrants a higher penalty to adequately
address the non-compliance.
After consideration of the comments received, we are finalizing our
changes to Sec. Sec. 422.760(b)(3) and 423.760(b)(3) as proposed.
E. Part D Medication Therapy Management (MTM) Program (Sec.
423.153(d))
1. MTM Eligibility Criteria (Sec. 423.153(d)(2))
a. Background
Section 1860D-4(c)(2) of the Act requires all Part D sponsors to
have an MTM program designed to assure, with respect to targeted
beneficiaries, that covered Part D drugs are appropriately used to
optimize therapeutic outcomes through improved medication use and to
reduce the risk of adverse events, including adverse drug interactions.
Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to
target those Part D enrollees who have multiple chronic diseases, are
taking multiple Part D drugs, and are likely to meet a cost threshold
for covered Part D drugs established by the Secretary. Since January 1,
2022, Part D sponsors are also required by section 1860D-
4(c)(2)(A)(ii)(II) of the Act to target all at-risk beneficiaries
(ARBs) \11\ in their Part D drug management program (DMP) for MTM. CMS
has codified the MTM targeting criteria at Sec. 423.153(d)(2).
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\11\ Defined at Sec. 423.100.
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As discussed in the December 2022 proposed rule (87 FR 79452), MTM
eligibility rates have steadily declined over time to 8 percent in
2020. In conjunction with the decreasing eligibility rates, CMS has
observed near-universal convergence among Part D sponsors to the most
restrictive targeting criteria currently permitted under Sec.
423.153(d)(2). When CMS finalized the current regulatory requirements
for targeting criteria over 13 years ago, CMS elected to continue to
give plan sponsors significant flexibility in establishing their MTM
eligibility criteria. However, sponsors have used this flexibility to
adopt increasingly restrictive criteria that we believe are limiting
access to MTM for vulnerable, clinically high-risk beneficiaries.
We performed an extensive analysis to identify potential
disparities in MTM program eligibility and access, as discussed in the
December 2022 proposed rule, and we identified the high cost threshold
and increasingly restrictive plan criteria (e.g., targeting select core
chronic diseases or specific drugs) as the main drivers of the
eligibility gaps. The targeting criteria used by most plans now require
three or more chronic diseases, require eight or more Part D drugs, and
target a narrow and variable list of chronic diseases. And because of
variation in plans' criteria for MTM enrollment, enrollees with
equivalent patient profiles (for example, same chronic diseases, same
number of chronic diseases, same number of Part D drugs, and similar
estimated drug costs) may or may not be eligible for MTM depending on
the criteria their plan requires. Under the current MTM cost threshold
methodology at Sec. 423.153(d)(2)(i)(C), the annual cost threshold for
2024 is $5,330, which also significantly limits the number of
beneficiaries who are eligible to be targeted for MTM enrollment. In
the December 2022 proposed rule, CMS proposed changes to the MTM
program eligibility criteria to address these concerns and help ensure
beneficiaries with more complex drug regimens who would benefit most
from MTM services are eligible.
The proposed changes included:
<bullet> Requiring plan sponsors to target all core chronic
diseases identified by CMS, codifying the current nine core chronic
diseases in regulation,\12\ and adding HIV/AIDS for a total of 10 core
chronic diseases;
---------------------------------------------------------------------------
\12\ The current core chronic diseases are: diabetes*,
hypertension*, dyslipidemia*, chronic congestive heart failure*,
Alzheimer's disease, end stage renal disease (ESRD), respiratory
disease (including asthma*, chronic obstructive pulmonary disease
(COPD), and other chronic lung disorders), bone disease-arthritis
(osteoporosis, osteoarthritis, and rheumatoid arthritis), and mental
health (including depression, schizophrenia, bipolar disorder, and
other chronic/disabling mental health conditions). Enumerated in
statute (*).
---------------------------------------------------------------------------
<bullet> Lowering the maximum number of covered Part D drugs a
sponsor may require from eight to five drugs and requiring sponsors to
include all Part D maintenance drugs in their targeting criteria; and
<bullet> Revising the methodology for calculating the cost
threshold ($5,330 in 2024) to be commensurate with the average annual
cost of five generic drugs ($1,004 in 2020).
CMS received many comments on these proposed changes, including the
following general comments, and our responses follow.
Comment: Many commenters cited studies that demonstrated the value
of MTM services and supported changes to the targeting criteria to
optimize therapeutic outcomes, decrease adverse medication events, and
avoid unnecessary costs. Commenters also acknowledged that studies show
medication-related problems such as poor medication adherence and
polypharmacy are widespread among individuals taking multiple
prescription medications. These studies emphasized the value of MTM,
including maintaining the wellbeing of Part D enrollees, resolving
medication-related problems, improving health outcomes, empowering
patients, and coordinating care. Some commenters cited a study that
showed net cost savings (i.e., a reduction in total annual health
expenditures minus patient copayments, coinsurance, and deductible
amounts) divided by the incremental cost of providing MTM services
resulted in a return on investment of more than $12 in cost savings for
each $1 spent on MTM. Commenters added that when patients better
understand the goals of their medication therapy, medication adherence
may increase, and hospital readmissions can be reduced. One commenter
cited an analysis by a regional Medicare Advantage plan that found
enrollees who received a comprehensive medication review (CMR) had an
average savings of up to $4,000 in medical claims compared to members
who did not receive a CMR. The commenter stated that the analysis also
found that all enrollees who received a CMR had a 5 percent reduction
in total cost of care compared to those who were eligible for but did
not receive a CMR. Another commenter emphasized that access to
pharmacists'
[[Page 30470]]
clinical skills and increased opportunities for patient-centric care
through MTM could help offset shortages of physicians and nurses.
Lastly, commenters pointed out that MTM fosters collaboration between
clinicians, pharmacists, and patients who take multiple medications
and/or have multiple chronic diseases.
Several commenters agreed that the proposed changes to the MTM
eligibility criteria have the potential to significantly improve the
effectiveness of the MTM program and achieve equity for underserved
Medicare patients. One commenter noted studies highlighting that
individuals with multiple comorbid chronic conditions tend to have the
greatest disparities in accessing the care and treatments they need.
The commenter also cited studies that noted that the current MTM
eligibility criteria do not optimally target beneficiaries most at risk
of underuse or poor adherence and that eligibility is limited to
beneficiaries with high drug use and high spending, which
systematically excludes beneficiaries who could benefit from these
services. Another commenter suggested that rather than using MTM to
improve outcomes and reduce health care costs for Part D enrollees with
multiple chronic diseases, plan sponsors have instead used it as a cost
control tool by focusing on enrollees who take high-cost drugs.
Response: We thank the commenters for their support of the proposed
changes to the MTM eligibility criteria to better focus on
beneficiaries with more complex drug regimens who would benefit most
from MTM. We appreciate the citation of many studies reinforcing the
value of MTM and the need for more equitable access. Almost all of the
chronic diseases targeted for MTM identified at section 1860D-
4(c)(2)(A)(ii)(I)(aa) of the Act and in the current CMS MTM guidance
(See HPMS Memorandum Contract Year 2024 Part D Medication Therapy
Management Program Guidance and Submission Instructions dated April 21,
2023) are more prevalent among minorities and lower income populations.
As a result, we anticipate that these changes will increase eligibility
rates among those populations by promoting more equitable access to MTM
services and closing eligibility gaps.
Comment: Many commenters opposed the proposed eligibility criteria
changes partially or in whole, and several expressed significant
concerns about the costs and resource burden associated with
implementing such a large-scale expansion of the MTM program. Some of
these commenters opined that the proposed changes would increase Part D
premiums and cost sharing for all enrollees. One commenter estimated
that the proposed changes would more than double MTM administrative
costs. Some commenters stated that the proposed MTM expansion would be
cost-prohibitive without any documented benefit to enrollees. Another
commenter suggested finalizing the proposed changes would result in a
loss of rebate dollars that would otherwise be used to improve
affordability or provide supplemental benefits that support enrollee
well-being. Several commenters referenced competing priorities between
the proposed MTM expansion and implementation of the Inflation
Reduction Act of 2022 (IRA). A few commenters emphasized that many of
the same resources needed to support IRA implementation for 2024 and
beyond would also be needed to implement changes to the MTM program,
and finalizing the MTM changes as proposed would put successful
implementation of both the IRA and the MTM expansion at risk.
Response: We acknowledge the concerns raised regarding the cost and
burden of the proposed expansion of MTM. In light of these comments, we
are finalizing the proposed changes with modifications that will result
in a more moderate program size increase and less burden and lower
costs than initially estimated in our December 2022 proposed rule. We
provide more details about the specific modifications in the responses
to comments later in this section of the preamble.
Comment: Several commenters who were opposed to the proposed
changes raised concerns about a decline in MTM program quality that
could result from a significant increase in program size, which would
dilute plans' ability to target MTM interventions to those
beneficiaries who would most benefit from them. Other commenters were
concerned that MTM providers may ``water down'' their approach due to
the increased volume resulting in lower-value programs that satisfy the
MTM requirements but are much less likely to improve health outcomes
due to shorter consultations or fewer interventions. Another commenter
stated that the pool of MTM vendors has decreased while costs have
increased due to the loss of competition, hindering the ability of plan
sponsors to administer quality MTM programs.
Response: We understand the commenters' concerns about the impact
on the quality of the MTM programs and services delivered due to a
large increase in program size as proposed. CMS is finalizing the
proposed changes with modifications that will ensure a smaller increase
in program size and promote the administration of high-value MTM
programs. Currently, due to the increasing cost threshold and
variations in the targeting criteria adopted by sponsors, Part D
enrollees with more complex drug regimens who would benefit most from
MTM services are often not eligible. In addition, enrollees with
equivalent patient profiles (for example, with the same chronic
diseases and taking the same Part D drugs) may or may not be eligible
for MTM depending on the criteria their plan requires. The eligibility
criteria changes we are finalizing in this rule aim to address the key
drivers of the eligibility gaps, discussed in detail in the December
2022 proposed rule, while maintaining a reasonable program size and the
ability of plans to administer effective MTM services.
MTM is a patient-centric and comprehensive approach to improve
medication use, reduce the risk of adverse events, and improve
medication adherence. To continue to provide quality MTM services to an
expanded population and better manage resources, we remind sponsors
that the delivery of MTM may be tailored to meet each enrollee's needs.
For example, the length of the CMR consultation or number of follow-up
interventions needed following targeted medication reviews (TMRs) may
vary between MTM enrollees with more complex drug regimens and those
who are stable on their medication regimens as long as the minimum
level of MTM services is met as specified in Sec. 423.153(d)(1)(vii).
Sponsors may also leverage effective MTM programs to improve several
measures in the Medicare Part D Star Ratings and display page such as
medication adherence, polypharmacy, and gaps in therapy. Lastly, while
we acknowledge commenters' concerns regarding the availability of MTM
vendors, we note that Part D plan sponsors may use in-house resources,
one or more external vendors, or a combination of both, to administer
their MTM programs.
Comment: Some commenters stated that a large increase in the MTM
enrollee population would require significant resources and that there
would be limited time to hire and train additional staff, implement the
necessary processes, and upgrade clinical and administrative
infrastructures. Commenters estimated needing to double or triple their
staffing to accommodate MTM enrollment increases of up to 60 percent in
one year. A commenter stated that many plan sponsors that utilize local
[[Page 30471]]
community pharmacists to furnish MTM services would not be able to meet
the higher demand in time, or that there would be pressure to use call
centers, possibly employing customer service representatives without
clinical training, which may lead to lower quality of care or member
experience. Other commenters were concerned that rapid expansion of the
MTM program size would exacerbate the existing pharmacist workforce
shortage or would not be feasible given the expanded scope of pharmacy
practice. One commenter also suggested that MTM vendors would drop
smaller clients to service larger ones as a result of not being able to
hire enough pharmacists to accommodate the increase in MTM enrollees.
Response: We are optimistic that the increase in demand for MTM
services will incentivize plan sponsors to strengthen their hiring
efforts. It is not clear what methodology the commenters used to
estimate staffing needed to accommodate certain MTM program size
increases. However, CMS plans to finalize our proposed changes to the
MTM eligibility criteria with the modifications described later in this
section of the preamble. CMS believes that this scaled back MTM
expansion may alleviate a portion of the staffing concerns raised by
commenters.
Comment: A few commenters, particularly commenters representing
dual eligible special needs plans (D-SNPs), were concerned that due to
the higher prevalence of chronic diseases in their enrollees, they will
be disproportionately impacted by the changes in the MTM eligibility
criteria and estimated that the majority of their plan enrollment would
be eligible for the MTM program. They asserted that it would not be
feasible to perform outreach or offer the MTM services to all their
enrollees.
A few other commenters stated that when combined the proposed
changes would result in MTM enrollment increases that exceeded the
estimated program-wide size (23 percent of Part D enrollees) in the
proposed rule (for example, increasing enrollment to 60 percent of
their Medicare population, by five times, etc.), depending on the
population or type of plan. Commenters asserted that such an increase
in MTM enrollment would increase administrative costs, resulting in
increased premiums, and could limit the offering of Part D plans.
Response: We acknowledge that some Part D contracts may have actual
MTM enrollment rates above or below the average rate for the program as
a whole because they have higher or lower enrollments of beneficiaries
with the chronic diseases targeted for MTM under the changes to the MTM
requirements we are finalizing in this rule. This is also true under
the current MTM requirements, and there is no evidence that higher than
average MTM enrollment has increased administrative costs and thus
premiums to the point of limiting Part D plans' offerings, including
MA-PDs that are D-SNPs. However, based in part on considerations about
how the estimated program size under the proposals in the December 2022
proposed rule would impact MTM enrollment differently across contracts
and increase the MTM enrollment volume to greater levels than some
sponsors could feasibly handle, we are finalizing the proposed changes
to the MTM eligibility criteria with modifications that we expect to
decrease estimated program size relative to the proposed rule.
Comment: Some commenters expressed concerns that Part D MTM
programs overlap with other programs such as disease management or care
management (including post-discharge medication reconciliation;
hypertension, diabetes, and dyslipidemia case management; and annual
wellness visits) and may cause enrollee confusion, frustration, or
complaints due to multiple outreach attempts, beneficiaries not
answering calls from the plan sponsor, or beneficiaries requesting to
be placed on the plan's do-not-call list. A commenter discussed that
MTM-like interventions occur outside of the Part D MTM program and
achieve improvements to health outcomes, and many MTM services, such as
drug-drug interaction (DDI) analyses, could be automated (outside of
CMRs) without beneficiary participation.
Response: We believe that Part D MTM programs complement efforts
under other programs rather than overlap with them. MTM programs--which
use a comprehensive approach to improve medication use, reduce the risk
of adverse events, and improve medication adherence for beneficiaries
at increased risk of medication-related problems due to having multiple
chronic diseases and taking multiple Part D drugs--are distinct from
disease-specific disease management programs. We acknowledge that
recommendations arising from MTM services may result in referrals to
other specialized, disease-specific programs that may not be a part of
the Part D MTM program. To reduce the risk of beneficiary confusion and
frustration, plan sponsors should be mindful of the timing and
frequency of enrollee outreach for MTM relative to complementary
disease management programs.
In addition, we remind Part D sponsors that while a CMR must be an
interactive consultation with the beneficiary and the pharmacist or
other qualified provider, other aspects of MTM may be automated as
described in CMS MTM guidance (See HPMS Memorandum Correction to
Contract Year 2024 Part D Medication Therapy Management Program
Guidance and Submission Instructions dated April 21, 2023).\13\ As
described in this guidance, sponsors are required to perform TMRs for
all beneficiaries enrolled in their MTM program with follow-up
interventions when necessary. Part D sponsors must assess the findings
of these reviews to determine if a follow-up intervention is necessary
for the beneficiary and/or their prescriber. These assessments could be
person-to-person or system generated.
---------------------------------------------------------------------------
\13\ <a href="https://www.cms.gov/files/document/memo-contract-year-2022-medication-therapy-management-mtm-program-submission-v-083121.pdf">https://www.cms.gov/files/document/memo-contract-year-2022-medication-therapy-management-mtm-program-submission-v-083121.pdf</a>.
---------------------------------------------------------------------------
Comment: Many commenters stated that the proposed eligibility
criteria changes would result in a substantive update to the Part D
Star Rating MTM Program CMR Completion Rate measure (MTM Star Rating
Measure) due to the program size expansion and impacts to resources.
Therefore, the commenters urged CMS to move the MTM Star Rating Measure
to a display measure for at least 2 years to adjust to the new levels.
A few commenters suggested specification changes to the MTM Star Rating
Measure. Other commenters suggested that expanding the program size in
such a short timeframe would incentivize plans to prioritize quantity
over quality of care.
Response: Per Sec. Sec. 422.164(d)(2) and 423.184(d)(2),
substantively updated Star Ratings measures are moved to the display
page for at least 2 years after the substantive update is adopted.\14\
Refer to sections VII.B.2 and VII.D of this final rule, where we
address the proposal to modify the Medication Therapy Management (MTM)
Program Completion Rate for Comprehensive Medication Review (CMR)
measure and discuss the weight of newly modified measures,
respectively. The MTM Program Completion Rate for CMR measure is being
updated in this rule to align with the revised targeting criteria
finalized at Sec. 423.153(d); the updated
[[Page 30472]]
measure will move to the display page entirely for the 2025 and 2026
measurement years and will return as a new measure to the Star Ratings
program no earlier than the 2027 measurement year for the 2029 Star
Ratings. We will share the additional suggestions for specification
changes with the Pharmacy Quality Alliance (PQA), the measure steward.
---------------------------------------------------------------------------
\14\ Information for measures on the display page are available
online at: <a href="https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data">https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data</a>. Please download the zipped file ``2024 Display
Measures'' for display measure scores, data and explanatory
technical notes.
---------------------------------------------------------------------------
Comment: A few commenters suggested that MTM program expansion
could be limited to those beneficiaries who are newly eligible for the
Part D MTM program or have recently added, removed, or changed drugs.
One commenter also asserted that the newly eligible would see the
greatest benefit from MTM services, resulting in improved health
outcomes and reduced overall costs. This commenter also stated that the
value of the CMR declines for enrollees with no changes in health
status and that broadening the targeted disease states would increase
burden and administrative costs with diminishing benefits for both plan
sponsors and enrollees. Another commenter suggested that enrollees who
have had a CMR in the last 12 months should requalify for MTM only with
the addition of a new drug to their drug regimen and/or a new disease
state.
Response: Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D
sponsors to target those Part D enrollees who have multiple chronic
diseases, are taking multiple Part D drugs, and are likely to meet a
cost threshold for covered Part D drugs established by the Secretary.
Since January 1, 2022, Part D sponsors are also required by section
1860D-4(c)(2)(A)(ii)(II) of the Act to target all at-risk beneficiaries
(ARBs) in their Part D drug management program (DMP) for MTM.
Furthermore, for 2013 and subsequent plan years, the Affordable Care
Act (ACA) amended the Act by adding section 1860D-4(c)(2)(C)(i), which
requires all Part D sponsors to offer all enrollees targeted for MTM an
annual CMR. These requirements are codified in the regulations at Sec.
423.153(d)(1) and (2).
We acknowledge that the needs and goals of newly eligible MTM
enrollees may be different from those who have already received MTM
services and continue to be eligible for MTM. However, for both
populations of beneficiaries, annual CMRs may be an opportunity to
understand new information about the beneficiary, including but not
limited to if the beneficiary's goals have changed, if they have new or
unresolved medication therapy problems, or if they have any social risk
factors that may be affecting their medication use that can only be
assessed through an interactive consultation.
Comment: A few commenters suggested that CMS should engage the
industry to determine alternative options for better targeting or
increased CMR participation rather than finalize the proposed
modifications to the eligibility criteria. A commenter stated that many
MTM enrollees choose not to participate, and to be more consistent with
the Administration's health equity goals, CMS should engage those
already eligible, who have the greatest need. Another commenter
suggested changes to the Medicare Plan Finder (MPF) that would
highlight the value added by specific plans' MTM programs and provide
guidance to beneficiaries on why selecting plans based on MTM program
specifics may be beneficial. The commenter cited recent precedent in
2019 to 2020 when CMS engaged plans, PBMs, developers, and patient
groups on how to improve the MPF, resulting in major improvements
supported by a wide range of interested parties. A few commenters also
suggested that CMS could engage plans and PBMs to assess MTM and
alternative programs to determine whether MTM eligibility criteria
expansion is warranted, whether to include cancer as a core chronic
condition, the effect of including any additional core chronic diseases
on specialized MTM provider training and program size, and whether MTM
services are an effective mechanism for management of certain diseases
(for example, those with high use of Part B drugs or frequently
changing medication regimens).
Response: Through this rulemaking, we have engaged numerous
interested parties to solicit feedback on implementing MTM eligibility
criteria changes. We have also engaged in our own analysis. As
discussed in the December 2022 proposed rule, we conducted an extensive
data analysis that identified several issues with the current MTM
targeting criteria, and we proposed specific regulatory changes in an
effort to increase MTM eligibility rates, reduce variability of MTM
eligibility criteria across plans, and address disparities to ensure
that those who would benefit the most from MTM services have access.
Taken together, we believed that the proposed changes to the MTM
program targeting criteria would balance eligibility and program size
while allowing us to address specific problems identified in the Part D
MTM program, including marked variability and inequitable beneficiary
access to MTM services.
As discussed later in this preamble, we are finalizing the
proposals with modifications in response to public comments we
received. However, we are committed to addressing the main drivers of
the inequities in MTM program eligibility discussed in the December
2022 proposed rule. Accordingly, we will continue to request input from
interested parties on improving aspects of the MTM program in the
future, including enhanced targeting and better engagement with MTM
enrollees. We will also look for opportunities to improve the
information available for beneficiaries on CMS' websites about Part D
MTM programs.
Comment: A few commenters suggested that additional analyses are
needed to assess the effectiveness of MTM programs, optimize current
MTM programs, and review alternative medication management methods
already being used by plan sponsors and their contracted providers. One
commenter asserted that CMS would be unable to determine which part of
the eligibility criteria expansion worked or failed as they believed
the metrics for MTM success to be ill-defined. The commenter also asked
if CMS has conducted any evaluation of the requirement to target DMP
enrollees for MTM enrollment. Another commenter encouraged CMS to find
a new approach to measuring MTM success in the future through metrics
that assess the quality of MTM services provided and not just the
overall volume of services provided. Another commenter noted the
documented successes of MTM in a number of situations but recognized
room for improvement in the program. The commenter stated that in many
cases, MTM benefits patients directly and can decrease the burden of
healthcare costs, but that results are not consistent across the board,
suggesting a need to increase the overall quality of MTM evaluations.
The commenter concurred with researchers in recommending that future
studies should consider increasing study size and incorporating
multiple sites to bolster the reliability of the results and suggested
that CMS could use its authority to influence changes to MTM studies.
Another commenter suggested that further study can help improve the MTM
program due to limited evidence that MTM improves medication adherence
and patient outcomes. The commenter recommended that CMS initiate a
study including a large set of geographically diverse, Part D plans to
better understand the overall effectiveness of the MTM program and
[[Page 30473]]
potential areas for improvement. The commenter also suggested that it
would be particularly useful to understand the experience and impact of
pharmacists' involvement in MTM programs.
Response: We routinely analyze CMS and plan-reported data to
oversee the Part D MTM programs, including implementation of the new
requirement to target DMP ARBs for MTM enrollment. However, we agree
that additional analysis would be beneficial to assess MTM program
effectiveness, and we will continue to explore ways of conducting such
analysis. We appreciate the comments on potential research and analysis
topics and agree that the high degree of variability between MTM
program targeting criteria has made it difficult to evaluate MTM
programs. We are hopeful that standardizing the criteria as finalized
in this rule will allow more research to be done on MTM outcomes. We
will also engage with industry to develop additional consensus-based
measures to evaluate the quality of MTM programs which may be
considered for the Star Ratings program in the future, and we are
encouraged by recent efforts by the PQA to convene MTM leaders on
evidence-based priorities for measurement.\15\
---------------------------------------------------------------------------
\15\ <a href="https://www.pqaalliance.org/mtm-convenes">https://www.pqaalliance.org/mtm-convenes</a>.
---------------------------------------------------------------------------
Comment: Another commenter urged CMS to increase transparency
regarding the costs of the MTM program (that is, how much plans are
saving versus how much they are allocating to pay pharmacists for the
services) and whether Part D plans are incentivized to offer robust MTM
services.
Response: We remind commenters that per Sec. 423.153(d)(5)(ii),
even though a Part D sponsor must disclose to CMS the amount of the
management and dispensing fees and the portion paid for MTM services to
pharmacists and others, reports of these amounts are protected under
the provisions of section 1927(b)(3)(D) of the Act.
Comment: A commenter stated that CMS's proposals in the December
2022 proposed rule to add Part D measures to the Star Ratings, such as
the focus on polypharmacy measures, may present an opportunity to
improve MTM. The commenter felt that the proposed changes to the MTM
program eligibility criteria would expand eligibility but do not
address the issue of providing MTM to Medicare beneficiaries who could
truly benefit from it.
Response: We thank the commenter for the feedback. We agree that
MTM programs may present an opportunity to improve plan performance in
Star Ratings measures such as polypharmacy and help with overall
improvement of medication use among Part D beneficiaries. Refer to
Section VII.B.3 for discussion about the Part D Polypharmacy Use of
Multiple Central Nervous System Active Medications in Older Adults
(Poly-CNS), Polypharmacy Use of Multiple Anticholinergic Medications in
Older Adults (Poly-ACH), and Concurrent Use of Opioids and
Benzodiazepines (COB) Measures.
Comment: Some commenters encouraged CMS to continue to examine
policy options that expand access to MTM and improve patient outcomes
and, in particular, to release the findings from the fifth and final
year of the Part D Enhanced MTM model (Enhanced MTM model). Another
commenter suggested that the Enhanced MTM model can address alarming
trends of medication underuse and overuse. The commenters also
encouraged CMS to collaborate with interested parties to leverage the
findings from the Enhanced MTM model and identify best practices in MTM
to scale nationally, as well as to guide future reforms before taking
action to change MTM.
Response: CMS will continue to examine policy options within our
authority that expand access to MTM and improve patient outcomes. In
February 2023, CMS released the fifth and final evaluation report for
the Enhanced MTM model available at: <a href="https://www.cms.gov/priorities/innovation/innovation-models/enhancedmtm">https://www.cms.gov/priorities/innovation/innovation-models/enhancedmtm</a>. We will continue to review
the results of the Enhanced MTM model and collaborate with interested
parties to identify best practices and lessons learned that may help
improve the traditional Part D MTM programs. We disagree that CMS
should leverage model findings or run additional analyses before making
changes to the Part D MTM programs, as our disparities analysis
discussed in the December 2022 proposed rule identified specific
eligibility gaps that need to be addressed. As such, we are moving
forward with finalizing modifications to the MTM targeting criteria in
this final rule.
Comment: A commenter urged CMS to require plan sponsors to report
MTM enrollee data and analyze the data using demographic information to
measure and address disparities among the enrollees.
Response: Plan sponsors are currently required to report MTM
program beneficiary-level data to CMS through the Part D Reporting
Requirements (OMB 0938-0992). We used these data and other program
data, including demographic information, to perform the MTM disparities
analysis. Furthermore, researchers may request access to a Part D MTM
data file through ResDAC \16\ which could be linked to encrypted
beneficiary and demographic variables in the CCW.
---------------------------------------------------------------------------
\16\ Information on the Part D MTM Data File available through
ResDAC at: <a href="https://resdac.org/cms-data/files/part-d-mtm">https://resdac.org/cms-data/files/part-d-mtm</a>.
---------------------------------------------------------------------------
Comment: Many commenters suggested that if CMS finalizes the
combination of changes as proposed, the updated eligibility criteria
should be implemented on a delayed or phased-in basis. Commenters
stated that such an approach would provide plan sponsors with the
additional time necessary to build up staffing, processes, and
infrastructure over several years; to coordinate with other internal
programs to manage medications for the core chronic diseases; and to
ensure local networks can accommodate the increased volume. Commenters
who suggested delays were concerned about implications for costs and
the timing for bid submissions as well as the need for operational
enhancements. Commenters who advocated for a phased-in approach
suggested ways to finalize one or more of the proposed MTM criteria
changes over time on an annual basis. Another commenter suggested that
CMS take a stepwise approach by first finalizing the proposal to
require plan sponsors to target all 10 core chronic diseases to
evaluate how MTM engagement improves, and then allow some flexibility
in how plans target within broad therapeutic categories.
Response: We appreciate the suggestions to implement the proposed
changes using a delayed or phased-in approach. However, we do not agree
that such an approach is necessary because CMS is finalizing the
proposed changes with modification, and--as discussed later in this
preamble--the resulting program size will be about 35 percent smaller
than originally estimated in the December 2022 proposed rule. The
reduced program size mitigates the need for a phased-in approach to
accommodate the new MTM enrollees. Additionally, the changes will be
effective in 2025 rather than 2024 as initially proposed, which will
provide additional time for Part D plan sponsors to build up the
necessary infrastructure to support the anticipated increase in MTM
enrollment.
We now address comments on specific aspects of the proposed
eligibility criteria changes and describe our rationale for finalizing
the proposed changes with modifications.
[[Page 30474]]
b. Multiple Chronic Diseases
The regulation at Sec. 423.153(d)(2)(i)(A) specifies that to be
targeted for MTM, beneficiaries must have multiple chronic diseases,
with three chronic diseases being the maximum number a Part D sponsor
may require for targeted enrollment. In the current CMS MTM guidance
(See HPMS Memorandum Correction to Contract Year 2024 Part D Medication
Therapy Management Program Guidance and Submission Instructions dated
April 21, 2023), CMS identifies nine core chronic diseases.
In the December 2022 proposed rule, we proposed to amend the
regulations at Sec. 423.153(d)(2) by adding a new paragraph (iii) to
require all Part D sponsors to include all core chronic diseases when
identifying enrollees who have multiple chronic diseases, as provided
under Sec. 423.153(d)(2)(i)(A). As part of the proposed new provision
at Sec. 423.153(d)(2)(iii), we also proposed to codify the nine core
chronic diseases currently identified in guidance and to add HIV/AIDS,
for a total of 10 core chronic diseases. We explained that the current
flexibility afforded to plans to identify enrollees with multiple
chronic diseases had led to variability across plans and was a main
driver of eligibility gaps and inequitable beneficiary access to MTM
services. Under our proposal to codify the 10 core chronic diseases,
plan sponsors would maintain the flexibility to target beneficiaries
with additional chronic diseases that are not identified as core
chronic diseases, or to include all chronic diseases in their targeting
criteria.
In the December 2022 proposed rule, CMS also solicited comment on
whether we should consider including additional diseases in the core
chronic diseases proposed at Sec. 423.153(d)(2)(iii), including cancer
to support the goals of the Cancer Moonshot.\17\ We sought comments on
broadly including cancer as a core chronic condition or alternatively
including specific cancers that are likely to be treated with covered
Part D drugs such as oral chemotherapies where MTM could be leveraged
to improve medication adherence and support careful monitoring. We were
interested in comments on the impact of including any additional core
chronic diseases on specialized MTM provider training and on MTM
program size. We also solicited comments on whether MTM services
furnished under a Part D MTM program are an effective mechanism for
management of certain diseases (for example, those with high use of
Part B drugs or frequently changing medication regimens) given the
statutory goals of the MTM program--specifically, reducing the risk of
adverse events, including adverse drug interactions, and ensuring that
covered Part D drugs prescribed to targeted beneficiaries are
appropriately used to optimize therapeutic outcomes through improved
medication use.
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\17\ <a href="https://www.whitehouse.gov/cancermoonshot/">https://www.whitehouse.gov/cancermoonshot/</a> CE.
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The comments we received on our proposed policies with respect to
targeting of core chronic diseases are summarized below along with our
responses.
Comment: Many commenters supported the proposal to add HIV/AIDS to
the list of core chronic diseases. Several commenters applauded CMS for
recognizing and attempting to address disparities within the HIV/AIDS
community. Other commenters pointed out that antiretroviral medications
are not only high cost but part of complex regimens that require
frequent monitoring and re-evaluation. Supporters of this proposal also
emphasized the importance of MTM services for HIV/AIDS patients with
many comorbidities.
Response: CMS thanks the commenters for their support for the
proposal to add HIV/AIDS as a core chronic disease. We agree that Part
D enrollees with HIV/AIDS often have complex Part D drug regimens where
medication adherence is critical, very high Part D drug costs, and
multiple comorbidities. In addition, these individuals are more likely
to be members of populations affected by health disparities. For these
reasons and for the reasons discussed in the December 2022 proposed
rule, we are finalizing the proposal to include HIV/AIDS in the core
chronic diseases at Sec. 423.153(d)(2)(iii).
Comment: Many commenters were opposed to including HIV/AIDS as a
core chronic disease and expressed concerns regarding the potential of
MTM programs disrupting therapy that is already being closely monitored
by a specialized team. Other commenters were concerned that the
pharmacists reviewing the drug regimen for individuals with HIV/AIDS
may not have the specialized training needed. One commenter suggested
additional qualifications to identify high-risk medication use among
this population. Lastly, some commenters stated that the data needed
for a successful CMR for this population, including lab values, are not
always available.
Response: We acknowledge that Part D sponsors, especially PDPs, may
not always have complete and up to date information at the time of a
CMR, but the CMR may provide the opportunity to obtain additional
information regarding an individual's current therapy. As discussed in
CMS MTM guidance (See HPMS Memorandum Contract Year 2024 Part D
Medication Therapy Management Program Guidance and Submission
Instructions dated April 21, 2023), a CMR is a systematic process of
collecting patient-specific information, assessing medication therapies
to identify medication-related problems, developing a prioritized list
of medication-related problems, and creating a plan to resolve them
with the patient, caregiver, and/or prescriber. The CMR is designed to
improve patients' knowledge of their prescriptions, over-the-counter
(OTC) medications, herbal therapies and dietary supplements, identify
and address problems or concerns that patients may have, and empower
patients to self-manage their medications and their health conditions.
MTM services should be complementary, not disruptive, to services
furnished by the beneficiary's care team, and an MTM provider may make
referrals or recommendations to the beneficiary's prescribers to
resolve potential medication-related problems or optimize the
beneficiary's medication use.
The CMS analysis presented in the December 2022 proposed rule found
that, on average, Part D enrollees with HIV/AIDS have 4 core chronic
diseases (including HIV/AIDS), take 12 Part D covered drugs (including
eight maintenance drugs), and incur $40,490 in Part D annual drug
spend. Because beneficiaries with HIV/AIDS are likely to have complex
drug regimens and are at increased risk of medication-related problems,
they could benefit from MTM to improve medication use. Despite having
multiple chronic diseases, taking multiple Part D drugs, and incurring
high Part D drug costs, many of these individuals were not eligible for
MTM because their plan did not target HIV/AIDS or did not target enough
of their other chronic diseases. However, we also found that HIV/AIDS
was more likely to be targeted by plans (about 10 percent of plans in
2021) than any other non-core chronic disease, suggesting that these
plans have already recognized the value of offering MTM services to
this population.
Comment: Some commenters questioned whether data privacy policies
and state laws would allow Part D sponsors to engage in data sharing
with MTM vendors. Others voiced concern over the sensitive nature of an
[[Page 30475]]
HIV/AIDS diagnosis and that giving MTM providers access to enrollees'
health information would increase the risk of a data breach or cause
member concerns over privacy.
Response: CMS requires Part D sponsors to comply with all Federal
and State laws regarding confidentiality and disclosure of medical
records or other health and enrollment information per Sec. 423.136.
Those laws may require additional steps for Part D sponsors to share
information with MTM providers, such as obtaining beneficiary consent.
In establishing the requirement to include HIV/AIDS as a core chronic
disease, we do not intend to change or modify any legal obligations
that entities may have under the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) Privacy Rule or any other law.
Regarding the potential for data breaches, we expect plan sponsors and
their MTM providers to have appropriate safeguards in place to protect
personal health information for beneficiaries with HIV/AIDS just as
they do for enrollees with other diseases or medication regimens.
Comment: Many commenters supported the proposal to require Part D
sponsors to include all core chronic diseases when identifying
enrollees who have multiple chronic diseases. Some of these commenters
emphasized the importance of MTM services for beneficiaries with
diseases such as ESRD and mental health conditions. We received
suggestions to expand the inclusion of Alzheimer's disease on the list
of core chronic diseases to include neurodegenerative diseases
(including multiple sclerosis) and/or other dementias such as Lewy Body
disease or frontotemporal lobar degeneration and pain as core chronic
diseases.
Other commenters who supported the proposal suggested that
requiring the 10 core chronic diseases should provide more consistency
in MTM eligibility between plans and broaden beneficiaries' eligibility
for MTM in each plan.
Response: We thank the commenters for their supportive comments
regarding our proposal to require sponsors to include all core chronic
diseases when identifying enrollees who have multiple chronic diseases.
We are finalizing that proposal at Sec. 423.153(d)(2)(iii). Plan
sponsors will be required to target all 10 core chronic diseases
beginning January 1, 2025. This change will address the concerns we
discussed in the December 2022 proposed rule regarding increasingly
restrictive criteria implemented by plan sponsors (for example, by
targeting select core chronic diseases), which have been one of the
main drivers of reduced eligibility rates for MTM. By reducing the
variability in targeting criteria across plans, we will eliminate
situations where enrollees meet the requirement in Sec.
423.153(d)(2)(i)(A) of having three chronic diseases but are not
targeted for MTM enrollment because their plan does not target their
chronic diseases. This change will also ensure that plan sponsors are
targeting all of the chronic diseases specified in the statute at
section 1860D-4(c)(2)(A)(ii)(I)(aa) of the Act, along with certain
other chronic diseases that we have identified as prevalent in the Part
D population and commonly treated with Part D drugs. This reduced
variability should also allow CMS to more accurately estimate program
size when calculating burden and assessing impact.
We will continue to analyze chronic diseases that are highly
prevalent in the Part D population, align with common targeting
practices across sponsors, and are commonly treated with Part D drugs,
where MTM services could most impact therapeutic clinical outcomes,
including those suggested by the commenters, and may consider proposing
additional core chronic diseases such as neurodegenerative diseases
and/or other dementias in future rulemaking. Although we are not adding
pain as a core chronic disease in this final rule, we remind sponsors
that as of January 1, 2022, they are now required to target ARBs as
defined at Sec. 423.100 for MTM enrollment. We also note that plan
sponsors retain the flexibility to target additional chronic diseases
beyond those codified as core chronic diseases.
Comment: Many commenters opposed the proposal to require Part D
sponsors to include all core chronic diseases to identify beneficiaries
who meet the targeting criterion of having multiple chronic diseases.
Some commenters suggested that CMS limit core diseases to those that do
not require specialized training or requested extra time to hire
specialized staff. Another commenter urged CMS to continue to allow
plan sponsors to have flexibility to establish a targeted population
within the 10 core chronic diseases. Other commenters wanted to limit
the core chronic diseases to those that are easily identified using
Part D claims only or to those associated with the Star Ratings
medication adherence measures. A commenter noted that even though the
core chronic diseases are not entirely new, the requirement for
sponsors to include all of them will necessitate IT development for
file transfer of medical claims data, adding complexity, as most plans
utilize only prescription drug claims data to identify members. For
example, the commenter mentioned that to target beneficiaries with many
of the core chronic diseases, plans will need to submit diagnosis codes
from medical claims to MTM vendors in order to identify such members.
Another commenter was concerned that lab work or other relevant data
points may not be easily accessible by the plan's MTM pharmacist. One
commenter felt that MTM pharmacists are not in the best position to
positively impact (and may detract from) a beneficiary's care with a
CMR and routine TMR assessments for ESRD.
Response: Plan sponsors' flexibility to target select core chronic
diseases was a main driver of inequitable access to MTM in the Part D
program that we addressed in our proposed changes to the Part D MTM
requirements in the December 2022 proposed rule. CMS strongly believes
pharmacists or other qualified MTM providers with extensive knowledge
and training of prescribed medications are in an excellent position to
impact a beneficiary's medication use, regardless of the chronic
diseases they have or the Part D drugs they take. For instance,
beneficiaries with ESRD typically have multiple co-morbidities being
treated with multiple Part D drugs which may benefit from a CMR and
assessment for dose adjustments due to kidney function. If a
beneficiary requires more specialized services or coordinated care, MTM
may be a means to identify and refer the beneficiary to such services.
We also remind commenters that the eligibility criteria, including core
chronic diseases, help identify beneficiaries who may be at increased
risk of medication-related problems. However, MTM services should not
focus only on the core chronic diseases or drugs within classes used to
treat those diseases. For example, the CMR should include a review of
all of the MTM enrollee's prescription medications, OTC medications,
herbal therapies, and dietary supplements. As they do today, plan
sponsors should optimize their targeting algorithms and methods using
data available to them to identify enrollees who are eligible for MTM.
Some plan sponsors may need to update their IT systems or workflows to
expand the use of data sources available to them to better optimize
their targeting methods.
Comment: Some commenters requested clarification on whether all
diseases included under the 10 core chronic disease categories must be
targeted, or whether plans will have the flexibility to choose specific
diseases within the core chronic diseases. A few
[[Page 30476]]
commenters were concerned that requiring targeting for all core chronic
diseases removes sponsors' ability to customize their MTM program to
target members they deem well-suited for MTM services.
Response: Plan sponsors must target all 10 core chronic diseases,
including all conditions within each core chronic disease. As discussed
in the proposed rule, our analysis found that a significant proportion
of the Part D population that we identified as having three or more
core chronic diseases and using eight or more drugs were not eligible
to be targeted for MTM, and variation in plan-specific targeting
criteria (for example, plans targeting fewer than all of the core
chronic diseases) was a key driver of gaps in eligibility for MTM. By
reducing the variability in targeting criteria across plans, we can
significantly reduce situations where enrollees meet the requirement in
Sec. 423.153(d)(2)(i) of having three chronic diseases but are not
targeted for MTM enrollment because their plan does not target their
chronic diseases. The proposal to require plan sponsors to target all
10 core chronic diseases, which we are finalizing in this rule, aims to
close this gap in access and better ensure that the beneficiaries who
are most in need of MTM services are targeted for enrollment. Plan
sponsors will still have the flexibility of targeting additional
chronic diseases beyond the core diseases codified in this rule.
Comment: A commenter wanted CMS to provide greater specificity when
codifying core diseases. For example, they asked that CMS clarify how
``other chronic lung disorders'' are defined under respiratory disease
and how ``chronic/disabling mental health conditions'' are defined
under mental health.
Response: CMS does not have guidance for plan sponsors to define or
code core chronic diseases such as ``other chronic lung disorders'' or
``chronic/disabling mental health conditions.'' Sponsors should retain
documentation supporting their eligibility criteria determinations.
Comment: In response to our request for information and feedback on
including additional diseases, such as cancer, in the list of core
chronic diseases, a couple of commenters supported including cancer as
a core chronic disease. One commenter felt it would align well with
some pharmacies' specialty pharmacy offerings and clinical services. We
also received some comments opposed to adding cancer as a core chronic
disease for MTM program eligibility. Some commenters indicated that
complex cancer treatment needs timely, on-going monitoring by
specialists with expertise across Part B and Part D medications (for
which data sets may or may not be available) and may not be best
managed by Part D MTM programs through annual CMRs or by pharmacists
without specialized training. Other commenters noted that specialty
pharmacies, which dispense the majority of oral cancer medications
(including specialty pharmacies within oncology clinics), already
provide monitoring or counseling for their oncology patients. A
commenter was concerned that beneficiaries with cancer may find MTM
outreach to be intrusive and unwanted, and another was concerned with
patient sensitivity when in remission. Another commenter that opposed
including cancer as a core chronic disease noted that beneficiaries who
meet the current MTM eligibility criteria who are also taking oncology
drug(s) would still benefit from the MTM review for side effects,
safety, and potential drug-drug interactions.
Response: Equitable access to cancer screening and targeting the
right treatments for cancer patients is a top priority under the goals
of the Cancer Moonshot. However, while section 1860D-
4(c)(2)(A)(ii)(I)(aa) of the Act provides us the authority to specify
and include other chronic diseases, after consideration of the comments
received in response to the RFI, we do not believe it would be
appropriate to add cancer to the core chronic diseases specified in
Sec. 423.153(d)(2)(iii) in this final rule. We agree that including
cancer may be potentially disruptive to the medication management that
is already a part of standard clinical practice in oncology and
specialty centers. Moreover, it is unclear that cancer patients' needs
can be met through Part D MTM program annual CMRs centered on Part D
medication use delivered by MTM pharmacists who typically lack the
specialized training in oncology. Cancer treatment goals are often
different than the goals for treatment of the other chronic diseases
included in Part D MTM program (such as diabetes), where MTM may be
used to review and stabilize drug regimens that are likely to be long
term. In contrast, many cancers involve a high utilization of
physician-administered Part B drugs and frequently changing medication
regimens. Also, cancer is not currently commonly targeted by Part D
plans as a chronic disease for their MTM program eligibility.
While we are not adding cancer as a core chronic disease at this
time, we emphasize that some cancer patients may still be eligible for
MTM based on meeting the eligibility criteria. We encourage Part D
plans and MTM providers to seek opportunities to promote cancer
screening where possible for MTM enrollees and to coordinate with
specialty cancer programs to develop medication safety recommendations
for cancer patients. In support of the Cancer Moonshot, CMS has
initiated other activities, such as the Enhancing Oncology Model
(EOM),\18\ which is designed to test how best to place cancer patients
at the center of high-value, equitable, evidence-based care. CMS has
also adopted rules providing payment for principal illness navigation
services to help patients and their families navigate cancer treatment
and treatment for other serious illnesses.\19\
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\18\ <a href="https://www.cms.gov/newsroom/press-releases/biden-administration-announces-new-model-improve-cancer-care-medicare-patients">https://www.cms.gov/newsroom/press-releases/biden-administration-announces-new-model-improve-cancer-care-medicare-patients</a>.
\19\ <a href="https://www.cms.gov/newsroom/press-releases/cms-finalizes-physician-payment-rule-advances-health-equity?ref=upstract.com">https://www.cms.gov/newsroom/press-releases/cms-finalizes-physician-payment-rule-advances-health-equity?ref=upstract.com</a>.
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c. Multiple Part D Drugs
Section 1860D-4(c)(2)(A)(ii) of the Act requires that targeted
beneficiaries be taking multiple covered Part D drugs. The current
regulation at Sec. 423.153(d)(2)(i)(B) specifies that eight is the
maximum number of Part D drugs a Part D plan sponsor may require for
targeted MTM enrollment. In accordance with the technical HPMS User
Guide for the MTM Program submission module, sponsors are permitted to
include all Part D drugs, all Part D maintenance drugs, or specific
drug classes.
We proposed to revise Sec. 423.153(d)(2)(i)(B) to decrease the
maximum number of Part D drugs a sponsor may require for targeted
enrollment from eight to five for plan years beginning on or after
January 1, 2024. As discussed in the preamble to the December 2022
proposed rule, while there is no consensus definition of polypharmacy
in terms of the use of a certain number of medications or medication
classes concurrently, the proposed change would ensure the MTM program
continues to focus on more individuals with complex drug regimens and
increased risk of medication therapy problems. In addition, although we
proposed changes to the targeting criteria with respect to the number
of Part D drugs, we noted that the CMR described in Sec.
423.153(d)(1)(vii)(B) should continue to include review of all
prescription medications, OTC medications, herbal therapies, and
dietary supplements.
We also proposed to add a new provision at Sec. 423.153(d)(2)(iv)
to
[[Page 30477]]
require all sponsors to include all Part D maintenance drugs in their
targeting criteria. Plans are currently able to include all maintenance
drugs in their targeting criteria as an option in the MTM Submission
Module in HPMS; however, CMS does not have guidance related to how
maintenance drugs are identified for this purpose. To ensure
consistency across the MTM program, we also proposed that, for the
purpose of identifying maintenance drugs, plans would be required to
rely on information contained within a widely accepted, commercially or
publicly available drug information database commonly used for this
purpose, such as Medi-Span or First Databank, but would have the
discretion to determine which one they use. Under this proposal,
sponsors would no longer be allowed to target only specific Part D drug
classes but would be required to target all Part D maintenance drugs.
However, plans would retain the option to expand their criteria by
targeting all Part D drugs. CMS solicited public comment on our
proposed parameters for defining maintenance drugs, including potential
additional sources for making such determinations.
Below, we address comments on the proposed revisions to the maximum
number of covered Part D drugs a plan sponsor may require and our
proposal to require sponsors to include all Part D maintenance drugs in
their targeting criteria. We also describe our rationale for finalizing
the proposed changes with modifications.
Comment: Many commenters supported the proposal to lower the
maximum number of covered Part D drugs a sponsor may require from eight
to five drugs. These commenters supported overall expansion of the MTM
program, which they believed would increase medication safety. A
commenter who supported the proposal suggested additional targeting
criteria, such as targeting individuals taking high-risk medications.
Response: We appreciate the support for this proposal. However, we
remind commenters that section 1860D-4(c)(2)(A)(ii) of the Act requires
plans to target beneficiaries taking multiple covered Part D drugs. We
note, however, that plans retain the flexibility to enroll
beneficiaries taking high-risk medications in their MTM programs
through expanded eligibility, even if they do not meet the statutory
criteria for targeted enrollment. In addition, high-risk medication use
may be addressed through MTM interventions.
Comment: Many commenters opposed the proposal to lower the maximum
number of covered Part D drugs a sponsor may require from eight to five
drugs. Commenters were concerned that MTM would not be as useful for
beneficiaries with less complex drug regimens and suggested that
beneficiaries should qualify for MTM enrollment based on higher pill
burdens and more complicated medication regimens. One commenter stated
that a typical enrollee with three or more chronic diseases takes
between seven and 10 medications and recommended retaining the current
maximum number of drugs at eight. Another commenter suggested initially
only decreasing this threshold from eight to five drugs for sponsors
that use specific classes of drugs in their criteria, and then fully
implementing the proposed change for all plan sponsors the following
year.
Response: After consideration of these comments, and the general
comments expressing concerns about increased burden and costs, current
pharmacy and vendor shortages, and other resource challenges due to the
combination of MA and Part D program policy changes plan sponsors must
implement over the next several years, we are not finalizing our
proposal to lower the maximum number of covered Part D drugs a sponsor
may require from eight to five drugs at this time. We are retaining the
maximum number of drugs a plan sponsor may require for targeting
beneficiaries taking multiple Part D drugs at eight (see Sec.
423.153(d)(2)(i)(B)). Plan sponsors will maintain the flexibility to
set a lower threshold (between two and eight Part D drugs) for
targeting. This will maintain the MTM program focus on beneficiaries
with the most complex drug regimens and will result in a more moderate
expansion of the MTM program size. Additionally, our decision not to
finalize this aspect of our proposed modifications to the MTM
eligibility criteria is supported by CMS' data analysis included in the
December 2022 proposed rule (87 FR 79542-79546). We found that the
beneficiaries identified as having 3 or more core chronic conditions
and using 8 or more drugs who were not eligible for MTM took on average
eight to nine Part D drugs, which suggests that the number of Part D
drugs criterion is not a main driver of MTM eligibility disparities
under our current policies. This change to our proposal al
[…truncated; see source link]Indexed from Federal Register on April 23, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.