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Issue Brief: CMS Medicare Advantage and Part D Proposed Rule

Center for Medicare and Medicaid Services (CMS)

January 13, 2022


The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule for Medicare Advantage and Part D. This rule would require Medicare Advantage and Part D plans to pass on price concessions they received from network pharmacies, known as Direct and Indirect Remuneration (DIR) fees, to beneficiaries at the point of sale.

This summary of proposed changes is intended to aid members in their review of the proposed rule.

What’s Next

We strongly encourage members to submit feedback, questions, or concerns to ASHP to assist in the development of our written comments on the proposed rule. Comments are due to CMS on March 7. Please send any input to Jillanne Schulte Wall at [email protected] by Feb. 25. We will update members when CMS releases a final rule on this issue.

Summary of the Proposed Changes

  • Lowering Beneficiary Cost-Sharing: CMS is proposing a policy that would require Part D plans to apply all price concessions they receive from network pharmacies to the point of sale. Specifically, CMS is proposing to redefine the negotiated price as the baseline, or lowest possible, payment to a pharmacy, effective Jan. 1, 2023. CMS is proposing this policy in an effort to reduce beneficiary out-of-pocket costs and improve price transparency and market competition in the Part D program.

ASHP has long supported this proposal of requiring Medicare Advantage and Part D plans to pass on these price concessions they received from network pharmacies, also known as DIR fees, to beneficiaries at the point of sale.

  • Social Determinants of Health and Special Needs Plan Health Risk Assessments: This rule is proposing that all health risk assessments include specific standardized questions on housing stability, food security, and access to transportation. This proposal is being made to help better identify the risk factors that may inhibit enrollees from accessing care and achieving optimal health outcomes and independence.
  • Past Performance: CMS is proposing additional bases for denying a new contract or service area expansion of an existing contract based on past performance. The current regulations permit CMS to deny applications from organizations under sanction or that have failed CMS’s net worth requirements during the performance period. The proposed rule adds Star Ratings (2.5 or lower), bankruptcy or bankruptcy filings, and exceeding a CMS designated threshold for compliance actions as bases for denial of a new application or a service area expansion application.

  • Network Adequacy: CMS is proposing to require that plan applicants demonstrate they have a sufficient network of contracted providers to care for beneficiaries before CMS will approve an application for a new or expanded Medicare Advantage plan.

Due to the proposed changes in the timing of the network adequacy reviews and potential difficulties Medicare Advantage organizations may face with building a full network almost one year in advance of the contract year, CMS has also proposed to allow a 10 percentage point credit toward the percentage of beneficiaries residing within published time and distance standards for new or expanding service area applicants. Once the coverage year start (Jan. 1), the 10 percentage point credit would no longer apply and plans would need to meet full compliance.

  • Maximum Out-of-Pocket Policy for Dually Eligible Beneficiaries: Medicare Advantage plans are required to establish a limit on beneficiary cost-sharing for Medicare Part A and B services after which the plan pays 100% of the service costs. Current guidance on calculation of the maximum out-of-pocket (MOOP) amount allows Medicare Advantage plans the option to count only those amounts the individual enrollee is responsible for paying, net of any state responsibility or exemption from cost-sharing toward the MOOP limit, rather than the cost-sharing amounts for services the plan has established in its plan benefit package.

CMS is proposing to specify that the MOOP limit in a Medicare Advantage plan (after which the plan pays 100% of Medicare Advantage costs) is calculated based on the accrual of all Medicare cost-sharing in the plan benefit, whether that Medicare cost-sharing is paid by the beneficiary, Medicaid, or other secondary insurance, or remains unpaid because of state limits on the amounts paid for Medicare cost-sharing and dually eligible individuals’ exemption from Medicare cost-sharing.

  • Marketing and Communications Oversight: CMS is proposing changes to marketing and communications requirements that will ensure they receive more accurate and accessible information about Medicare coverage. These changes include strengthening oversight of third-party marketing organizations to detect and prevent the use of deceptive marketing tactics to enroll beneficiaries in Medicare Advantage and Part D plans, reinstating the inclusion of a multi-language insert in specified materials to inform beneficiaries of the availability of free language and translation services, codifying enrollee ID card standards, requirements related to a disclaimer for limited access to preferred cost sharing pharmacies, plan website instructions on how to appoint a representative, and website posting of enrollment instructions and forms.

  • Beneficiary Access to Care During Disasters and Emergencies: CMS is proposing to revise and clarify timeframes and standards associated with disasters and emergencies. Current regulations have special requirements for Medicare Advantage plans during disasters or emergencies, including requirements for plans to cover services provided by non-contracted providers and to waive gatekeeper referral requirements. The proposal would require a Medicare Advantage plan to comply with the special requirements when there is a declaration of disaster or emergency (including a public health emergency) and disruption in access to healthcare.

  • Greater Transparency in Medical Loss Ratio (MLR) Reporting: CMS is proposing to reinstate MLR reporting requirements that were in effect for contract years 2014–2017. The current regulations require that Medicare Advantage organizations and Part D sponsors report to CMS the percentage of revenue spent on patient care and quality improvement and the amount of any remittance that must be paid to CMS for failure to meet the 85% minimum MLR requirement. The new proposal would require Medicare Advantage organizations and Part D sponsors to report the underlying cost and revenue information needed to calculate and verify the MLR percentage and remittance amount, if any. In addition, CMS is proposing to require that Medicare Advantage organizations report the amounts they spend on various types of supplemental benefits not available under original Medicare (e.g., dental, vision, hearing, transportation).

  • 2023 Part C Star Ratings Calculations for Certain Measures Given Impacts of the COVID-19 Public Health Emergency: CMS is proposing a technical change to enable CMS to calculate 2023 Part C Star Ratings for the three Healthcare Effectiveness Data and Information Set (HEDIS) measures collected through the Health Outcomes Survey (HOS): Monitoring Physical Activity, Reducing the Risk of Falling, and Improving Bladder Control. This would be a change to account for the extreme and uncontrollable circumstances adjustment for COVID-19.

  • Enrollee Input on D-SNP Operations: CMS is proposing that all D-SNPs establish and maintain one or more enrollee advisory committees and that D-SNPs consult with advisory committees on issues related to health equity.

  • Simplified Appeals and Grievance Processes: The Bipartisan Budget Act of 2018 (Pub.L. 115–123) charged CMS with unifying appeals and grievance processes across Medicare and Medicaid to the maximum extent possible. New requirements took effect in 2021 for a subset of D-SNPs. Beneficiaries in these plans go through one Medicare-Medicaid appeals process at the plan level, rather than filing separate, potentially duplicative, appeals with both the D-SNP and a Medicaid managed care organization (MCO). CMS has proposed to expand the universe of D-SNPs for which the unified appeals and grievance processes apply.

  • New Pathways to Simplify D-SNP Enrollee Materials: CMS is proposing to codify a mechanism through which states can require certain D-SNPs to use integrated materials to make it easier to understand the full scope of Medicare and Medicaid benefits available through the D-SNPs.

  • New Pathways to Have Star Ratings Specific to the Performance of the Local D-SNP: Star Ratings are calculated at the contract level for Medicare Advantage and Part D plans. In many cases, contracts contain D-SNPs and other non-SNP MA plans. CMS is proposing a pathway to allow certain states with integrated care programs to require that Medicare Advantage organizations establish a contract that only includes one or more D-SNPs, which would allow for Star Ratings for that contract to reflect the D-SNPs’ local performance.

  • Technical and Definitional Updates for FIDE SNPs and HIDE SNPs: Dually eligible individuals have an array of choices for how to receive their Medicare coverage, including fully integrated dual eligible special needs plans (FIDE SNPs) and highly integrated dual eligible special needs plans (HIDE SNPs). CMS is proposing to require, for 2025 and subsequent years, that all FIDE SNPs have exclusively aligned enrollment (i.e., limit enrollment to individuals in the affiliated Medicaid MCO) and cover Medicaid home health, durable medical equipment, and behavioral health services through a capitated contract with the state Medicaid agency. In addition, CMS proposed to require that each HIDE SNP’s capitated contract with the state apply to the entire service area for the D-SNP for plan year 2025 and subsequent years. Consistent with existing policy, it was also proposed to codify specific limited benefit carve-outs for FIDE SNPs and HIDE SNPs.