On November 15, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule titled 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 (“Proposed Rule”).[1]
The broad, 155-page Proposed Rule would revise regulations to the Medicare Advantage (“Part C” or “MA”), Medicare Prescription Drug Benefit (Part D), and Medicare Cost Plan programs and to the Programs of All-Inclusive Care for the Elderly (PACE) effective beginning with contract year (CY) 2025 in an effort to improve the programs and to codify existing Parts C and D sub-regulatory guidance. Other changes in the Proposed Rule relate to marketing and communications, agent/broker compensation, health equity, dual eligible special needs plans (D-SNPs), and more.
The Proposed Rule seeks to achieve the following goals through changes to MA and/or Part D programs:
- Better protect vulnerable beneficiaries served by Medicare special needs plans (SNPs) by strengthening certain (SNP) standards as well as prohibitions applicable to dual eligible “look alikes.”
- Improve plan risk adjustment accuracy by standardizing the MA risk adjustment data validation appeals process.
- Better protect PACE enrollees by strengthening compliance oversight.
- Improve access to behavioral health care providers by adding certain behavioral health provider specialties to MA network adequacy standards.
- Help to ensure that Special Supplemental Benefits for the Chronically Ill (SSBCI) improve or maintain health.
- Enhance guardrails for agent and broker compensation to remove negative incentives.
- Adjust the Utilization Management (UM) Committee requirements to promote health equity.
- Enhance enrollees’ right to appeal an MA plan’s decision to terminate coverage for non-hospital provider services.
- Improve care coordination by increasing the percentage of dually eligible managed care enrollees who receive Medicare/Medicaid services from the same organization.
- Protect dual eligibles by limiting out-of-network cost sharing for D-SNP preferred provider organizations for specific services and expanding prohibitions on D-SNP look-alikes.
We summarize here some of the more significant proposals, beginning with those affecting MA SNPs. CMS is accepting comments on the Proposed Rule through January 5, 2024.
Improvements to SNPs
Within the Proposed Rule, CMS presents eight significant policy changes that would impact MA SNPs to better protect the vulnerable enrollees that these plans serve. SNPs provide tailored benefits and services to people with specific diseases, with certain health care needs, or who also have Medicaid, and can be offered as a health maintenance organization or preferred provider organization (PPO) plan.
In addition to traditional Parts A and B benefits, SNPs provide enhanced care coordination services and can tailor their benefits, provider network, and covered drugs (formularies) to best meet the specific needs of the groups they serve. SNPs might also cover additional services, such as extra days in the hospital, non-emergency medical transportation, or, in the case of D-SNPs, benefits that are covered by a state’s Medicaid program.
Current laws and regulations allow plans to offer three types of SNPs: Chronic Condition SNP (C-SNP), Institutional SNP (I-SNP), and D-SNPs. Certain of CMS’s proposed changes impact a specific type of SNP, while other proposed changes would apply to any type of SNP.
Provisions Specific to Institutional SNPs (I-SNPs)
CMS allows MA plans to offer two types of I-SNPs: institutionalized (or “Facility-based”) and institutionalized-equivalent.[2] The latter would enroll individuals who need an institutional level of care but who live in the community. Either type of I-SNP must restrict enrollment to MA-eligible individuals who meet the definition of “institutionalized” or “institutionalized-equivalent.”
For each county within the service area, Facility-based I-SNPs must own or contract with at least one institution, per the definition of “institutionalized” in § 422.2. In parallel, I-SNPs (along with all types of SNPs) must continue to meet the network adequacy requirements applicable to all network-based MA organizations at § 422.116.
In the Proposed Rule, CMS recognizes that Facility-based I-SNPs serve a particularly vulnerable group of Medicare beneficiaries who are almost all dually eligible for Medicaid and who receive most of their health care services through or at the facility (predominantly at an SNF) in which they reside. CMS further recognizes that, as a result (as the industry has pointed out for years), the time and distance standards under § 422.116 that apply to all MA plans may not be the best fit for Facility-based I-SNPs, and it is proposing to adopt a new exception for Facility-based I-SNPs from the general network adequacy requirements.
The exceptions process under § 422.116 has historically been so narrowly defined and so difficult to satisfy as to be almost unattainable. CMS is now proposing to broaden the acceptable rationales for an exception specifically for Facility-based I-SNPs to include two new exceptions: (1) when the Facility-based I-SNP submits documentation proving that, despite efforts to do so, it is unable to successfully negotiate and establish a contract with a provider;[3] and (2) when the Facility-based I-SNP provides access to specialists through the “additional telehealth benefits” process outlined in § 422.135 and also covers in-person, out-of-network services at in-network cost sharing when approved by the plan.
The Proposed Rule appears to indicate that each would be an independently sufficient pathway for an exception. Because exceptions would be granted at the contract level, to access either new exception, MA organizations seeking the exception would be limited to operating only Facility-based I-SNP plans under the contract.
Importantly, CMS is not proposing alternative network adequacy standards specifically for Facility-based I-SNPs along the lines of the Medicare-Medicaid Plan-specific criteria issued by the Medicare-Medicaid Coordination Office.[4] Instead, CMS is proposing to continue requiring Facility-based I-SNPs to either make a concerted effort to build a network meeting standard MA time and distance standards or establish a robust telehealth program and allow out-of-network access at in-network cost sharing.
Interested stakeholders should provide comments on whether the new exceptions and process will meet the needs of Facility-based I-SNPs seeking to operate and negotiate provider networks.
D-SNP Provisions
The majority of SNP-specific policy changes in the Proposed Rule focus on D-SNPs. To put these proposals in context, enrollment in D-SNPs has grown at a tremendous rate in recent years, with 60 percent growth between 2018 and 2022, as compared to a growth rate of 38 percent in non-SNP plans.
Growth Rate of Enrollment in MA Plan Types, 2018 to 2022
As indicated in the above data table, while MA enrollment has been growing steadily, D-SNP enrollment has been growing at a much higher rate. Concurrent with these years of enrollment growth, CMS made a series of significant regulatory changes to increase the level of integration with Medicaid benefits and reduce the prevalence of “D-SNP look-alikes,” which are MA plans that build benefits to simulate D-SNPs but without entering a State Medicaid Agency Contract (SMAC) that would be required in order to market as a D-SNP.[6]
The Proposed Rule would significantly expand upon these prior efforts. It would make major changes to the marketing and enrollment process for D-SNPs and other integrated products and would impose related restrictions on the operation of non-integrated versions of these products. If implemented, these changes would lead to a significant reduction in the total number of D-SNP products in the marketplace and a significant increase in the percentage of dually eligible managed care enrollees receiving benefits from aligned and integrated products.
Changes to the Special Enrollment Periods for Dually Eligible Individuals and Other Low-Income Subsidy-Eligible Individuals
Dual-eligible MA enrollees are currently allowed to switch plans once per calendar quarter during the first nine months of the year under a Special Enrollment Period (SEP). This allowance, itself a reduction from a previously applied continuous monthly SEP,[7] leads to frequent plan switching. This undermines care coordination efforts and creates, in CMS’s estimation, an inappropriate incentive for agents and brokers to specifically target dually eligible beneficiaries, even those already enrolled in a D-SNP, due to their ability to make enrollment elections at multiple intervals throughout the year. In the Proposed Rule, CMS identifies that the current federal SEP creates substantial complexity for handling Medicaid managed care organization (MCO) enrollment alignment.
In response to these identified concerns, CMS proposed the following four regulatory changes:
- Replace the current quarterly SEP with a once-per-month SEP for dually eligible individuals and others enrolled in the Part D low-income subsidy program to elect a stand-alone prescription drug plan.
- Create a new integrated care SEP to allow dually eligible individuals to elect an integrated D-SNP on a monthly basis.
- Limit enrollment in certain D-SNPs to those individuals who are also enrolled in an affiliated MCO.
- Limit the number of D-SNP plan benefit packages an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, can offer in the same service area as an affiliated Medicaid MCO.
The changes to the dual-eligible SEP would not impact other dual-eligible-related SEPs, such as the ability to enroll in a PACE. CMS proposes an exception to the prohibition on offering multiple D-SNPs to allow for MA plans to respond to state Medicaid agency requirements related to operating different programs for different eligibility groups (e.g., one product for disabled individuals under 65 and another for dually eligible enrollees 65 and over).
If finalized, these proposals would restrict the ability of dually eligible individuals to select a plan outside of the annual enrollment period (D-SNP or otherwise) unless that plan is a PACE plan or a highly integrated dual eligible or fully integrated dual eligible (FIDE) SNP with exclusively aligned enrollment, while continuing to allow dually eligible individuals to disenroll in any month, and significantly restricting the number of D-SNP offerings that any entity with a Medicaid MCO contract can offer in the same service area. CMS identifies several trade-offs from this policy, including the restriction on enrollment choices for the many dually eligible individuals living in a region without any qualifying integrated plans.
Enrollment Limitations for Non-Integrated MA Plans
In addition to the proposals related to the SEP above, CMS also proposes a more specific requirement pushing the delivery system to achieve the goal of integrated care, which would expressly prohibit dually eligible beneficiaries from enrolling in non-aligned plans.
In recognition of the many operational challenges for state Medicaid agencies and plans, CMS proposes a phased implementation of this requirement. The first deadline would be 2025 for existing FIDE-SNPs. For other D-SNPs, the requirement would take effect in 2027, requiring aligned enrollment in counties where the D-SNP also operates the Medicaid MCO, and by 2030, requiring 100 percent alignment across the entire service area.
This direct imposition of alignment requirements as a condition of market participation represents a significant milestone for CMS’s regulation of the D-SNP market. As discussed in detail in the Proposed Rule, a 2019 Medicare Payment Advisory Commission report found that only 14 percent of D-SNP enrollees were in a fully aligned Medicaid plan. The requirements for aligned enrollment carry as much or more complexity for state Medicaid agencies as for the D-SNPs, since states will be required to implement new procurements and negotiate with D-SNP operators and stakeholders to implement aligned Medicaid contracts to meet the proposed deadlines.
Contracting Standards for Dual-Eligible Special Needs Plan Look-Alikes
As a part of the “2020 Final Rule,”[8] CMS began restricting non-D-SNP MA plans that are determined to be “D-SNP look-alikes,” defined as a new non-SNP MA plan that projects in its bid that 80 percent or more of the plan's total enrollees are eligible for Medicaid.[9] Since the implementation of the 2020 Final Rule, CMS no longer enters into contracts with new plans that meet this criteria and, beginning in 2023, no longer renews any plans meeting that threshold. CMS initially implemented this restriction due to the proliferation in certain markets of plans meeting or exceeding the 80 percent threshold, effectively targeting dual-eligible beneficiaries for enrollment without providing those beneficiaries with the benefits or protections that would apply to the plan if it was subject to the CMS standards for D-SNPs or those imposed through the SMAC. CMS now proposes to lower the enrollment threshold from 80 percent to 60 percent over two years, to further squeeze out these look-alikes, applying a 70 percent threshold for 2025 and 60 percent for 2026. CMS solicits comments on whether to lower that threshold even further to 50 percent.
CMS proposes a variety of options for impacted look-alike plans to seek an SMAC with the Medicaid agency and to transition to D-SNP status (and thus avoid non-renewal). These changes align with the broader intent of the Proposed Rule changes to ensure that dually eligible individuals seeking to enroll in an MA plan choose the most integrated product type available in the market.
For D-SNP PPOs, Limit Out-of-Network Cost Sharing
The final D-SNP proposal addresses a policy issue related specifically to D-SNP PPO products, which CMS indicates have become more common in recent years. Dually eligible beneficiaries, whether enrolled in an MA plan (including a PPO product) or remaining in Traditional Medicare, are entitled to Medicaid coverage of their Medicare cost sharing.
However, the federal Balanced Budget Act of 1997 authorized the “lesser-of policy,” which allows Medicaid agencies to only reimburse Medicare providers for cost sharing to the extent that the Medicare payment (80 percent of the Medicare allowed amount for Part B) is less than 100 percent of the Medicaid fee schedule for the same service. In the context of D-SNP PPO products, the lower cost sharing for out-of-network services under the bid can, because of the lesser-of policy, result in very low compensation rates for providers.
In order to address the emerging policy issues related to D-SNP PPO out-of-network service cost sharing, CMS now proposes that D-SNP PPOs cap out-of-network cost sharing starting in 2026. CMS proposes that cost sharing for out-of-network professional and acute and psychiatric inpatient services be limited to the in-network service levels, the specific amounts varying based on the catastrophic out-of-pocket max under the bid.
CMS also proposes capping out-of-network cost sharing for other enumerated services, including chemotherapy, skilled nursing care, home health, and durable medical equipment. The agency solicits comments on how it should identify the specific services for out-of-network cost-sharing restrictions for D-SNP PPO products and is considering a blanket requirement.
Taken together, these proposed policy changes impacting C-SNPs, I-SNPs, and especially D-SNPs reflect a concerted effort by CMS to ensure that enrollees in these specialty managed-care products receive the full benefit of these product types.
RADV Proposed Rule Changes
Risk Adjustment Data Validation (RADV) audits are CMS’s primary validation tool for diagnoses submitted by MA organizations for the purposes of risk-adjusted payments pursuant to 42 C.F.R. § 422.310(e). Earlier this year, CMS published its long-awaited RADV Program final rule with some significant changes to its original RADV audits, eliminating the application of a fee-for-service adjuster to audit results and permitting CMS and the Department of Health and Human Services (HHS) Office of Inspector General to extrapolate error rates for payment year 2018 forward. That final rule took effect on April 3, 2023, after which the industry anticipated the finalization of prior year audits and initiation of new audits, as CMS had signaled in the preamble to the RADV final rule. However, CMS remained dormant, apparently due to its recent proposed changes (summarized herein) to the existing RADV audit appeals process outlined in 42 C.F.R. § 422.311.
An MA organization has the right to appeal RADV audit results with which it does not agree but is limited to two types of appeals: an appeal of the medical record review determinations and an appeal of the payment error calculation. Under current regulations, an MA organization would need to file either or both appeals within 60 days of receiving the final audit report. However, CMS has now realized this requirement is not always practical. If only challenging the payment error calculation, the 60-day time frame is reasonable. However, if challenging the former or both, the 60-day time limit is not reasonable, primarily since any redetermination of a coding review will lead to a recalculation of the payment error, potentially prompting another appeal or a revised one.
CMS is now proposing that if an MA organization is appealing both a medical record review determination and a payment error calculation, then it must exhaust all levels of the medical record review appeals process (reconsideration, hearing officer review, and CMS administrator review) prior to filing a payment error calculation. Once those levels of the appeals process are completed, agnostic as to whether the process has resulted in a reversal or changed determination, the MA organization will have another 60 days from receipt of a revised or reissued final audit report to file the payment error calculation appeal. If an MA organization only files an appeal for the payment error calculation, it forfeits the medical record review appeal process.
Other clarifications CMS is proposing include the following: (1) an MA organization’s request for medical record review determination must identify all audited hierarchical condition category codes that the MA organization wants to dispute; (2) the reconsideration official’s decision is final unless it is reversed or modified by the hearing officer; (3) if the CMS administrator does not decline or elect to review within 90 days of the MA organization’s or CMS’s timely request for review, the hearing officer’s decision becomes final; (4) if an administrator has issued a notice of review, CMS and the MA organization may submit comments within 15 days; and (5) recalculations of payment error rates will be completed once it is determined that a decision is final.
PACE Policy Updates on Corrective Actions and Service Determination Requests Prior to First Care Plan
CMS would make two important updates to the PACE program through the Proposed Rule: (1) allowing CMS or the State Administering Agency (SAA) to monitor the effectiveness of corrective actions at their discretion and (2) clarifying the service determination requests pending initial plan of the care process.
Corrective Actions
The Proposed Rule would grant CMS more flexibility in exercising its oversight authority over PACE organizations’ corrective actions. The current regulations require CMS, in partnership with the SAA, “to conduct comprehensive reviews of PACE organizations’ compliance with all significant program requirements.”[10]
Historically, CMS regulations surrounding the PACE program have increased the authority of CMS and SAA to oversee PACE organizations. The 1999 PACE interim final rule stated that (1) PACE organizations must take corrective action regarding deficiencies raised by CMS or SAA or else face sanctions or termination, and (2) CMS or the SAA must monitor how effective any PACE organizations’ corrective actions are. The 2019 PACE final rule expanded CMS and SAA methods of identifying deficiencies.
In light of the rapid growth of the PACE program across participating states, CMS has determined that the resources spent monitoring the effectiveness of each and every corrective action of each and every PACE organization would be better utilized if it and the SAA could prioritize the corrective actions most likely to impact participant health and safety and the program’s integrity. Therefore, the Proposed Rule would provide CMS and SAA with additional discretion in selecting which corrective actions to monitor.
Service Determination Requests Pending Finalized Initial Plan of Care
The Proposed Rule would also clarify the service determination request (SDR) process when a final plan of care has not yet been finalized. Current regulations require PACE organizations to have written processes for service determination requests, along with other aspects of a request for services by enrollees. The regulations define an SDR as “a request to initiate a service; modify an existing service, including to increase, reduce, eliminate, or otherwise change a service; or to continue coverage of a service that the PACE organization is recommending be discontinued or reduced.”[11]
The 2021 PACE regulation provided an exception to the SDR definition when the request is made before the initial plan of care is completed. In the proposed version of the 2021 regulation (the 2020 proposed rule), CMS explained that this exception would occur any time before finalization of the initial plan because it would allow the interdisciplinary care team (IDT) and participant/caregiver to discuss the totality of the participant’s condition and their wishes. CMS stated that it intended the IDT to discuss requests made by participants/caregivers and determine whether those requests should be included in the care plan.
CMS now indicates that, since its issuance of the 2021 rules, it has learned through oversight of PACE organizations that requests made by participants/caregivers are frequently not discussed during the initial care planning process or considered by the IDT. As a result, this proposed regulation would clarify that SDRs made before the plan of care is finalized must be either approved and included in the plan of care or be documented in the plan of care with the IDT’s rationale for not approving the requested service, with a right to appeal.
Behavioral Health Services Network Adequacy
In alignment with the CMS Behavioral Health Strategy,[12] and responding to stakeholder comments that have specifically recommended standards focused on access to substance use disorder prevention and treatment services, CMS proposes to add a new combined facility/provider specialty type called “Outpatient Behavioral Health” to the existing network adequacy requirements under § 422.116(b)(2).
The new facility-specialty type would include Opioid Treatment Program (OTP) providers, Community Mental Health Centers, or other outpatient mental health and substance use treatment facilities, along with a variety of provider-specialty types, including Marriage and Family Therapists (MFTs), Mental Health Counselors (MHCs),[13] addiction medicine physicians, and physician assistants, nurse practitioners, and clinical nurse specialists who regularly furnish or will regularly furnish behavioral health counseling or therapy services. This new Outpatient Behavioral Health category would be added to the list of provider types for which MA organizations can receive a 10-point credit toward the percentage of beneficiaries that reside within the required time and distance standard.
CMS provides several reasons for proposing Outpatient Behavioral Health to be a combined facility and specialty provider category, including the precedent for characterizing individual physical therapy, occupational therapy, and speech therapy providers as “facility types”; the fact that the identified behavioral health provider types often deliver services within outpatient facility settings; and the fact that CMS is still gathering data that could support time and distance standards for the newly recognized MFT and MHC specialty-provider types. CMS is also considering the possibility of establishing OTPs as a separate facility type, noting the growing number of OTPs enrolled in Medicare.
The new Outpatient Behavioral Health specialty type would complement the four existing behavioral health specialty types required for network adequacy: psychiatry, clinical psychology, clinical social work, and inpatient psychiatric facility services. Under this proposal, MA organizations may not submit a single provider for purposes of meeting more than one of our provider network requirements (for example, they cannot submit a single provider as a psychiatry, clinical social work, or clinical psychologist provider specialty and also as an Outpatient Behavioral Health facility).
Health Equity Analysis of UM Policies
CMS proposes to require that an MA organization’s UM Committee include at least one member with expertise in health equity and that the UM Committee conduct an annual health equity analysis of the organization’s use of prior authorization. The proposed health equity analysis would require eight specified metrics (including denial rates, appeal overturn rates, and determination turn-around times). Each metric must be broken out to examine the impact of prior authorization on enrollees with one or both of the identified social risk factors (receipt of the low-income subsidy or being dually eligible for Medicare and Medicaid, and having a disability) relative to the impact on enrollees without the identified social risk factor. MA organizations must make the results of this health equity analysis publicly available on their websites.
This new requirement would respond to research indicating that the use of prior authorization may disproportionately impact individuals with social risk factors, due to factors including administrative resource challenges for providers that serve historically underserved populations, a reduction in medication adherence, and overall worse medical outcomes due to delayed or denied care. CMS chose the identified social risk factors because they mirror the social risk factors that will be used to measure the Heath Equity Index reward for the 2027 Star Ratings. CMS also seeks comments on whether to include additional social risk factors, whether and how to define “expertise in health equity,” and additional requirements for the health equity analysis.
Part D Drug Management Program Requirements
Part D plan sponsors are required to have a drug management program for beneficiaries at risk of abuse or misuse of opioids and benzodiazepines. CMS identifies potential at-risk beneficiaries who meet certain clinical criteria (e.g., based on a history of opioid-related overdose or drug-seeking behaviors), and sponsors determine, through case management, whether an identified enrollee meets the criteria to be deemed an at-risk beneficiary. If the sponsor determines that the enrollee is an at-risk beneficiary, the sponsor may limit the enrollee’s access to opioids and benzodiazepines to selected prescribers and/or network pharmacies, or through a beneficiary-specific, point-of-sale claim edit. The Proposed Rule would make minor modifications to the process and timing for notifying enrollees that a limit on their access to opioids and/or benzodiazepines will be imposed or removed.
CMS also solicits feedback on the criteria and methodology that are used to identify potential at-risk beneficiaries for case management:
- Potentially using a recently tested analytical model (described at length in the Proposed Rule) to enhance the minimum or supplemental criteria in the future (either in addition to the current criteria or as a replacement)
- How to avoid the stigma and/or misapplication of identification of a potentially at-risk beneficiary using the variables in the identified model
- Implementation considerations, such as opportunities to promote medications for opioid use disorder, co-prescribing of naloxone or care coordination, effectively conducting case management, and/or unintended consequences for access to needed medications
Fast-Track Appeals
CMS proposes to enhance enrollees’ right to appeal an MA organization’s decision to terminate coverage for non-hospital provider services (§ 422.626).
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. Further, MA enrollees forfeit their right to appeal to the QIO if they leave a facility or otherwise end services from one of these providers before the MA organization terminates coverage for the services.
CMS is proposing to (1) require the QIO, instead of the MA plan, to review untimely fast-track appeals of an MA plan’s decision to terminate services in an HHA, CORF, or SNF, and (2) restore an enrollee’s right to appeal a termination of services decision when they leave the facility. These proposals would align MA regulations with Traditional Medicare and expand the rights of MA beneficiaries to access the fast-track appeals process.
ePrescribing Under Part D
CMS is proposing, for the first time, to align its Part D electronic transaction standards with those applicable to all other HHS programs by cross-referencing the HHS Office of the National Coordinator for Health Information Technology (ONC) Certification Standards for Health IT and adopting the Standards Development Advancement Process to incorporate by reference any updates that ONC adopts going forward.
Historically, Part D has always adopted electronic standards independently from all other HHS programs, including HIPAA Administrative Simplification standards (issued by CMS) and Health IT standards (issued by ONC). Most recently, in June 2019, CMS adopted the NCPDP SCRIPT standard version 2017071 to apply to e-prescribing, which was adopted. Use of this standard by Part D plan providers and pharmacies was required beginning in 2021.[14] Because the standards adopted by Part D were not compatible with the standard adopted for the ONC Health IT Certification Program for electronic health records (EHRs) under the 21st Century Cures Act, ONC exercised enforcement discretion so as not to penalize entities for complying with Part D requirements. This caused significant impacts on both the ONC certification program and CMS Promoting Interoperability Program resources.
CMS’s proposal to now align Part D standards with those applicable to other HHS programs will streamline processes by aligning the standards used by health IT developers, prescribing providers, pharmacy benefit managers, other health care organizations, and stakeholders that use the e-prescribing standard for transmitting prescriptions and prescription-related information, medication history, and electronic prior authorization transactions using electronic media for covered Part D drugs for Part D-eligible individuals.
Therefore, in the Proposed Rule, CMS is proposing to withdraw the NCPDP SCRIPT 2022011 standard, which is already outdated, and to adopt the most current 2023011 NCPDP SCRIPT standard that aligns with ONC, along with a new approach that will keep Part D in sync with the processes by which HIPAA standards for eligibility and benefits transactions and ONC certified EHR technology are updated. This approach was engineered in collaboration with ONC to mitigate future compliance and enforcement challenges. If the rule is adopted as proposed, there will be a transition period until January 1, 2027, before the NCPDP SCRIPT 2023011 standard becomes effective.
MA Agent/Broker Compensation
In what has become an annual effort to further constrict third-party marketing of MA products, CMS has proposed changes to its agent/broker compensation rules.
Under current regulations, MA plans have flexibility in setting compensation rates to independent agents/brokers for marketing to and enrollment of Medicare beneficiaries, as long as such payments are at or below the fair market value (FMV) cap set by CMS on an annual basis. Compensation includes commission payments as well as bonuses, gifts, and prizes or awards. Plans may also separately pay for services other than enrollment of beneficiaries—for example, training, customer service, operational overhead, or assistance with completion of health risk assessments. These other payments are often referred to as “administrative costs.”
Through the Proposed Rule, CMS would remove the authority for plans to separately pay independent agents/brokers for administrative costs and, instead, move certain of those costs into the “compensation” category. These administrative costs, including payment of fees to comply with state appointment laws; training, certification, and testing costs; reimbursement for mileage to and from appointments with beneficiaries; reimbursement for actual costs associated with beneficiary sales appointments; and “any other payments made to an agent or broker that are tied to enrollment, related to an enrollment in an MA plan or product, or for services conducted as a part of the relationship associated with the enrollment into an MA plan or product” would be paid as part of the plan’s compensation for an individual enrollment, through the addition of $31 to the current FMV compensation amounts to account for the cost of the added services.
Notably, CMS’s proposed changes would not appear to prohibit MA plans from entering into arrangements for the provision of administrative services with entities that employ or contract with independent agents/brokers, such as health insurance agencies/brokerages or field marketing organizations (FMOs), as long as the services provided under those arrangements do not include those that CMS would explicitly move into the compensation category. As such, the Proposed Rule appears to allow MA plans to pay agencies/brokerages or FMOs for the provision of services not “tied to an enrollment” (e.g., marketing and oversight). This reading is supported by CMS’s later request for comments to inform future rulemaking on “how CMS can further ensure that payments made by MA plans to FMOs do not undercut the intended outcome of the agent and broker compensation proposals included in this proposed rule.”[15]
CMS further proposes to standardize the amounts plans may pay as compensation such that the FMV amount (including the added $31) would become the required payment for an individual enrollment, removing plan flexibility in setting compensation rates. This could be problematic for plans where independent agents/brokers are not paying for certain of the services identified by CMS as accounted for in the $31. It could also be problematic for independent agents/brokers who seek to provide additional services that are “tied to enrollment”—CMS’s proposal would leave plans with no flexibility to increase the $31 to cover the costs of those additional services. An additional concern is CMS’s statement that the Proposed Rule would require that agents and brokers “be paid the same amount either from the MA plan directly or by an FMO,” as CMS appears to define an FMO as “a type of [third-party marketing organization] that employs agents and brokers to complete MA enrollment activities and may also conduct additional marketing activities on behalf of MA plans, such as lead generating and advertising.”[16] CMS does not address the difficulties that would arise from requiring FMOs to pay all of their employees at a per-enrollment, CMS-defined amount without regard to seniority, experience, or employee benefits.
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To submit a formal comment on the Proposed Rule by the January 5, 2024, due date, please visit https://www.federalregister.gov/documents/2023/11/15/2023-24118/medicare-program-contract-year-2025-policy-and-technical-changes-to-the-medicare-advantage-program.
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Staff Attorney Ann Parks also contributed to the preparation of this Insight
ENDNOTES
[1] 88 FR 78476 (November 15, 2023), available at https://www.federalregister.gov/documents/2023/11/15/2023-24118/medicare-program-contract-year-2025-policy-and-technical-changes-to-the-medicare-advantage-program.
[2] The clarification of these sub-types and the definitions of each were only outlined last year in ”The Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications” proposed rule, which appeared in the Federal Register on December 27, 2022 (87 FR 79452).
[3] The Proposed Rule provides that proof could include letters or e-mails to and from the providers’ offices demonstrating that the providers were declining to contract with any facility-based I-SNP. CMS has historically interpreted the non-interference provision at section 1854(a)(6) of the Social Security Act to prohibit CMS from requiring any MA organization to contract with a particular provider (even though the time and distance standards do have this effect on occasion) or require a particular price structure or payment amount (with the noted exception of the Physician Incentive Plan requirements at 42 CFR 422.208. Based on this interpretation, CMS has historically never accepted an MA organization’s inability to contract with a provider as a valid rationale for an exception.
[4] Health Service Delivery (HSD) Instructions for Medicare-Medicaid Plans (MMPs) Annual Medicare Network Submission, available at: https://www.cms.gov/files/document/mmphsdnetworksubmissioninstructionscy2023.pdf.
[5] Kaiser Family Foundation, 2022 Medicare Advantage: Special Needs Plan (SNP) Enrollment, by SNP Type; https://www.kff.org/medicare/state-indicator/snp-enrollment-by-snp-type/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
[6] See “Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Program of All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021” (CMS–4185–F).
[7] See 83 FR 16640.
[8] See 85 FR 33796.
[9] See 42 C.F.R. § 422.514(d)(1).
[10] Proposed Regulation, page 347.
[11] Proposed Regulation, page 349.
[12] https://www.cms.gov/cms-behavioral-health-strategy.
[13] MFTs and MHCs will be eligible to enroll in Medicare and start billing for services beginning January 1, 2024, due to the new statutory benefit category established by the Consolidated Appropriations Act (CAA) 2023.
[14] Medicare Program; Secure Electronic Prior Authorization For Medicare Part D, 85 FR 86824 (December 31, 2020) (at 42 CFR 423.160).
[15] 88 Fed. Reg. 78553.
[16] Id.
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