CMS Releases CY 2023 Medicare Advantage and Part D Final Rule, Finalizing Significant Changes to D-SNPs
CMS released its CY 2023 Medicare Advantage (MA) and Part D final rule (see press release, fact sheet), which revises MA and Part D regulations related to marketing and communications, quality ratings, network adequacy requirements, medical loss ratio reporting, requirements during public emergencies, and pharmacy price concessions. CMS also finalized significant regulatory changes to Dual-Eligible Special Needs Plans (D-SNPs), incorporating lessons learned from the Medicare-Medicaid Financial Alignment Initiative. A summary of the finalized changes follows, and Healthsperien is in the process of developing a more detailed analysis of the final rule.
- Prescription Drug Beneficiary Cost-Sharing: Effective January 1, 2024, CMS will require Part D plans to apply all price concessions received from network pharmacies to the negotiated price at the point of sale. Specifically, CMS is redefining the negotiated price as the baseline, or lowest possible payment to a pharmacy. CMS will also now apply the policy across all phases of the Part D benefit, including the coverage gap phase. CMS reasons the change would reduce beneficiary out-of-pocket costs and improve price transparency and market competition. Note that CMS originally proposed this policy to take effect January 1, 2023.
- Marketing and Communications Oversight: CMS is finalizing a series of changes to increase oversight, including increasing efforts to detect deceptive marketing tactics to enroll beneficiaries in MA and Part D plans, requiring a multi-language insert informing beneficiaries of interpreter services, codifying enrollee ID card standards, requiring 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.
- Access to Care During Disasters and Emergencies: CMS will require MA plans to comply with certain requirements when there is a disaster or emergency declaration and disruption in access to care. CMS also clarifies the period of time during which MA plans must comply with special requirements to ensure access to covered services for enrollees.
- Higher Bases for Denying New Plan Contracts or Services: CMS is finalizing the addition of low Star Ratings performance (2.5 or lower), bankruptcy or bankruptcy filings, and exceeding a CMS-designated threshold for compliance actions as new bases for denying a new MA or Part D organization’s application for a new contract or service area expansion.
- Requiring Compliant Network at Application: CMS is finalizing the requirement for plan applications to demonstrate compliance with network adequacy requirements before CMS would approve an application for a new or expanded MA plan, and thus ahead of bid submissions. CMS recognizes plans may need to build out their network almost one year in advance of the contract year under this requirement and proposes to offer a temporary 10-percentage point credit towards time and distance requirements until the coverage year begins. Based on comments received, CMS will also allow applicants to use Letters of Intent (LOIs) in lieu of a signed provider contract, at the time of application and for the duration of the application review to meet network adequacy standards.
- Increased Transparency in Medical Loss Ratio (MLR) Reporting: CMS will reinstate MLR reporting requirements that were in effect for contract years 2014 – 2017, which would require plans to report underlying cost and revenue information needed to calculate and verify MLR percentages and remittance amounts, as well as the amounts spent on supplemental benefits. In addition, the new MLR reporting templates will require additional details about plan expenditures to allow CMS to better assess the accuracy of MLR submissions, the value of services provided, and the impact of recent rule changes to removed limitations on certain expenditures that count towards the 85% MLR requirement.
- Star Rating Changes to Account for COVID-19: CMS is finalizing a technical change to the Monitoring Physical Activity, Reducing the Risk of Falling, and Improving Bladder Control HEDIS measures collected through the Health Outcomes Survey. Without the change, CMS would be unable to calculate 2023 Star Ratings for these measures due to the COVID-19 extreme and uncontrollable circumstances adjustment. CMS is also finalizing a number of changes in 2021 and 2022 Star Ratings that were established in March and September 2020 Interim Final Rules to accommodate disruptions in data collection due to the COVID-19 pandemic.
- Maximum Out-of-Pocket (MOOP) Policy for Dually Eligible Beneficiaries: CMS is finalizing its proposal to calculate the MOOP limit based on 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 due to state limits on Medicare cost-sharing and dually eligible individuals’ exemption from Medicare cost-sharing.
- Enrollee Participation in Plan Governance: CMS is finalizing its proposed policy that any MA organization offering one or more D-SNPs in a state must establish and maintain one or more enrollee advisory committees to solicit direct input on enrollee experiences. They also require that the committee include a reasonably representative sample of individuals enrolled in the D-SNP(s) and solicit input on, among other topics, ways to improve access to covered services, coordination of services, and health equity for underserved populations.
- Standardizing SDOH Questions on Health Risk Assessments (HRAs): CMS is not implementing its proposed policy to require all SNPs use the same specific standardized questions in their HRAs. Rather, CMS is finalizing a requirement that by 2024 all SNP HRAs include at least one question from a list of screening instruments specified by CMS in sub-regulatory guidance on each of the three topics of housing stability, food security, and access to transportation. The final rule notes that CMS did not propose SNPs be accountable for resolving all risks identified in the assessment questions, but statute requires that the results from the initial and annual HRAs be addressed in the individualized care plan.
- Redefining Definitions for FIDE-SNPs and HIDE-SNIPS: CMS is finalizing its proposal that for 2025 and subsequent years, all FIDE SNPs have exclusively aligned enrollment and cover Medicare cost-sharing for three categories of Medicaid benefits: home health services; medical supplies, equipment, and appliances; and behavioral health services. CMS is also finalizing its proposal that for plan year 2025 and subsequent years, each HIDE SNP have a service area that completely overlaps with the service area of the affiliated Medicaid managed care plan. Finally, consistent with policy outlined in sub-regulatory guidance, the final rule codifies limited carve-outs of Medicaid long-term services and supports and behavioral health services covered under the Medicaid capitated contract affiliated with FIDE SNPs and HIDE SNPs.
- Additional Opportunities for Integration Through State Medicaid Agency Contracts: CMS is finalizing its proposal to codify new pathways through which states can use state Medicaid agency contracts to require that certain D-SNPs with exclusively aligned enrollment: 1) apply and request to establish contracts that only include one or more D-SNPs within a state (allowing star ratings to reflect local D-SNP performance) and 2) use certain integrated materials and notices for enrollees. Because Star Ratings are assigned at the contract level, the final rule provides a mechanism to help CMS and state better identify disparities between dually eligible beneficiaries and other beneficiaries. Finally, CMS is finalizing its proposals to better coordinate state and CMS monitoring and oversight of certain D-SNPs when a state has elected to require these additional levels of integration, including granting state access to certain CMS information systems.
The U.S. Departments of Labor, Health and Human Services, and the Treasury (together referred to as the Tri-Agencies) released new Frequently Asked Questions (FAQs) on the implementation of the Transparency in Coverage Final Rule. As a reminder, the rule requires issuers in the individual and group markets (with the exception of grandfathered plans) to:
- Disclose cost-sharing information upon request to an individual
- Make this information available online or in paper form if requested
- Disclose in-network provider negotiated rates, historical out-of-network allowed amounts, and drug pricing information through three machine-readable files posted online
In these new FAQs, the Tri-Agencies reiterate that enforcement of the machine-readable files disclosing in-network and out-of-network amounts will begin July 1, 2022. The prescription drug pricing information portion has previously been delayed. The FAQs also provide information on a potential safe harbor for arrangements where a specific dollar amount cannot be determined.
CMS released the final rule (press release, fact sheet) for the 2023 Notice of Benefit and Payment Parameters (NBPP), which establishes standards for issuers and marketplaces, as well as requirements for agents, brokers, web brokers, and issuers assisting consumers with enrollment through marketplaces that use the federal platform. Notable finalized policies include:
- Standardized Plan Options: CMS will require issuers in the Federally-facilitated marketplace (FFM) and state-based marketplaces on the Federal Platform (SBM-FPs) to offer standardized plan options at every product network type, at every metal level, and throughout every service area that they offer non-standardized options in plan year (PY) 2023 and beyond.
- Network Adequacy: Beginning in PY 2023, CMS will evaluate qualified health plans (QHPs) on FFMs for compliance with quantitative network adequacy standards based on time and distance. Beginning in PY 2024, CMS will also evaluate appointment wait times. CMS will also require QHPS to submit information on whether providers are offering services through telehealth.
- Actuarial Value de Minimis Ranges: CMS finalized changes to certain AV de minimis ranges, including individual market silver QHPs, which will influence the generosity of benchmark plans, potentially increasing the amount of premium tax credits subsidized enrollees receive.
- Health Equity: CMS will refine its Essential Health Benefits nondiscrimination policy to ensure benefit designs, including benefit limitations and plan EHB coverage requirements, are based on clinical evidence.
- Special Enrollment Period (SEP) Verification: CMS will scale back pre-enrollment SEP verification in the FFMs and SBM-FPs to include only the SEP for loss of minimum essential coverage.
- Updated Quality Improvement Strategy (QIS) Standards: CMS will update QIS standards beginning in 2023 requiring QHP issuers to address health and health care disparities as a specific topic area within their QIS.
- Essential Community Provider (ECP) Threshold: CMS finalized an increase of the ECP threshold from 20% to 35% of available ECPs in each plan’s service area to participate in the plan’s provider network.
- User Fees: For the 2023 benefit year, CMS finalized an FFM user fee rate of 2.75% of premium and SBM-FP rate of 2.25% of premium.
- Risk Adjustment: CMS finalized two of the three proposed model specification changes to risk adjustment, including removing current severity illness factors and adding an interacted hierarchical condition category. CMS also finalized refinements to the HHS Risk Adjustment Data Validation (HHS-RADV) methodology.
- Premium Tax Credit Proration: CMS finalized premium tax credit proration methodology for the federal marketplaces, but not for the state-based marketplaces. Instead, beginning in 2023, SBMs will report to HHS their methodology.
This week, the House Energy and Commerce Committee held a hearing on President Biden’s Fiscal Year 2023 Budget proposal for the Department of Health and Human Services (HHS). Secretary of HHS, Xavier Becerra, sat before the committee for about three hours answering Representatives’ questions about the President’s budget proposal for the upcoming year as well as other pressing health policy issues. Of note, Secretary Becerra reflected on the Department’s achievements over the past year related to over 257,000 Americans receiving COVID-19 vaccinations and boosters, a record number of health insurance enrollees, and key investments to address disparities and improve equity, particularly around investments on mental and behavioral health infrastructure. Secretary Becerra also noted that the pandemic has cost the US $4T, so future pandemic preparedness is necessary. Other topics discussed include ARPA-H, the Title 42 asylum moratorium, and drug pricing. Healthsperien has drafted a summary of the hearing, which can be found here.
Sen. Joe Manchin (D-WV), key holdout on President Biden’s Build Back Better agenda, said Democrats’ health care priorities are contingent on new tax hikes. Sen. Manchin recently discussed such proposal with Senate Majority Leader Chuck Schumer (D-NY), specifically about using a narrower version of the budget reconciliation process to undo-the Trump tax cuts for corporations and the wealthy. Manchin specifically wants half of the reconciliation bill’s offsets to pay for deficit reduction. This would mean that any of the tax hikes would likely have to pay for drug pricing reform and deficit reduction. Yesterday, Sen. Manchin was asked at the American Hospital Association conference whether he supports any of the Democrats’ health care priorities like extending the exchange insurance premium subsidies that Congress temporarily increased early on in the pandemic as well as fill the Medicaid coverage gap. Machin responded that he would not support adding to the government health care costs without tax increases. Congress has a narrowing amount of time to get any major legislation passed, as mid-term election season begins to pick up later this summer.
This week, Representative Robin Kelly (IL-D), Chair of the Congressional Black Caucus Health Braintrust, introduced the Health Equity and Accountability Act (HEAA). HEAA is the only legislation aimed at directly addressing the intersection of health inequities with personal characteristics such as race, ethnicity, age, and disability. Specifically, the legislation offers a path to increase the federal tobacco tax, improve access to cessation services, permanently lifts the cap on federal Medicaid spending in the U.S. Territories and brings federal matching rates in line with states, and includes provisions from the Diversifying Investigations Via Equitable Research Studies for Everyone (DIVERSE) Trials Act. The legislation has been introduced in each Congress since 2003 and serves as a comprehensive legislative roadmap that focuses on 10 primary topics:
- Data collection and reporting
- Culturally and linguistically appropriate health and health care
- Health workforce diversity
- Improving health care access and quality
- Improving health outcomes for women, children, and families
- Mental health and substance use disorders
- Addressing high impact minority diseases
- Health information technology
- Accountability and evaluation
- Addressing social determinants and improving environmental justice
HEAA is supported by the Congressional Tri-Caucuses and is endorsed by more than 60 external stakeholders representing a variety of health industry partners and advocates including, the National Urban League, the NAACP, and the American Cancer Society Cancer Action Network, among others.
The week, Senator Elizabeth Warren (D-MA) sent a letter to Department of Health and Human Services Secretary Xavier Becerra, sharing the findings from a letter that legal experts sent to her which outlined three legal tools the Biden Administration could use to lower drug prices. To read Sen. Warren’s letter to Secretary Becerra click here. To read the legal experts letter to Sen. Warren click here. The three tools are:
- The government patent use power codified in 28 U.S.C. § 1498: This law formalizes the government’s ability to use any innovation described in and covered by a patent in the United States, without license, provided that the use is by or for the United States and the patent holder is afforded reasonable and entire compensation. The legal experts argue that the federal government could and should use this power to curb drug prices paid by the government. The federal government can use this power by purchasing the patented drugs from a lower-cost manufacturer, or it can manufacture the drug itself or hire a third party to use the patent in the government’s place.
- The Bayh-Dole Act’s royalty-free license: Outlined in section 202 of the Bayh-Dole Act, the section grants the government irrevocable, non-transferable, royalty-free licenses to covered patents. These licenses permit the government to manufacture drugs for tis own use or license production on the government’s behalf.
- The Bayh-Dole Act’s march-in rights: Outlined in section 203 of the Bayh-Dole Act, the section allows the government to authorize generic drug companies to produce the invention for sale in the private market. Unlike the government licenses provided by section 202, march-in licenses require payment of royalties to the patent holder. In addition, to issue a march-in license, an agency that funded the research must determine that proper grounds exist.
CMS released a proposed rule to implement sections of the Consolidated Appropriations Act to simplify Medicare enrollment rules and extend coverage of immunosuppressive drugs for certain beneficiaries. Beginning January 1, 2023, Medicare coverage will become effective the month after enrollment for individuals in the last three months of their Initial Enrollment Period (IEP) or in the General Enrollment Period (GEP). Currently, coverage can take multiple months to begin if individual enrolls in either of these enrollment periods. CMS is also proposing several Special Enrollment Periods (SEPs):
- An SEP for individuals impacted by an emergency or disaster
- An SEP for health plan or employer error
- An SEP for formerly incarcerated individuals
- An SEP to coordinate with termination of Medicaid coverage
- An SEP for other exceptional conditions
The rule also proposes an extension of coverage of immunosuppressive drugs for certain beneficiaries. An individual who does not have other health insurance coverage would be eligible to enroll in Part B beyond the 36-month post-transplant period for the limited purpose of getting Part B coverage for immunosuppressive drugs. The benefit would begin as early as January 1, 2023.
This week, CMS released enrollment figures on the three key insurance program operated by CMS, Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). As of January 2022, more than 63.2 million individuals were enrolled in Medicare, an increase of 52 thousand since the last report. Nearly 40 million of those were enrolled in Original Medicare while approximately 29 million were enrolled in a Medicare Advantage plan. Nearly 11.9 million individuals were dually eligible for Medicare and Medicaid as of January 2022 and enrolled in both programs. As of January 2022, just under 87 million individuals were enrolled in Medicare and CHIP, an increase of 1.1 million since the last report. Nearly 80 million of those individuals were enrolled in Medicaid with the remainder in CHIP. Complete Medicare enrollment data can be viewed here and complete Medicaid and CHIP data can be viewed here.
The associations representing emergency room physicians, radiologists, and anesthesiologists say they will continue to pursue their case against the Biden Administration interim final rule on surprise billing now that the Department of Justice is appealing a separate case in favor of the Texas Medical Association. As we reported in February, a U.S. District Judge in Texas ruled in favor of the TMA, finding that independent dispute resolution process outlined in the interim final rule was invalid. However, two other cases sit before federal judges in Illinois and Washington, D.C. The American College of Emergency Room Physicians, American College of Radiology, and American Society of Anesthesiologist initially filed suit in Illinois, while the American Medical Association and American Hospital Association filed suit in Washington, D.C. Since the Texas ruling the plaintiffs in the Illinois and Washington, D.C. cases have paused litigation pending the DOJ’s decision to appeal the Texas court cases’ ruling to the Fifth Circuit. As a result, of the DOJ’s decision to appeal, the plaintiff’s in the other two cases have spoken out about their intention to continue their litigation pending an unfavorable decision in Texas. In supplemental court filings, the Biden Administration stated it intends to issue a final rule and respond to the comments they received via the interim final rule with comment period. The final rule should be out by summer.