CMS Releases Medicare Part D and Medicare Advantage Proposal

In January, CMS issued a proposed rule that would revise the Medicare Advantage (MA) and Part D regulations related to marketing and communications, the criteria used to review applications for new or expanded MA and Part D plans, quality ratings for MA and Part D plans, provider network adequacy requirements, medical loss ratio reporting, special requirements during disasters or public emergencies, and the use of pharmacy price concessions to reduce beneficiary out-of-pocket costs for prescription drugs under Part D. This proposed rule would also revise regulations for Dual Elligible Special Needs Plans and potentially other special needs plans related to enrollee advisory committees, health risk assessments, and ways to improve integration of Medicare and Medicaid. Many proposals are based on lessons learned from the Medicare-Medicaid Financial Alignment Initiative.

CMS expects that the relatively modest costs associated with the provisions in the proposed rule will not significantly change MA plans’ bids, supplemental benefits, or beneficiary premiums.

Summary of Proposed Changes                    

Lowering Beneficiary Cost-Sharing at the Pharmacy
In recent years, more Part D plans have been entering into arrangements with pharmacies that may pay less money for dispensed drugs if pharmacies do not meet certain criteria. The negotiated price for a drug is the price reported to CMS at the point of sale, which is used to calculate beneficiary cost-sharing and generally adjudicate the Part D benefit. With the emergence of these payment arrangements, the negotiated price is frequently higher than the final payment to pharmacies. Higher negotiated prices lead to higher beneficiary cost-sharing and faster beneficiary advancement through the Part D benefit. 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 so that the beneficiary can also share in the savings. Specifically, CMS is proposing to redefine the negotiated price as the baseline, or lowest possible, payment to a pharmacy, effective January 1, 2023. This policy would reduce beneficiary out-of-pocket costs and improve price transparency and market competition in the Part D program.

Marketing and Communications Oversight

CMS is proposing changes to marketing and communications requirements that will protect Medicare beneficiaries by ensuring they receive accurate and accessible information about Medicare coverage. These include strengthening oversight of third-party marketing organizations to detect and prevent the use of deceptive marketing tactics to enroll beneficiaries in MA 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 identification card standards, updating requirements related to a disclaimer for limited access to preferred cost sharing pharmacies, providing website instructions on how to appoint a representative, and website posting of enrollment instructions and forms.

Beneficiary Access to Care During Disasters and Emergencies

To ensure that beneficiaries have uninterrupted access to needed services, CMS is proposing to revise and clarify timeframes and standards associated with disasters and emergencies. Current regulations have special requirements for MA 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 an MA 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 health care.

Past Performance

To hold plans to a higher standard, 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 failing CMS’ net worth requirements during the performance period. The proposed rule adds star ratings of 2.5 or lower, bankruptcy or bankruptcy filings, and exceeding a CMS designated threshold for compliance actions as bases for CMS denying a new application or a service area expansion application.

Network Adequacy

To strengthen its application standards and oversight, 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 MA plan. This change would also provide MA organizations with information regarding their network adequacy ahead of bid submissions, mitigating current issues with late changes to the bid that may affect the bid pricing tool

Greater Transparency in Medical Loss Ratio (MLR) Reporting

To increase value for taxpayers and beneficiaries, we are proposing to reinstate MLR reporting requirements that were in effect for contract years 2014 – 2017. The current regulations require that MA 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 proposed rule would require MA 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, the rule proposed to require that MA organizations report the amounts they spend on various types of supplemental benefits not available under original Medicare (e.g., dental, vision, hearing, transportation).

To view the proposed rule, please visit:

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