[Federal Register Volume 83, Number 212 (Thursday, November 1, 2018)]
[Proposed Rules]
[Pages 54982-55088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-23599]



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Vol. 83

Thursday,

No. 212

November 1, 2018

Part II





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services





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42 CFR Parts 422, 423, 438, et al.





Medicare and Medicaid Programs; Policy and Technical Changes to the 
Medicare Advantage, Medicare Prescription Drug Benefit, Program of All-
Inclusive Care for the Elderly, Medicaid Fee-for-Service, and Medicaid 
Managed Care Programs for Years 2020 and 2021; Proposed Rule

  Federal Register / Vol. 83 , No. 212 / Thursday, November 1, 2018 / 
Proposed Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 422, 423, 438, and 498

[CMS-4185-P]
RIN 0938-AT59


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

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare Advantage (MA) 
program (Part C) regulations and Prescription Drug Benefit program 
(Part D) regulations to implement certain provisions of the Bipartisan 
Budget Act of 2018; improve quality and accessibility; clarify certain 
program integrity policies; reduce burden on providers, MA plans, and 
Part D sponsors through providing additional policy clarification; and 
implement other technical changes regarding quality improvement. This 
proposed rule would also revise the appeals and grievances requirements 
for Medicaid managed care and MA special needs plans for dually 
eligible individuals to implement certain provisions of the Bipartisan 
Budget Act of 2018.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on December 31, 
2018.

ADDRESSES: In commenting, please refer to file code CMS-4185-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-4185-P, P.O. Box 8013, 
Baltimore, MD 21244-8013.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-4185-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
Theresa Wachter, (410) 786-1157, or Cali Diehl, (410) 786-4053, MA/Part 
C Issues.
Elizabeth Goldstein, (410) 786-6665, Parts C and D Quality Ratings 
Issues.
Mark Smith, (410) 786-8015, Prescription Drug Plan Access to Parts A 
and B Data Issues.
Vanessa Duran, (410) 786-8697, D-SNP Issues.
Frank Whelan, (410) 786-1302, Preclusion List Issues.
Jonathan Smith (410) 786-4671, or Joanne Davis, (410) 786-5127, MA RADV 
Issues.

SUPPLEMENTARY INFORMATION:  Inspection of Public Comments: All comments 
received before the close of the comment period are available for 
viewing by the public, including any personally identifiable or 
confidential business information that is included in a comment. We 
post all comments received before the close of the comment period on 
the following website as soon as possible after they have been 
received: http://www.regulations.gov. Follow the search instructions on 
that website to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Executive Summary

A. Purpose

    The primary purposes of this proposed rule are to: make revisions 
to the Medicare Advantage (MA) program (Part C) and Prescription Drug 
Benefit Program (Part D) regulations based on our continued experience 
in the administration of the Part C and Part D programs and to 
implement certain provisions of the Bipartisan Budget Act of 2018. The 
proposed changes are necessary to--
     Implement the Bipartisan Budget Act of 2018 provisions;
     Improve program quality and accessibility;
     Clarify program integrity policies; and
     Implement other changes.
    This proposed rule would meet the Administration's priorities to 
reduce burden across the Medicare program by reducing unnecessary 
regulatory complexity, and improve the regulatory framework to 
facilitate development of Part C and Part D products that better meet 
the individual beneficiary's healthcare needs. Because the Bipartisan 
Budget Act of 2018 requires the Secretary to establish procedures, to 
the extent feasible, for integration and unification of the appeals and 
grievance processes for dually eligible beneficiaries who are enrolled 
in Medicaid and in MA special needs plans for dually eligible 
individuals, this proposed rule also includes proposals to revise the 
appeals and grievances requirements for Medicaid managed care and MA 
special needs plans for dually eligible individuals. We note CMS plans 
to release a proposed Medicare rule in the near future to further the 
President's agenda of reducing drug costs.

B. Summary of the Major Provisions

1. Requirements for Medicare Advantage Plans Offering Additional 
Telehealth Benefits (Sec. Sec.  422.100, 422.135, 422.252, 422.254, and 
422.264)
    Section 50323 of the Bipartisan Budget Act of 2018 (Pub. L. 115-
123) created a new section 1852(m) of the Social Security Act (the 
Act), which allows MA plans to provide ``additional telehealth 
benefits'' to enrollees starting in plan year 2020 and treat them as 
basic benefits for purposes of bid submission and payment by CMS. The 
statute limits these authorized additional telehealth benefits to 
services for which benefits are available under Medicare Part B, but 
that are not payable under section 1834(m) of the Act and have been 
identified for the applicable year as clinically appropriate to furnish 
through electronic information and telecommunications technology 
(section 1852(m)(2)(A)(i) of the Act). Under this proposal, MA plans 
would be permitted to offer--as part of the basic benefit package--
additional telehealth benefits beyond what is currently allowable under 
the original Medicare telehealth benefit. In addition, we propose to 
continue authority for

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MA plans to offer supplemental benefits (that is, benefits not covered 
by original Medicare) via remote access technologies and/or 
telemonitoring for those services that do not meet the requirements for 
additional telehealth benefits.
    Section 1852(m)(4) of the Act mandates that enrollee choice is a 
priority. If an MA plan covers a Part B service as an additional 
telehealth benefit, then the MA plan must also provide access to such 
service through an in-person visit and not only as an additional 
telehealth benefit. The enrollee must have the option whether to 
receive such service through an in-person visit or as an additional 
telehealth benefit. In addition, section 1852(m)(2)(A)(ii) of the Act 
excludes from additional telehealth benefits any capital and 
infrastructure costs and investments relating to such benefits. These 
statutory provisions have guided our proposal.
    We propose to establish regulatory requirements that would allow MA 
plans to cover Part B benefits furnished through electronic exchange as 
``additional telehealth benefits''--and as part of the basic benefits 
defined in Sec.  422.101--instead of separate supplemental benefits. We 
believe additional telehealth benefits would increase access to 
patient-centered care by giving enrollees more control to determine 
when, where, and how they access benefits. We are soliciting comments 
from stakeholders on various aspects of our proposal, which would help 
inform CMS's next steps related to implementing the additional 
telehealth benefits.
2. Dual Eligible Special Needs Plans Provisions (Sec. Sec.  422.2, 
422.60, 422.102, 422.107, 422.111, 422.560 Through 422.562, 422.566, 
422.629 Through 422.634, 422.752, 438.210, 438.400, and 438.402)
    Section 50311(b) of the Bipartisan Budget Act of 2018 amends 
section 1859 of the Act to require integration of the Medicare and 
Medicaid benefits provided to enrollees in Dual Eligible Special Needs 
Plans (D-SNPs). In particular, the statute requires: (1) Development of 
unified grievance and appeals processes for D-SNPs; and (2) 
establishment of new standards for integration of Medicare and Medicaid 
benefits for D-SNPs.
    The statute specifies a number of key elements for unified D-SNP 
grievance and appeals processes and grants the Secretary discretion to 
determine the extent to which unification of these processes is 
feasible. In particular, the unified processes must adopt the 
provisions from section 1852(f) and (g) of the Act (MA grievances and 
appeals) and sections 1902(a)(3) and (5), and 1932(b)(4) of the Act 
(Medicaid grievances and appeals, including managed care) that are most 
protective to the enrollee, take into account differences in state 
Medicaid plans to the extent necessary, be easily navigable by an 
enrollee, include a single written notification of all applicable 
grievance and appeal rights, provide a single pathway for resolution of 
a grievance or appeal, provide clear notices, employ unified timeframes 
for grievances and appeals, establish requirements for how the plan 
must process, track, and resolve grievances and appeals, and with 
respect to benefits covered under Medicare Parts A and B and Medicaid, 
incorporate existing law that provides continuation of benefits pending 
appeal for items and services covered under Medicare and Medicaid. The 
statute requires the Secretary to establish unified grievance and 
appeals procedures by April 1, 2020 and requires D-SNP contracts with 
state Medicaid agencies to use the unified procedures for 2021 and 
subsequent years.
    With respect to the establishment of new standards for integration 
of Medicare and Medicaid benefits, the statute requires that all D-SNPs 
meet certain new minimum criteria for such integration for 2021 and 
subsequent years, either by covering Medicaid benefits through a 
capitated payment from a state Medicaid agency or meeting a minimum set 
of requirements as determined by the Secretary. The law also stipulates 
that for the years 2021 through 2025, if the Secretary determines that 
a D-SNP failed to meet one of these integration standards, the 
Secretary may impose an enrollment sanction, which would prevent the D-
SNP from enrolling new members. In describing the ``additional minimum 
set of requirements'' established by the Secretary, the statute directs 
the Federally Coordinated Health Care Office in CMS to base such 
standards on ``input from stakeholders.'' We intend to use this 
rulemaking to solicit input from stakeholders on the implementation of 
these new statutory provisions as well as to clarify definitions and 
operating requirements for D-SNPs.
3. Medicare Advantage and Part D Prescription Drug Plan Quality Rating 
System (Sec. Sec.  422.162(a) and 423.182(a), Sec. Sec.  422.166(a) and 
423.186(a), Sec. Sec.  422.164 and 423.184, and Sec. Sec.  
422.166(i)(1) and 423.186(i)(1))
    In the Medicare Program; Contract Year 2019 Policy and Technical 
Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-
for-Service, the Medicare Prescription Drug Benefit Programs, and the 
PACE Program Final Rule (hereafter referred to as the April 2018 final 
rule), CMS codified at Sec. Sec.  422.160, 422.162, 422.164, and 
422.166 (83 FR 16725 through 16731) and Sec. Sec.  423.180, 423.182, 
423.184, and 423.186 (83 FR 16743 through 16749) the methodology for 
the Star Ratings system for the MA and Part D programs, respectively. 
This was part of the Administration's effort to increase transparency 
and advance notice regarding enhancements to the Part C and D Star 
Ratings program. That final rule included mechanisms for the removal of 
measures for specific reasons (low statistical reliability and when the 
clinical guidelines associated with the specifications of measures 
change such that the specifications are no longer believed to align 
with positive health outcomes) but, generally, removal of a measure for 
other reasons would also occur through rulemaking.
    At this time, we are proposing enhancements to the cut point 
methodology for non-Consumer Assessment of Healthcare Providers and 
Systems (CAHPS) measures. We are also proposing substantive updates to 
the specifications for a few measures for the 2022 and 2023 Star 
Ratings, and rules for calculating Star Ratings in the case of extreme 
and uncontrollable circumstances. Unless otherwise stated, data would 
be collected and performance measured using these proposed rules and 
regulations for the 2020 measurement period and the 2022 Star Ratings.
4. Preclusion List Requirements for Prescribers in Part D and 
Individuals and Entities in MA, Cost Plans, and PACE (Sec. Sec.  
422.222 and 423.120(c)(6))
    In the April 2018 final rule, CMS removed several requirements 
pertaining to MA and Part D provider and prescriber enrollment that 
were to become effective on January 1, 2019. We stated in that final 
rule our belief that the best means of reducing the burden of the MA 
and Part D provider and prescriber enrollment requirements without 
compromising our payment safeguard objectives would be to focus on 
providers and prescribers that pose an elevated risk to Medicare 
beneficiaries and the Trust Funds. That is, rather than require the 
enrollment of MA providers and Part D prescribers regardless of the 
level of risk they might pose, we would prevent payment for MA items or 
services and Part D drugs that are, as applicable, furnished or 
prescribed by demonstrably problematic

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providers and prescribers. Therefore, we established in the April 2018 
final rule a policy under which: (1) Such problematic parties would be 
placed on a ``preclusion list''; and (2) payment for MA services and 
items and Part D drugs furnished or prescribed by these individuals and 
entities would be rejected or denied, as applicable. The MA and Part D 
enrollment requirements, in short, were replaced with the payment-
oriented approach of the preclusion list.
    This proposed rule would make several revisions and additions to 
the preclusion list provisions we finalized in the April 2018 final 
rule. We believe these changes would help clarify for stakeholders CMS' 
expectations with respect to the preclusion list.
5. Medicare Advantage Risk Adjustment Data Validation (RADV) Provisions 
(Sec. Sec.  422.300, 422.310(e), and 422.311(a))
    The Medicare Advantage Risk Adjustment Data Validation (RADV) 
program was implemented as the primary corrective action to reduce the 
Part C improper payment rate in compliance with the Improper Payments 
Information Act (IPIA) of 2002, as amended by the Improper Payments 
Elimination and Recovery Act (IPERA) of 2010 and updated by the 
Improper Payments Elimination and Recovery Improvement Act (IPERIA) of 
2012. In this proposed rule, we would, based on longstanding case law 
and best practices from HHS and other federal agencies, establish that 
extrapolation may be utilized as a valid part of audit authority in 
Part C, as it has been historically a normal part of auditing practice 
throughout the Medicare program.
    Accordingly, we are proposing the following:
     To establish that CMS would use extrapolation in RADV 
contract-level audits and that the extrapolation authority would apply 
to the payment year 2011 contract-level audits and all subsequent 
audits.
     Not to apply a fee-for-service (FFS) Adjuster to audit 
findings.

C. Summary of Costs and Benefits

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BILLING CODE 4120-01-C

II. Provisions of the Proposed Regulations

A. Implementing the Bipartisan Budget Act of 2018 Provisions

1. Requirements for Medicare Advantage Plans Offering Additional 
Telehealth Benefits (Sec. Sec.  422.100, 422.135, 422.252, 422.254, and 
422.264)
    Technologies that enable healthcare providers to deliver care to 
patients in locations remote from the providers (hereafter referred to 
as ``telehealth'') are increasingly being used to complement face-to-
face patient-provider encounters. Telehealth visits among rural 
Medicare beneficiaries in particular have increased more than 25 
percent a year for the past decade.\1\ In MA, about 81 percent of MA 
plans offer supplemental telehealth benefits in the form of remote 
access technologies in 2018, an increase from 77 percent in 2017. These 
statistics show that the healthcare industry has made significant 
advances in technology that enable secure, reliable, real-time, 
interactive communication and data transfer that were not possible in 
the past. Moreover, the use of telehealth as a care delivery option for 
MA enrollees may improve access to and timeliness of needed care, 
increase convenience for patients, increase communication between 
providers and patients, enhance care coordination, improve quality, and 
reduce costs related to in-person care.\2\
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    \1\ Mehrotra, A., Jena, A., Busch, A., Souza, J., Uscher-Pines, 
L., Landon, B. (2016). ``Utilization of Telemedicine Among Rural 
Medicare Beneficiaries.'' JAMA, 315(18): 2015-2016.
    \2\ Medicare Payment Advisory Commission (MedPAC), Report to the 
Congress: Medicare Payment Policy, March 2018.
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    MA basic benefits are structured and financed based on what is 
covered under Parts A and B (paid through the capitation rate by the 
government) with coverage of additional items and services and more 
generous cost sharing provisions financed as supplemental benefits 
(paid using rebate dollars or supplemental premiums paid by enrollees). 
Traditionally, MA plans have been limited in how they may deliver 
telehealth services outside of the original Medicare telehealth benefit 
under section 1834(m) of the the Act because of this financing 
structure; only services covered by original Medicare under Parts A and 
B, with actuarially equivalent cost sharing, are in the basic benefit 
bid paid by the capitation rate. Section 1834(m) of the Act and Sec.  
410.78 generally limit payment for telehealth services in original 
Medicare by authorizing payment only for specific services provided 
using an interactive audio and video telecommunications system that 
permits real-time communication between a Medicare beneficiary and a 
physician or certain other practitioner and by specifying

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where the beneficiary may receive care (eligible originating sites). 
Originating sites generally are limited by both geography and patient 
setting. The statute grants the Secretary the authority to add to the 
list of allowable telehealth services based on an established annual 
process, but does not generally provide exceptions from the statutory 
limitations relating to geography or patient setting. Because sections 
1852(a), 1853, and 1854 of the Act limit the basic benefits covered by 
the government's capitation payment to only Parts A and B services 
covered under original Medicare with actuarially equivalent cost 
sharing, telehealth benefits offered by MA plans in addition to those 
covered by original Medicare are currently offered as supplemental 
benefits and funded through the use of rebate dollars and/or 
supplemental premiums paid by enrollees.
    On February 9, 2018, President Trump signed the Bipartisan Budget 
Act of 2018 (Pub. L. 115-123) into law. Section 50323 of the Bipartisan 
Budget Act of 2018 created a new section 1852(m) of the Act, which 
allows MA plans to provide ``additional telehealth benefits'' to 
enrollees starting in plan year 2020 and treat them as basic benefits 
(also known as ``original Medicare benefits'' or ``benefits under the 
original Medicare fee-for-service program option'') for purposes of bid 
submission and payment by CMS. The statute limits these authorized 
``additional telehealth benefits'' to services for which benefits are 
available under Medicare Part B but that are not payable under section 
1834(m) of the Act and have been identified for the applicable year as 
clinically appropriate to furnish through electronic information and 
telecommunications technology (hereinafter referred to as ``electronic 
exchange''). While MA plans have always been able to offer more 
telehealth services than are currently payable under original Medicare 
through supplemental benefits, this change in how such additional 
telehealth benefits are financed (that is, accounted for in the 
capitated payment) makes it more likely that MA plans will offer them 
and that more enrollees will use the benefit.
    We are proposing to add a new regulation at Sec.  422.135 to 
implement the new section 1852(m) of the Act and to amend existing 
regulations at Sec. Sec.  422.100, 422.252, 422.254, and 422.264. 
Specifically, we propose to add a new regulation, to be codified at 
Sec.  422.135, to allow MA plans to offer additional telehealth 
benefits, to establish definitions applicable to this new 
classification of benefits, and to enact requirements and limitations 
on them. Further, we are proposing to amend Sec.  422.100(a) and (c)(1) 
to include additional telehealth benefits in the definition of basic 
benefits and add a cross-reference to new Sec.  422.135 to reflect how 
these benefits may be provided as part of basic benefits. Finally, we 
are proposing to amend the bidding regulations at Sec. Sec.  422.252, 
422.254, and 422.264 to account for additional telehealth benefits in 
the basic benefit bid.
    Under this proposal, MA plans will be permitted to offer--as part 
of the basic benefit package--additional telehealth benefits beyond 
what is currently allowable under the original Medicare telehealth 
benefit. According to Sec.  422.100(a), MA plans are able to offer 
original Medicare telehealth benefits described in existing authority 
at section 1834(m) of the Act and Sec.  414.65. We are proposing that 
in addition to original Medicare telehealth benefits, MA plans would be 
able (but not required) to offer additional telehealth benefits 
described in this proposed rule and at section 1852(m) of the Act. In 
addition, we propose to continue authority for MA plans to offer 
supplemental benefits (that is, benefits not covered by original 
Medicare) via remote access technologies and/or telemonitoring for 
those services that do not meet the requirements for additional 
telehealth benefits, such as the requirement of being covered by Part B 
when provided in-person. For instance, an MA plan may offer a 
videoconference dental visit to assess dental needs as a supplemental 
benefit because services primarily provided for the care, treatment, 
removal, or replacement of teeth or structures directly supporting 
teeth are not currently covered Part B benefits and thus would not be 
allowable as additional telehealth benefits.
    We propose to establish regulatory requirements that would allow MA 
plans to cover Part B benefits furnished through electronic exchange as 
``additional telehealth benefits''--and as part of the basic benefits 
defined in Sec.  422.101--instead of separate supplemental benefits. We 
believe additional telehealth benefits would increase access to 
patient-centered care by giving enrollees more control to determine 
when, where, and how they access benefits.
    Section 1852(m)(2)(A)(i) of the Act, as added by the Bipartisan 
Budget Act of 2018, defines additional telehealth benefits as 
services--(1) for which benefits are available under Part B, including 
services for which payment is not made under section 1834(m) of the Act 
due to the conditions for payment under such section; and (2) that are 
identified for the applicable year as clinically appropriate to furnish 
using electronic information and telecommunications technology when a 
physician (as defined in section 1861(r) of the Act) or practitioner 
(described in section 1842(b)(18)(C) of the Act) providing the service 
is not at the same location as the plan enrollee (which we refer to as 
``through electronic exchange''). In addition, section 
1852(m)(2)(A)(ii) of the Act excludes from additional telehealth 
benefits any capital and infrastructure costs and investments relating 
to such benefits. This statutory definition of ``additional telehealth 
benefits'' has guided our proposal.
    We are proposing a new regulation at Sec.  422.135 to authorize and 
govern the provision of additional telehealth benefits by MA 
organizations, consistent with our interpretation of the new statutory 
provision. First, we propose definitions for the terms ``additional 
telehealth benefits'' and ``electronic exchange'' in proposed 
regulation text at Sec.  422.135(a). We propose to define ``additional 
telehealth benefits'' as services that meet the following: (1) Are 
furnished by an MA plan for which benefits are available under Medicare 
Part B but which are not payable under section 1834(m) of the Act; and 
(2) have been identified by the MA plan for the applicable year as 
clinically appropriate to furnish through electronic exchange. We 
propose to define ``electronic exchange'' as ``electronic information 
and telecommunications technology'' as this is a concise term for the 
statutory description of the means used to provide the additional 
telehealth benefits. We are not proposing specific regulation text that 
defines or provides examples of electronic information and 
telecommunications technology because the technology needed and used to 
provide additional telehealth benefits will vary based on the service 
being offered. Examples of electronic information and 
telecommunications technology (or ``electronic exchange'') may include, 
but are not limited to, the following: Secure messaging, store and 
forward technologies, telephone, videoconferencing, other internet-
enabled technologies, and other evolving technologies as appropriate 
for non-face-to-face communication. We believe this broad and 
encompassing approach will allow for technological advances that may 
develop in the future and avoid tying the authority in the proposed new 
regulation to specific information formats or technologies that

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permit non-face-to-face interactions for furnishing clinically 
appropriate services.
    We are not proposing specific regulation text defining ``clinically 
appropriate,'' rather, we are proposing to implement the statutory 
requirement for additional telehealth benefits to be provided only when 
``clinically appropriate'' to align with our existing regulations for 
contract provisions at Sec.  422.504(a)(3)(iii), which requires each MA 
organization to agree to provide all benefits covered by Medicare ``in 
a manner consistent with professionally recognized standards of health 
care.'' We propose to apply the same principle to additional telehealth 
benefits, as additional telehealth benefits must be treated as if they 
were benefits under original Medicare per section 1852(m)(5) of the 
Act.
    The statute limits additional telehealth benefits to those services 
that are identified for the applicable year as clinically appropriate 
to furnish through electronic exchange. The statute does not specify 
who or what entity identifies the services for the year. Therefore, we 
are proposing to interpret this provision broadly by not ourselves 
specifying the Part B services that an MA plan may offer as additional 
telehealth benefits for the applicable year, but instead allowing MA 
plans to independently determine which services each year are 
clinically appropriate to furnish in this manner. Thus, our proposed 
definition of additional telehealth benefits at Sec.  422.135(a) 
provides that it is the MA plan (not CMS) that identifies the 
appropriate services for the applicable year. We believe that MA plans 
are in the best position to identify each year whether additional 
telehealth benefits are clinically appropriate to furnish through 
electronic exchange. MA plans have a vested interest in and 
responsibility for staying abreast of the current professionally 
recognized standards of health care, as these standards are 
continuously developing with new advancements in modern medicine. As 
professionally recognized standards of health care change over time and 
differ from practice area to practice area, our proposal is flexible 
enough to take those changes and differences into account.
    Furthermore, Sec.  422.111(b)(2) requires the MA plan to annually 
disclose the benefits offered under a plan, including applicable 
conditions and limitations, premiums and cost sharing (such as 
copayments, deductibles, and coinsurance) and any other conditions 
associated with receipt or use of benefits. MA plans satisfy this 
requirement through the Evidence of Coverage, or EOC, document provided 
to all enrollees. This disclosure requirement would have to include 
applicable additional telehealth benefit limitations. That is, any MA 
plan offering additional telehealth benefits must identify the services 
that can be covered as additional telehealth benefits when provided 
through electronic exchange. We believe that it is through this 
mechanism (the EOC) that the MA plan will identify each year which 
services are clinically appropriate to furnish through electronic 
exchange as additional telehealth benefits.
    We solicit comment on this proposed implementation of the statute 
and our reasoning. We considered whether CMS should use the list of 
Medicare telehealth services payable by original Medicare under section 
1834(m) of the Act as the list of services that are clinically 
appropriate to be provided through electronic exchange for additional 
telehealth benefits. In that circumstance, services on the list could 
be considered as clinically appropriate to be provided through 
electronic exchange for additional telehealth benefits without 
application of the location limitations of section 1834(m) of the Act. 
However, we did not believe that is the best means to take full 
advantage of the flexibility that Congress has authorized for the MA 
program. The list of Medicare telehealth services for which payment can 
be made under section 1834(m) of the Act under the original Medicare 
program includes services specifically identified by section 1834(m) of 
the Act as well as other services added to the Medicare telehealth list 
by CMS that meet certain criteria: (1) The services are similar to 
services currently on the list such that there are similar roles and 
interactions among the beneficiaries and the distant site physicians or 
practitioners furnishing the services; or (2) the services are not 
similar to services on the current list but are accurately described by 
the corresponding code when furnished via telehealth and produce 
demonstrated clinical benefit to patients when furnished using a 
telecommunications system. We believe these limitations and criteria do 
not apply to additional telehealth benefits under new section 1852(m) 
of the Act for MA plans.
    The statute requires the Secretary to solicit comment on what types 
of items and services should be considered to be additional telehealth 
benefits. Therefore, we are also soliciting comments on whether we 
should place any limitations on what types of Part B items and services 
(for example, primary care visits, routine and/or specialty 
consultations, dermatological examinations, behavior health counseling, 
etc.) can be additional telehealth benefits provided under this 
authority.
    An enrollee has the right to request additional telehealth benefits 
through the organization determination process. If an enrollee is 
dissatisfied with the organization determination, then the enrollee has 
the right to appeal the decision. We believe these rights help ensure 
access to medically necessary services, including additional telehealth 
benefits offered by an MA plan as proposed in this rule. In addition, 
CMS audits plan performance with respect to timeliness and clinical 
appropriateness of organization determinations and appeals.
    While the MA plan would make the ``clinically appropriate'' 
decision in terms of coverage of an additional telehealth benefit, we 
note that each healthcare provider must also provide services that are 
clinically appropriate. We acknowledge that not all Part B items and 
services would be suitable for additional telehealth benefits because a 
provider must be physically present in order to properly deliver care 
in some cases (for example, hands-on examination, administering certain 
medications). Behavioral health, in particular, is a prime example of a 
service that could be provided remotely through MA plans' offering of 
additional telehealth benefits under this proposal. The President's 
Commission on Combating Drug Addiction and the Opioid Crisis recommends 
telehealth as useful in the effort to combat the opioid crisis, 
especially in geographically isolated regions and underserved areas 
where people with opioid use disorders and other substance use 
disorders may benefit from remote access to needed treatment.\3\
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    \3\ https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Meeting%20Draft%20of%20Final%20Report%20-%20November%201%2C%202017.pdf.
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    We are proposing in paragraph (b) the general rule to govern how an 
MA plan may offer additional telehealth benefits. Specifically, we 
propose that if an MA plan chooses to furnish additional telehealth 
benefits, the MA plan may treat these benefits as basic benefits 
covered under the original Medicare fee-for-service program as long as 
the requirements of proposed Sec.  422.135 are met. We also propose in 
Sec.  422.135(b) that if the MA plan fails to comply with the 
requirements of Sec.  422.135, then the MA plan may not treat the 
benefits provided through electronic exchange as additional telehealth 
benefits, but may

[[Page 54990]]

treat them as supplemental benefits. For example, a non-Medicare 
covered service provided through electronic exchange cannot be offered 
as an additional telehealth benefit because it does not comply with 
Sec.  422.135, which is limited to furnishing through electronic 
exchange otherwise covered Part B covered services, but it may be 
offered it as a supplemental benefit.
    Section 1852(m)(4) mandates that enrollee choice is a priority. If 
an MA plan covers a Part B service as an additional telehealth benefit, 
then the MA plan must also provide access to such service through an 
in-person visit and not only as an additional telehealth benefit. We 
propose to codify this statutory mandate preserving enrollee choice in 
regulation text at Sec.  422.135(c)(1), which would require that the 
enrollee must have the option to receive a service that the MA plan 
would cover as an additional telehealth benefit either through an in-
person visit or through electronic exchange. Section 1852(m)(5) of the 
Act mandates that additional telehealth benefits shall be treated as if 
they were benefits under the original Medicare fee-for-service program 
option. Based on the manner in which CMS currently allows differential 
cost sharing under MA plans for original Medicare-covered benefits, in 
proposed regulation text at Sec.  422.135(f), we propose to allow MA 
plans to maintain different cost sharing for the specified Part B 
service(s) furnished through an in-person visit and the specified Part 
B service(s) furnished through electronic exchange. This aligns with 
how CMS has traditionally interpreted section 1852(a)(1)(B)(i), (iii), 
(iv), and (v) of the Act to mean that, subject to specific exceptions 
in the statute and Sec.  422.100(j), basic benefits must be covered at 
an actuarially equivalent level of cost sharing from a plan level (that 
is, an aggregate and not enrollee level) perspective.
    In proposed regulation text at Sec.  422.135(c)(2), we propose to 
require MA plans to use their EOC (at a minimum) to advise enrollees 
that they may receive the specified Part B service(s) either through an 
in-person visit or through electronic exchange. Similarly, as we 
propose at Sec.  422.135(c)(3), MA plans would have to use their 
provider directory to identify any providers offering services for 
additional telehealth benefits and in-person visits or offering 
services exclusively for additional telehealth benefits. We believe 
that these notifications in the EOC and the provider directory are 
important to ensure choice, transparency, and clarity for enrollees who 
might be interested in taking advantage of additional telehealth 
benefits. We request comments on what impact, if any, additional 
telehealth benefits should have on MA network adequacy policies. 
Specifically, we will look for the degree to which additional 
telehealth benefit providers should be considered in the assessment of 
network adequacy (including for certain provider types and/or services 
in areas with access concerns) and any potential impact on rural MA 
plans, providers, and/or enrollees.
    Section 1852(m)(3) of the Act requires the Secretary to specify 
limitations or additional requirements for the provision or furnishing 
of additional telehealth benefits, including requirements with respect 
to physician or practitioner qualifications, factors necessary for the 
coordination of additional telehealth benefits with other items and 
services (including those furnished in-person), and other areas 
identified by the Secretary. We recognize the potential for additional 
telehealth benefits to support coordinated health care and increase 
access to care in both rural and urban areas. We expect MA plans will 
use these types of benefits to support an effective, ongoing doctor-
patient relationship and the efficient delivery of needed care.
    We propose in regulation text at Sec.  422.135(c)(4) to require an 
MA plan offering additional telehealth benefits to comply with the 
provider selection and credentialing requirements provided in Sec.  
422.204. An MA plan must have written policies and procedures for the 
selection and evaluation of providers and must follow a documented 
process with respect to providers and suppliers, as described in Sec.  
422.204. Further, we propose that the MA plan, when providing 
additional telehealth benefits, must ensure through its contract with 
the provider that the provider meet and comply with applicable state 
licensing requirements and other applicable laws for the state in which 
the enrollee is located and receiving the service. We recognize, 
however, that it is possible for a state to have specific provisions 
regarding the practice of medicine using electronic exchange; our 
intent is to ensure that MA network providers comply with these laws 
and that MA organizations ensure compliance with such laws and only 
cover additional telehealth benefits provided in compliance with such 
laws. We solicit comment on whether to impose additional requirements 
for qualifications of providers of additional telehealth benefits, and 
if so, what those requirements should be.
    In order to monitor the impact of the additional telehealth 
benefits on MA plans, providers, enrollees, and the MA program as a 
whole, we also propose to require MA plans to make information about 
coverage of additional telehealth benefits available to CMS upon 
request, per our proposed regulation text at Sec.  422.135(c)(5). We 
propose that this information may include, but is not limited to, 
statistics on use or cost of additional telehealth benefits, manner(s) 
or method(s) of electronic exchange, evaluations of effectiveness, and 
demonstration of compliance with the requirements in proposed 
regulation text at Sec.  422.135. The purpose of requiring MA plans to 
make such information available to CMS upon request is to determine 
whether CMS should make improvements to the regulation and/or guidance 
regarding additional telehealth benefits.
    In proposed regulation text at Sec.  422.135(d), we propose to 
require that MA plans furnishing additional telehealth benefits may 
only do so using contracted providers. We believe limiting service 
delivery of additional telehealth benefits to contracted providers 
offers MA enrollees access to these covered services in a manner more 
consistent with the statute because plans would have more control over 
how and when they are furnished. Additionally, MA plans' must have 
written policies and procedures for the selection and evaluation of 
providers. These policies must conform with MA credentialing 
requirements described in Sec.  422.204. These policies would also 
provide additional oversight of providers' performance, increasing 
plans' ability to provide covered services such as additional 
telehealth benefits. We also propose to specify that if an MA plan 
covers benefits furnished by a non-contracted provider through 
electronic exchange, then those benefits may only be covered as a 
supplemental benefit, not an additional telehealth benefit (that is, 
not covered as a basic benefit). We request comment on whether the 
contracted providers' restriction should be placed on all MA plan types 
or limited only to certain plan types, such as local/regional preferred 
provider organization (PPO) plans, medical savings account (MSA) plans, 
and/or private fee-for-service (PFFS) plans. Currently, pursuant to 
Sec.  422.4(a)(1)(v), PPO plans must provide reimbursement for all 
plan-covered medically necessary services received from non-contracted 
providers without prior authorization requirements. Without an 
opportunity to review the qualifications of the non-contracted

[[Page 54991]]

provider and to impose limits on how only clinically appropriate 
services are provided as additional telehealth benefits, PPO plans will 
not be able to meet the requirements in this proposed rule. Therefore, 
we are soliciting comment on whether to require just PPOs (and/or MSA 
plans, PFFS plans, etc.), instead of all MA plan types, to use only 
contracted providers for additional telehealth benefits.
    Per section 1852(m)(2)(A)(ii) of the Act, the term ``additional 
telehealth benefits'' does not include capital and infrastructure costs 
and investments relating to such benefits. We propose to codify this 
requirement in Sec.  422.254(b)(3)(i) as a restriction on how MA 
organizations include additional telehealth benefits in their bid 
submission. We believe that the statutory limit is tied only to the 
cost to the government of permitting coverage of these additional 
telehealth benefits as part of the bid for basic benefits. We are not 
proposing specific definitions of capital and infrastructure costs or 
investments related to such benefits at this time because the costs and 
investments needed and used to provide additional telehealth benefits 
will vary based on the individual MA plan's approach to furnishing the 
benefits and the MA plan's contracts with providers. Some examples of 
capital and infrastructure costs include, but are not limited to, high-
speed internet installation and service, communication platforms and 
software, and video conferencing equipment. We are soliciting comments 
on what other types of capital and infrastructure costs and investments 
should be excluded from the bid and how CMS should operationalize this 
statutory requirement in the annual bid process. We propose to provide 
a more detailed list of examples in the final rule, based on feedback 
received from stakeholders.
    In Sec.  422.254(b)(3)(i), we propose that MA plans must exclude 
any capital and infrastructure costs and investments relating to 
additional telehealth benefits from their bid submission, for both 
additional telehealth services offered directly by the plan sponsor and 
services rendered by a third party provider. Accordingly, the projected 
expenditures in the MA bid for services provided via additional 
telehealth benefits must not include the corresponding capital and 
infrastructure costs. Any items provided to the enrollee in the 
administration of additional telehealth benefits must be directly 
related to the care and treatment of the enrollee for the Part B 
benefit. For example, MA plans may not provide enrollees with items 
such as internet service or permanently install telecommunication 
systems in an enrollee's home as part of administration of additional 
telehealth benefits.
    In addition to our proposal at Sec.  422.135, we also propose to 
amend paragraphs (a) and (c)(1) of Sec.  422.100 to explicitly address 
how additional telehealth benefits may be offered by an MA plan. 
Section 1852(a)(1)(A) of the Act requires that each MA plan shall 
provide enrollees benefits under the original Medicare fee-for-service 
program option. As amended by the Bipartisan Budget Act of 2018, 
section 1852(a)(1)(B) of the Act defines ``benefits under the original 
Medicare fee-for-service program option'' to mean--subject to 
subsection (m) (regarding provision of additional telehealth 
benefits)--those items and services (other than hospice care or 
coverage for organ acquisitions for kidney transplants) for which 
benefits are available under Parts A and B to individuals entitled to 
benefits under Part A and enrolled under Part B. Since this definition 
is subject to the statutory provision for additional telehealth 
benefits, this means that all of the same coverage and access 
requirements that apply with respect to basic benefits also apply to 
any additional telehealth benefits an MA plan may choose to offer. 
Therefore, we propose to amend Sec.  422.100(c)(1) to include 
additional telehealth benefits in the definition of basic benefits and 
to cross-reference the proposed regulation at Sec.  422.135 that 
provides the rules governing additional telehealth benefits. We also 
propose to further clarify the regulation text in Sec.  422.100(c)(1) 
to track the statutory language described earlier more closely in 
addressing both kidney acquisition and hospice in the definition of 
basic benefits. Finally, we propose to make corresponding technical 
revisions to Sec.  422.100(a) to reference the new paragraph (c)(1) for 
basic benefits (clarifying that additional telehealth benefits are 
voluntary benefits for MA plans to offer--not required) and paragraph 
(c)(2) for supplemental benefits (instead of Sec.  422.102 because 
supplemental benefits are listed as a benefit type in (c)(2)). We also 
propose a small technical correction in the last sentence of Sec.  
422.100(a) to replace the reference to Sec.  422.100(g) with ``this 
section'' because there are a number of provisions in Sec.  422.100--
not just paragraph (g)--that are applicable to the benefits CMS 
reviews.
    Additionally, we propose amendments to the bidding regulations at 
Sec. Sec.  422.252, 422.254, and 422.264 to account for additional 
telehealth benefits and correct the inconsistent phrasing of references 
to basic benefits (for example, these regulations variously use the 
terms ``original Medicare benefits,'' ``benefits under the original 
Medicare program,'' ``benefits under the original Medicare FFS program 
option,'' etc.). In order to make the additional telehealth benefits 
part of the basic benefit bid and included in the ``monthly aggregate 
bid amount'' as part of the original Medicare benefits that are the 
scope of the basic benefit bid, we propose to update these various 
phrases to consistently use the phrase ``basic benefits as defined in 
Sec.  422.100(c)(1).'' We also propose a few minor technical 
corrections to the bidding regulations. Finally, we propose a paragraph 
(e) in new Sec.  422.135 to state that an MA plan that fully complies 
with Sec.  422.135 may include additional telehealth benefits in its 
bid for basic benefits in accordance with Sec.  422.254. This provision 
means that inclusion in the bid is subject to the bidding regulations 
we are also proposing to amend here.
    In offering additional telehealth benefits, MA plans must comply 
with existing MA rules, including, but not limited to: Access to 
services at Sec.  422.112; enrollee recordkeeping at Sec.  422.118 (for 
example, confidentiality, accuracy, timeliness); standards for 
communications and marketing at Sec.  422.2268 (for example, inducement 
prohibition); and non-discrimination at Sec. Sec.  422.100(f)(2) and 
422.110(a). Further, in addition to Sec. Sec.  422.112, 422.118, 
422.2268, 422.100(f)(2), and 422.110(a), MA plans must also ensure 
compliance with other federal non-discrimination laws, such as Title VI 
of the Civil Rights Act, section 504 of the Rehabilitation Act, and 
section 1557 of the Affordable Care Act. We are not proposing specific 
reference to these existing requirements in new Sec.  422.135 because 
we do not believe that to be necessary. Compliance with these existing 
laws is already required; we merely note, as an aide to MA 
organizations, how provision of additional telehealth benefits must be 
consistent with these regulations. We solicit comment on this policy 
choice, specifically whether there are other existing regulations that 
CMS should revise to address their application in the context of 
additional telehealth benefits.
    Finally, section 1852(m)(2)(B) of the Act instructs the Secretary 
to solicit comments on the implementation of these additional 
telehealth benefits by November 30, 2018; in addition to proposing 
regulations to implement section 1852(m) of the Act, we are using this 
notice of proposed rulemaking and the associated comment period to 
satisfy this statutory requirement. We thank

[[Page 54992]]

commenters in advance for their input to help inform CMS's next steps 
related to implementing the additional telehealth benefits.
2. Dual Eligible Special Needs Plans
    Special needs plans (SNPs) are MA plans created by the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 
108-173) that are specifically designed to provide targeted care and 
limit enrollment to special needs individuals. Under the law, SNPs are 
able to restrict enrollment to: (1) Institutionalized individuals, who 
are defined in Sec.  422.2 as those residing or expecting to reside for 
90 days or longer in a long term care facility; (2) individuals 
entitled to medical assistance under a state plan under Title XIX; or 
(3) other individuals with certain severe or disabling chronic 
conditions who would benefit from enrollment in a SNP. As of June 2018, 
the CMS website listed 297 SNP contracts with 641 SNP plans that have 
at least 11 members. These figures included 190 Dual Eligible SNP 
contracts (D-SNPs) with 412 D-SNP plans with at least 11 members, 49 
Institutional SNP contracts (I-SNPs) with 97 I-SNP plans with at least 
11 members, and 58 Chronic or Disabling Condition SNP contracts (C-
SNPs) with 132 C-SNP plans with at least 11 members. This proposed rule 
would implement the provisions of the Bipartisan Budget Act of 2018 
that establish new requirements for D-SNPs for the integration of 
Medicare and Medicaid benefits and unification of Medicare and Medicaid 
grievance and appeals procedures that would be effective in 2021. This 
proposed rule would also clarify definitions and operating requirements 
for D-SNPs that would take effect on the effective date of the final 
rule.
a. Integration Requirements for Dual Eligible Special Needs Plans 
(Sec. Sec.  422.2, 422.60, 422.102, 422.107, 422.111, and 422.752)
    Beneficiaries who are dually eligible for both Medicare and 
Medicaid can face significant challenges in navigating the two 
programs, which include separate or overlapping benefits and 
administrative processes. Fragmentation between the two programs can 
result in a lack of coordination for care delivery, potentially 
resulting in--(1) missed opportunities to provide appropriate, high-
quality care and improve health outcomes, and (2) ineffective care, 
such as avoidable hospitalizations and a poor beneficiary experience of 
care. Advancing policies and programs that integrate care for dual 
eligible individuals is one way in which we seek to address such 
fragmentation. Under plans that offer integrated care, dually eligible 
beneficiaries receive the full array of Medicaid and Medicare benefits 
through a single delivery system, thereby improving care coordination, 
quality of care, beneficiary satisfaction, and reducing administrative 
burden. Some studies have shown that highly integrated managed care 
programs perform well on quality of care indicators and enrollee 
satisfaction.\4\
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    \4\ See: Kim, H., Charlesworth, C.J., McConnell, K.J., 
Valentine, J.B., and Grabowski, DC (2017, November 15). Comparing 
Care for Dual-Eligibles Across Coverage Models: Empirical Evidence 
From Oregon. Retrieved from http://journals.sagepub.com/doi/abs/10.1177/1077558717740206; Anderson, W.L., Feng, Z., & Long, S.K. 
(2016, March 31). Minnesota Managed Care Longitudinal Data Analysis, 
prepared for the U.S. Department of Health and Human Services 
Assistant Secretary for Planning and Evaluation (ASPE). Retrieved 
from https://aspe.hhs.gov/report/minnesota-managed-care-longitudinal-data-analysis; Health Management Associates (2015, July 
21). Value Assessment of the Senior Care Options (SCO) Program. 
Retrieved from http://www.mahp.com/wp-content/uploads/2017/04/SCO-White-Paper-HMA-2015_07_20-Final.pdf; and Medicare Payment Advisory 
Committee (2012, June 16). ``Care coordination programs for dual-
eligible beneficiaries.'' In June 2012 Report to Congress: Medicare 
and Health Care Delivery System. Retrieved from http://www.medpac.gov/docs/default-source/reports/chapter-3-appendixes-care-coordination-programs-for-dual-eligible-beneficiaries-june-2012-report-.pdf?sfvrsn=0.
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    D-SNPs are a type of MA plan that is intended to integrate or 
coordinate care for this population more effectively than standard M A 
plans or Original Medicare by focusing enrollment and care management 
on dually eligible individuals. As of June 2018, approximately 2.3 
million dually eligible beneficiaries (one 1 of every 6 dually eligible 
beneficiaries) were enrolled in 412 D-SNPs. About 170,000 dually 
eligible beneficiaries are enrolled in fully integrated dual eligible 
special needs plans, or FIDE SNPs (that is, where the same organization 
receives capitation to cover both Medicare and Medicaid services).\5\ 
Several states, including Arizona, Idaho, Hawaii, Massachusetts, 
Minnesota, New Jersey, New Mexico, New York, Pennsylvania, Tennessee, 
Texas, Virginia, and Wisconsin, operate Medicaid managed care programs 
for dually eligible individuals in which the state requires that the 
Medicaid managed care organizations serving dual eligible individuals 
offer a companion D-SNP product.
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    \5\ Centers for Medicare & Medicaid Services (2018, June). SNP 
Comprehensive Report. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data.html.
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    Since the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) first authorized D-SNPs' creation, 
subsequent legislation has been enacted that has extended their 
authority to operate and set forth additional programmatic 
requirements.
     Sections 164 and 165 of the Medicare Improvements for 
Patients and Providers Act (MIPPA) (Pub. L. 110-275) amended sections 
1859 and 1852(a) of the Act to require D-SNPs to--
     Provide each prospective enrollee, prior to enrollment, 
with a comprehensive written statement that describes the benefits and 
cost-sharing protections to which the beneficiary is entitled under 
Medicaid and which are covered by the plan;
     Contract with the state Medicaid agency to provide 
benefits, or arrange for the provision of Medicaid benefits, which may 
include long-term care services consistent with state policy, to which 
such individual is entitled. Notwithstanding this requirement, section 
164(c)(4) of MIPPA stipulated that a state is in no way obligated to 
contract with a D-SNP; and
     Limit the imposition of cost-sharing on full-benefit dual 
eligible individuals and Qualified Medicare Beneficiaries.
     Section 3205 of the Patient Protection and Affordable Care 
Act (Pub. L. 111-148) revised section 1853(a)(1)(B) of the Act to 
permit the Secretary to apply a frailty payment under PACE payment 
rules to certain D-SNPs that are fully integrated with capitated 
contracts with states for Medicaid benefits, including long-term care, 
and that have similar average levels of frailty (as determined by the 
Secretary) as the PACE program.
    Regulations promulgated following the enactment of these laws 
established provisions that:
     Define at Sec.  422.2 a fully integrated special needs 
plan (FIDE SNP);
     Require at Sec.  422.107 all MA organizations seeking to 
offer a D-SNP to enter into a contract containing a minimum set of 
terms and conditions with the state Medicaid agency;
     Require at Sec.  422.111(b)(2)(iii) D-SNPs to furnish, 
prior to enrollment, certain benefit and cost-sharing information to 
dually eligible enrollees; and
     Permit at Sec.  422.308(c)(4) the application of a frailty 
payment adjustment to FIDE SNPs that have a similar average level of 
frailty (as determined by the Secretary) as the PACE program.\6\
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    \6\ See 73 FR 54226 (September 18, 2008) and 76 FR 21432 (April 
15, 2011)

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[[Page 54993]]

    Because the current regulations establish only minimum 
requirements, state Medicaid agencies may exercise authority to 
establish requirements that surpass the minimum, and to that end, we 
have seen states leverage their contracts with D-SNPs to limit D-SNP 
enrollment to individuals who also receive Medicaid benefits through 
the same organization, collect certain data from the D-SNP, and 
integrate beneficiary communication materials and care management 
processes to provide dual eligible enrollees a more seamless, 
coordinated experience of care.\7\ CMS supports states that have an 
interest in pursuing integrated care models for dual eligible 
individuals, including through the use of their contracts with MA 
organizations offering D-SNPs, and currently provides technical 
assistance to states seeking to develop solutions tailored to their 
local market conditions, beneficiary characteristics, and policy 
environment.
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    \7\ Verdier, J, Kruse, A., Sweetland Lester, R., Philip, A.M., & 
Chelminsky, D. (2016, November). ``State Contracting with Medicare 
Advantage Dual Eligible Special Needs Plans: Issues and Options.'' 
Retrieved from http://www.integratedcareresourcecenter.com/PDFs/ICRC_DSNP_Issues__Options.pdf.
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    Through this proposed rule, we are establishing new requirements in 
accordance with section 50311(b) of the Bipartisan Budget Act of 2018, 
which amended section 1859 of the Act to require that all D-SNPs meet 
certain new minimum criteria for Medicare and Medicaid integration for 
2021 and subsequent years. Beyond the newly enacted amendments to the 
Act, we are also using this rulemaking to add requirements and 
clarifications to existing regulations to codify guidance and policy 
since D-SNPs were established nearly 15 years ago and to update certain 
aspects of the regulations. Under the newly enacted section 
1859(f)(8)(D)(i) of the Act, the statute calls for D-SNPs, for 2021 and 
subsequent years, to meet one or more of three specified requirements, 
to the extent permitted under state law, for integration of benefits:
     A D-SNP must, in addition to meeting the existing 
requirement of contracting with the state Medicaid agency under section 
1859(f)(3)(D) of the Act, coordinate long-term services and supports 
(LTSS), behavioral health services, or both, by meeting an additional 
minimum set of requirements for integration established by the 
Secretary based on input from stakeholders. Such requirements for 
integration could include: (1) Notifying the state in a timely manner 
of hospitalizations, emergency room visits, and hospital or nursing 
home discharges of enrollees; (2) assigning one primary care provider 
for each enrollee; or (3) data sharing that benefits the coordination 
of items and services under Medicare and Medicaid.
     A D-SNP must either--(1) meet the requirements of a fully 
integrated dual eligible special needs plan described in section 
1853(a)(1)(B)(iv)(II) of the Act (other than the requirement that the 
plan have similar average levels of frailty as the PACE program); or 
(2) enter into a capitated contract with the state Medicaid agency to 
provide LTSS, behavioral health services, or both.
     The parent organization of a D-SNP that is also the parent 
organization of a Medicaid managed care organization providing LTSS or 
behavioral services must assume ``clinical and financial 
responsibility'' for benefits provided to beneficiaries enrolled in 
both the D-SNP and Medicaid managed care organization.
    Section 50311(b) of the Bipartisan Budget Act of 2018 also 
authorizes the Secretary, in section 1859(f)(8)(D)(ii) of the Act, to 
impose an enrollment sanction on MA organizations offering a D-SNP that 
fails to meet at least one of these integration standards in plan years 
2021 through 2025. In the event that the Secretary imposes such a 
sanction, the MA organization must submit to the Secretary a plan 
describing how it will come into compliance with the integration 
standards.
(1) Definitions of a ``Dual Eligible Special Needs Plan'', ``Fully 
Integrated Dual Eligible Special Needs Plan'', ``Highly Integrated Dual 
Eligible Special Needs Plan'', and ``Aligned Enrollment'' (Sec.  422.2)
    We are proposing new definitions for the terms ``dual eligible 
special needs plan,'' ``fully integrated dual eligible special needs 
plan,'' ``highly integrated dual eligible special needs plan,'' and 
``aligned enrollment,'' for purposes of part 422 (that is, the rules 
applicable to the MA program) and this proposed rule.
    Through this notice of proposed rulemaking, we propose to 
consolidate statutory and regulatory references to a D-SNP and, in so 
doing, clearly state in Sec.  422.2 the minimum requirements for a D-
SNP. Currently, D-SNPs are described in various sections of 42 CFR part 
422, including provisions governing the definition of specialized MA 
plans for special needs individuals in Sec.  422.2, the supplemental 
benefit authority for D-SNPs that meet a high standard of integration 
and minimum performance and quality-based standards in Sec.  
422.102(e), state Medicaid agency contracting requirements in Sec.  
422.107, and specific benefit disclosure requirements in Sec.  
422.111(b)(2)(iii). In our proposed definition at Sec.  422.2, we 
describe a dual eligible special needs plan as a type of specialized MA 
plan for individuals who are eligible for Medicaid under Title XIX of 
the Act that provides, as applicable, and coordinates the delivery of 
Medicare and Medicaid services, including LTSS and behavioral health 
services, for individuals who are eligible for such services; has a 
contract with the state Medicaid agency consistent with Sec.  422.107 
that meets the minimum requirements in paragraph (c) of such section; 
and satisfies at least one of following integration requirements: (1) 
It meets the additional state Medicaid agency contracting requirement 
at proposed Sec.  422.107(d) (described in section II.A.2.a.(2)) of 
this proposed rule that surpasses the minimum requirements in current 
regulations at Sec.  422.107(c); (2) it is a highly integrated dual 
eligible special needs plan (HIDE SNP), as described in further detail 
later in this section; or (3) it is FIDE SNP. In addition, we propose 
elsewhere in this proposed rule additional performance requirements for 
D-SNPs that we have not incorporated into the definition; for example, 
a D-SNP would provide assistance to individuals filing a grievance or 
appeal for a Medicaid services in accordance with proposed Sec.  
422.562(a)(5) (described in section II.A.2.b.(1) of this proposed 
rule).
    While we do not explicitly cite or summarize the integration 
requirement at section 1859(f)(8)(D)(i)(III) of the Act in this 
proposed regulatory definition, we interpret the statutory language on 
assuming clinical and financial responsibility for benefits (as 
discussed later in this proposed rule) to mean that such a D-SNP would 
always satisfy the requirement of being a FIDE SNP or HIDE SNP. We 
believe that this proposed definition identifies the minimum 
requirements for an MA plan to be a D-SNP under section 1859 of the Act 
as amended by the Bipartisan Budget Act of 2018, as well as clarifies 
the applicability of the separate regulatory provisions that establish 
these minimum standards. We solicit comment whether our proposed 
definition meets these goals or should be revised to include other 
regulatory provisions that establish requirements for D-SNPs.
    We believe it is important to clarify through this rulemaking the 
meaning of the requirement in section 1859(f)(3)(D) of the Act, which 
is currently codified at Sec.  422.107(b), that the MA organization 
have responsibility under the contract for providing benefits or

[[Page 54994]]

arranging for benefits to be provided for individuals entitled to 
Medicaid. We have not interpreted the meaning of this statutory 
language, ``arranging for benefits,'' in previous rulemaking or in 
subregulatory guidance. We propose to interpret ``arranging for 
benefits'' as requiring a D-SNP, at a minimum, to coordinate the 
delivery of Medicare and Medicaid benefits. We propose to relocate this 
requirement to our proposed D-SNP definition. While our interpretation 
is consistent with the new statutory integration standards, this 
clarification is based on requirements for D-SNPs that existed prior to 
the enactment of the Bipartisan Budget Act of 2018 that we believe 
should be strengthened. We believe coordination would encompass a wide 
range of activities that a D-SNP may engage in for their dual eligible 
members. For example, if a D-SNP identifies through an enrollee's 
health risk assessment and/or individualized care plan, as required by 
Sec.  422.101(f), functional limitations or mental health needs, the D-
SNP would verify the enrollee's eligibility for LTSS and/or behavioral 
health services under Medicaid; determine how the enrollee receives 
such services (through FFS Medicaid or through another Medicaid managed 
care product); and make arrangements with the applicable Medicaid 
program (state Medicaid agency or managed care plan) for the provision 
of such services by the appropriate payer and/or provider. We recognize 
that not all of a D-SNP's membership will be eligible for the full 
complement of Medicaid services, particularly those who are partial-
benefit dual eligible individuals whose Medicaid eligibility is limited 
to payment of their Medicare premiums, and if applicable, deductibles 
and cost-sharing.\8\ However, for all enrollees who are eligible for 
Medicaid services, the D-SNP must fulfill its statutory responsibility 
to arrange for the provision of Medicaid benefits by facilitating a 
beneficiary's meaningful access to such benefits. We believe it would 
be insufficient for a D-SNP to limit its coordination activity simply 
to telling a beneficiary to call or write their Medicaid managed care 
plan or state agency without giving specific contact information, 
giving specific coaching on the roles of the Medicaid program (that is, 
the state agency or Medicaid managed care plan versus the D-SNP), and 
offering additional support if needed. We solicit comment on whether 
our proposed definition should be more prescriptive in identifying 
which plan activities constitute coordination or whether it should 
remain broadly defined as proposed.
---------------------------------------------------------------------------

    \8\ Partial-benefit dual eligible programs are commonly referred 
to collectively as the ``Medicare Savings Program'' (MSP). The MSP 
includes 4 eligibility groups: Qualified Medicare Beneficiary 
Program without other Medicaid (QMB Only) for whom Medicaid pays 
their Medicare Part A premiums, if any, Medicare Part B premiums, 
and to the extent consistent with the Medicaid State plan, Medicare 
Part A and B deductibles, coinsurance and copays for Medicare 
services provided by Medicare providers; Specified Low-Income 
Medicare Beneficiary Program without other Medicaid (SLMB Only) and 
Qualifying Individual (QI) Program for whom Medicaid pays the Part B 
premiums; Qualified Disabled and Working Individual (QDWI) Program 
for whom Medicaid pays the Part A premiums.
---------------------------------------------------------------------------

    We propose revising the definition of fully integrated dual 
eligible special needs plan at Sec.  422.2 to align with the proposed 
definition of a D-SNP and to codify current policy. Specifically, we 
propose the following:
     Striking the reference to a ``CMS approved MA-PD'' plan in 
the current FIDE SNP definition and paragraph (1), which refers to the 
individuals eligible for enrollment in a FIDE SNP, because those 
provisions duplicate elements of the new proposed definition of a D-SNP 
at Sec.  422.2;
     Replacing the reference to ``dual eligible beneficiaries'' 
with ``dual eligible individuals'' in newly redesignated paragraph (1) 
to align with the terminology used in section 1935(c) of the Act;
     Adding to newly redesignated paragraph (2) that a FIDE 
SNP's capitated contract with a state Medicaid agency may include 
specified behavioral health services, as well as replacing the term 
``long-term care'' benefits with ``long-term services and supports'' to 
better describe the range of such services FIDE SNPs cover in capitated 
contracts with states. We also propose codifying in paragraph (2) the 
current policy that the FIDE SNP's capitated contract with the state 
provide coverage of nursing facility services for at least 180 days 
during the plan year; \9\
---------------------------------------------------------------------------

    \9\ Following the April 2, 2012 issuance of the ``Announcement 
of Calendar Year (CY) 2013 Medicare Advantage Capitation Rates and 
Medicare Advantage and Part D Payment Policies and Final Call 
Letter,'' Chapter 16b of the Medicare Managed Care Manual was 
revised to include this policy.
---------------------------------------------------------------------------

     Striking references to coordination of covered Medicare 
and Medicaid ``health and long-term care'' and referring more broadly 
to Medicare and Medicaid services in in newly redesignated paragraph 
(3); and
     Replacing the reference to ``member'' materials with 
``beneficiary communication materials,'' consistent with the definition 
of ``communication materials'' at Sec.  422.2260.
    We propose to codify a definition of highly integrated dual 
eligible special needs plan (HIDE SNP) at Sec.  422.2. Under the 
proposed definition, a HIDE SNP would be a type of D-SNP offered by an 
MA organization that has--or whose parent organization or another 
entity that is owned and controlled by its parent organization has--a 
capitated contract with the Medicaid agency in the state in which the 
D-SNP operates that includes coverage of LTSS, behavioral health 
services, or both, consistent with state policy.
    We note that all the requirements of a D-SNP would also apply to a 
HIDE SNP, such as the obligation to provide, as applicable, and 
coordinate Medicare and Medicaid benefits. In contrast to a FIDE SNP, a 
D-SNP could satisfy the requirements of a HIDE SNP if its parent 
organization offered a companion Medicaid product that covered only 
LTSS or behavioral health services, or both, under a capitated 
contract. Because a FIDE SNP covers comprehensive Medicaid benefits 
including LTSS and behavioral health services, any FIDE SNP would also 
be a HIDE SNP, but not all HIDE SNPs would qualify to be FIDE SNPs. In 
defining a HIDE SNP, we chose to adopt the phrase ``consistent with 
state policy'' to align with the FIDE SNP definition. We interpret this 
phrase, both for FIDE SNPs and HIDE SNPs, as an important 
acknowledgement of variation in how states elect to provide coverage of 
LTSS or behavioral health services under their capitated contracts with 
D-SNPs and Medicaid managed care plans (for example, MCOs in the case 
of FIDE SNPs, and MCOs, PIHPs, and PAHPs in the case of HIDE SNPs). For 
example, one state may include all Medicaid behavioral health services 
in its capitated contracts, while another state may carve out a 
particular service from its capitated contracts with a Medicaid managed 
care plan covering behavioral health services. We interpret the phrase 
``consistent with state policy'' as allowing CMS to permit certain 
carve-outs where consistent with or necessary to accommodate state 
policy, except for where specifically prohibited (such as for nursing 
facility services in the FIDE SNP definition). As such, among the 
states that have capitated contracts with D-SNPs or the D-SNPs' parent 
organizations, CMS can still determine that D-SNPs meet the FIDE SNP or 
HIDE SNP definition despite these types of variations allowed under 
this proposal. We solicit comment on this proposed definition, 
including on whether additional requirements for HIDE SNPs should be 
addressed in the definition.
    We also propose to establish at Sec.  422.2 a definition for the 
term aligned

[[Page 54995]]

enrollment, as many of the other D-SNP proposals in this proposed rule 
are based on this concept. Under our proposal, aligned enrollment 
occurs when a full-benefit dual eligible individual is a member of a D-
SNP and receives coverage of Medicaid benefits from the D-SNP or from a 
Medicaid managed care organization, as defined in section 1903(m) of 
the Act, that is: (1) The same organization as the MA organization 
offering the D-SNP; (2) its parent organization; or (3) another entity 
that is owned and controlled by the D-SNP's parent organization. 
Aligned enrollment, as we propose to define it, would not arise where 
the MA organization or its parent organization has a contract with the 
applicable state to offer a prepaid inpatient health plan (PIHP) or 
prepaid ambulatory health plan (PAHP) in the state's Medicaid program. 
Unlike a Medicaid MCO, these other Medicaid managed care plans cover 
only specific and non-comprehensive set of services. In the event that 
it is the policy of the state Medicaid agency to limit a D-SNP's 
membership to individuals with aligned enrollment, we would describe 
this practice as ``exclusively aligned enrollment,'' which is embedded 
in the definition of ``aligned enrollment.'' For example, some states 
limit D-SNP enrollment to full-benefit dual eligible individuals who 
also choose to receive Medicaid benefits through the D-SNP or a 
Medicaid MCO operated by the same entity (that is, by the MA 
organization) or by the MA organization's parent organization. Such a 
limitation would be included in the state Medicaid agency contract with 
the D-SNP. Exclusively aligned enrollment is relevant to how we propose 
to apply the integrated grievance and appeals requirements described in 
section II.A.2.b. of this proposed rule. We solicit comment on how we 
propose to define aligned enrollment given its relevance to the 
category of D-SNPs to which the integrated grievance and appeals 
procedures apply. We also solicit comment on whether we should consider 
other types of Medicaid managed care arrangements beyond companion 
Medicaid MCOs, as defined in section 1903(m) of the Act and codified at 
Sec.  438.2, operated by a HIDE SNP's parent organization.
    Finally, we propose in our definition of a D-SNP at Sec.  422.2 to 
codify that an MA organization seeking to offer a D-SNP must satisfy 
any one (or more) of the three integration requirements in section 
1859(f)(3)(D)(i) of the Act. We note that the statutory language 
requires that plans meet one or more statutorily identified integration 
requirements to the extent permitted under state law. We interpret this 
phrase as acknowledging and respecting the flexibility provided to 
states under the Medicaid program while imposing on D-SNPs integration 
requirements that Congress has deemed necessary. In approximately 20 
states, state law does not permit enrollment of dual eligible 
individuals in managed care for Medicaid services, which would 
effectively preclude a D-SNP in such a state from being a HIDE SNP 
(paragraph 2) or FIDE SNP (paragraph 3). Similarly, in other states, 
certain Medicaid benefits, such as LTSS and behavioral health services, 
are carved out of Medicaid managed care, which could similarly preclude 
a D-SNP from meeting paragraphs (2) or (3) of our proposed definition 
of a D-SNP. As we discuss in the context of our definitions of a FIDE 
SNP and HIDE SNP, a carve-out by the state of a minimal scope of 
services is permissible so long as comprehensive services are covered 
under the capitated Medicaid contract. For these reasons, we propose to 
interpret this statutory provision in a way that provides multiple 
avenues for a MA plan to qualify as a D-SNP. However, we considered 
other interpretations of this particular provision. For example, we 
considered whether this phrase should mean that in states that have 
Medicaid managed care programs for dual eligible individuals, all MA 
organizations seeking to offer a D-SNP could do so only if they were 
under contract with the state to offer a companion Medicaid managed 
care plan in that state, on the grounds that such an opportunity is 
permitted under state law. We solicit comments on our proposed 
interpretation as well as alternatives. We also request comment on 
whether and how our proposed definition could or should be revised 
consistent with the interpretation we take of the statute.
    These proposed definitions serve to describe different types of D-
SNPs based on the degree to which they integrate Medicaid benefits at 
the plan level. FIDE SNPs that limit enrollment to full-benefit dual 
eligible individuals and require (or have) exclusively aligned 
enrollment across Medicare and Medicaid constitute the most extensive 
level of integration, with the greatest potential for holistic and 
person-centered care coordination, integrated appeals and grievances, 
comprehensive beneficiary communication materials, and quality 
improvement. HIDE SNPs with exclusively aligned enrollment are plans 
that share much of this potential but integrate a narrower set of 
Medicaid benefits than FIDE SNPs. We believe that an entity can only 
truly hold ``clinical and financial responsibility'' for the provision 
of Medicare and Medicaid benefits, as described at section 
1859(f)(8)(D)(i)(III) of the Act, in the scenarios of exclusively 
aligned enrollment. Therefore, the plans that meet this criterion would 
be FIDE SNPs and HIDE SNPs that have exclusively aligned enrollment, as 
these terms are defined under our proposal. By virtue of these 
exclusively aligned plans' status as a FIDE SNP or HIDE SNP, they would 
also satisfy the integration requirement at section 
1859(f)(8)(D)(i)(II) of the Act, which we codified in paragraphs (2) 
and (3) of the definition of a D-SNP at Sec.  422.2.
    FIDE SNPs and HIDE SNPs where aligned enrollment is possible--but 
not required--under the state contract with the D-SNP and the state's 
administration of its Medicaid managed care program would constitute 
another form of integration, albeit to a lesser degree. In such a D-
SNP, it is likely that some share of the D-SNP's enrollment is aligned 
enrollment but not exclusively aligned enrollment. Some dual eligible 
individuals enrolled in that plan may: (1) Enroll in a Medicaid managed 
care plan operated by a different parent organization; or (2) receive 
their Medicaid benefits through Medicaid fee-for-service. These other 
choices may be a result of individual choice even when a Medicaid 
managed care plan offered by the same entity (or parent organization) 
as the MA D-SNP is available or may be the result of the applicable 
state's decisions in administering its Medicaid program.
    Under section 1859(f)(8)(D)(i) of the Act, those D-SNPs that are 
neither FIDE SNPs nor HIDE SNPs must meet an additional state Medicaid 
contracting requirement beginning in 2021. Our proposed definition of a 
D-SNP addresses this in paragraph (1), cross-referencing the proposed 
new requirement in paragraph (d) of Sec.  422.107. This new 
requirement, which involves the provision of notice when an individual 
who belongs to a group of high-risk dual eligible individuals has a 
hospital and skilled nursing facility admission, is discussed in 
section II.A.2.b.(2) of the proposed rule in greater detail. We solicit 
comments on this proposal and, in particular, on alternative approaches 
to classifying D-SNPs consistent with requirements of section 
1859(f)(8)(D)(i) of the Act.

[[Page 54996]]

(2) Dual Eligible Special Needs Plans and Contracts With States (Sec.  
422.107)
    In Sec.  422.107, we propose changes to more clearly articulate the 
requirements of the contract between the D-SNP and the state Medicaid 
agency, while also incorporating the changes required by the Bipartisan 
Budget Act of 2018. In summary, we propose to make the following 
changes:
     Delete language in paragraph (b) that is extraneous and 
duplicative of the proposed definition of a D-SNP in Sec.  422.2;
     Make clarifying edits in paragraphs (c)(1) through (c)(3), 
which govern the minimum requirements of the contract between the D-SNP 
and the state Medicaid agency;
     Redesignate paragraph (d) as paragraph (e), which relates 
to compliance dates; and
     Establish a revised paragraph (d) that describes the new 
minimum contracting requirement under the Bipartisan Budget Act of 2018 
that the newly designated paragraph (e)(2) would make effective January 
1, 2021.
    Section 50311(b) of the Bipartisan Budget Act of 2018 amended 
section 1859(f) of the Act by creating a new paragraph (8)(D)(i)(I) to 
require that the Secretary establish additional requirements for D-
SNPs' contracts with state Medicaid agencies. We address in our 
preamble discussion about our proposed definition of D-SNP how this 
provision requires a D-SNP to have a state Medicaid agency contract 
that includes additional coordination requirements (subsection 
(f)(8)(D)(i)(I) of the Act); be a FIDE SNP or HIDE SNP (subsection 
(f)(8)(D)(i)(II) of the Act); or have exclusively aligned enrollment 
and have its parent organization accept full clinical and financial 
responsibility for all Medicare and Medicaid covered services 
(subsection (f)(8)(D)(i)(III) of the Act), depending on the state's 
election.
    We are proposing to implement subsection (f)(8)(D)(i)(I) of the Act 
itself by establishing at Sec.  422.107(d) that any D-SNP that is not a 
FIDE SNP or HIDE SNP is subject to an additional contracting 
requirement. Under this proposed new contract requirement, the D-SNP 
would be required to notify the state Medicaid agency, or individuals 
or entities designated by the state Medicaid agency, of hospital and 
skilled nursing facility (SNF) admissions for at least one group of 
high-risk full-benefit dual eligible individuals, as determined by the 
state Medicaid agency. Our proposal would also permit the D-SNP to 
authorize another entity or entities (such as a D-SNP's network 
providers) to notify the state Medicaid agency and/or individuals or 
entities designated by the state Medicaid agency on its behalf, with 
the understanding that the D-SNP ultimately would retain responsibility 
for complying with this requirement. Our intent in proposing this 
notification requirement is to promote the integration of Medicare and 
Medicaid benefits by establishing a minimum contracting requirement 
that has the effect of increasing D-SNPs' care coordination activity 
around care transitions. In such care transitions, there is a clear 
need to share information among parties concerned with the 
beneficiary's care and there is a risk of potential harm to the 
beneficiary when effective communication and coordination do not occur. 
In our experience, there are known gaps when a beneficiary migrates 
from one setting where services are covered under Medicare, such as an 
inpatient or SNF stays, to another setting where services such as LTSS, 
including home and community based services (HCBS), that are covered 
under Medicaid.\10\ This proposed provision is intended to promote 
successful transitions of care into a setting of the beneficiary's 
choice, and increase coordination among those involved in furnishing 
and paying for primary care, acute care, LTSS, and behavioral health 
services. The proposed requirement for notification is just one facet 
of successful, holistic care transitions, but we believe it is an 
essential catalyst for the process.
---------------------------------------------------------------------------

    \10\ ``Improving Care Transitions,'' Health Affairs Health 
Policy Brief, September 13, 2012. DOI: 10.1377/hpb20120913.327236. 
Retrieved from https://www.healthaffairs.org/do/10.1377/hpb20120913.327236/full/; and Segal, M., Rollins, E., Hodges, K., 
and Roozeboom, M. ``Medicare-Medicaid Eligible Beneficiaries and 
Potentially Avoidable Hospitalizations.'' Medicare & Medicaid 
Research Review, 2014: 4 (1), p. E1-E10. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4053188/pdf/mmrr2014-004-01-b01.pdf.
---------------------------------------------------------------------------

    In permitting a state Medicaid agency to specify which 
subpopulations of high-risk full-benefit dual eligible individuals the 
D-SNP must focus on through this effort, we are seeking to give states 
flexibility to begin on the path toward greater integration on a 
smaller scale and, in collaboration with the D-SNPs in their markets, 
test different approaches. As processes and infrastructure mature, a 
state Medicaid agency may choose through its contracts with D-SNPs to 
scale up this notification to include additional data, additional 
subpopulations of full-benefit dual eligible individuals, or both. 
High-risk beneficiaries could include those who are receiving HCBS or 
participating in a Medicaid health home program in accordance with 
section 1945 of the Act. Alternatively, or in addition, the state 
Medicaid agency could use claims or encounter data to target particular 
groups, such as those who have a history of hospital readmissions or 
who are high utilizers of acute care services, LTSS, or behavioral 
health services. Under this proposal, we would give the state Medicaid 
agency broad latitude to establish notification procedures and 
protocols, including the recipients of the admission notifications, 
timeframes by which a D-SNP must furnish this information directly or 
indirectly, and how such notification would occur. We are proposing to 
defer to state Medicaid agencies on the manner in which notification 
occurs, that is, whether it involves an automated or manual process. 
For example, in markets where there is existing infrastructure to 
leverage, such as a state health information exchange, a state may 
elect an approach that requires data sharing across a common platform 
using industry standards, including those adopted by the Office of the 
National Coordinator for Health IT in accordance with 45 CFR part 170, 
subpart B. Regardless of process, the expectation is that notifications 
occur timely in order to ensure prompt care coordination and effective 
care transitions. To that end, we strongly encourage states to use the 
most efficient notification mechanisms available, which may include the 
state's health information exchange. However, we appreciate that not 
every state is similarly positioned and, therefore, if a state elected 
to implement this requirement on a smaller scale, targeting a small 
subset of beneficiaries, a solution that does not initially require 
automation may be more appropriate and pragmatic. We support state 
Medicaid agencies in their efforts to adopt the policies and procedures 
for this notification requirement that work best for them and D-SNPs 
participating in their markets. Regardless of what approach a state 
chooses to take under this proposal, our aim is to have actionable 
information that enables providers and payers to facilitate seamless 
care transitions for high-risk populations, that is, those full-benefit 
dual eligible individuals who are among the most ill and medically 
complex or who are most likely to benefit from effective interventions 
(such as through the provision of LTSS and behavioral health services) 
that enable them to live independently in the setting of their choice 
and in a way that values their own needs and preferences.
    We believe that our proposal to establish a notification 
requirement for D-SNPs for high-risk individuals'

[[Page 54997]]

hospital and skilled nursing facility admissions is consistent with the 
criteria we used to evaluate various options for the minimum 
contracting requirements. We considered whether a proposal would--
     Meaningfully improve care coordination and care 
transitions, thereby improving health outcomes for dually eligible 
beneficiaries;
     Minimize burden on plans and states relative to the 
improvements in care coordination and transitions;
     Provide flexibility to state Medicaid agencies;
     Enable CMS to assess compliance with minimal burden on 
CMS, plans, and providers; and
     Be consistent with the statutory amendments made by the 
Bipartisan Budget Act of 2018.
    We solicit comment on whether our proposal satisfies these criteria 
to a greater extent than the more prescriptive or alternative proposals 
we considered as described in further detail in this section of this 
proposed rule; whether our reasoning for why our proposal is preferable 
to the more prescriptive or alternative proposals is sound; whether 
there are other minimum contacting requirements that we did not 
consider that are superior to our proposal; and whether our proposal 
provides sufficient incentives for plans and states to pursue greater 
levels of integration. For example, we considered the following:
     We considered proposing that notice requirements apply for 
all full-benefit dual eligible individuals' hospital and SNF 
admissions. We believe our proposal is preferable because it limits the 
administrative burdens for states and MA organizations and focuses 
efforts on high-risk beneficiaries for whom there is likely to be some 
Medicaid care coordination infrastructure.
     We considered proposing a minimum size for the state-
selected high-risk population. In contrast, our proposal for new Sec.  
422.107(d) gives state Medicaid agencies the discretion to decide what 
it means that a group of beneficiaries is at high risk and how large or 
small the group(s) may be.
     We considered requiring a notification for every emergency 
department visit, as mentioned in section 1859(f)(8)(D)(i)(I) of the 
Act. We believe our proposal is preferable because it focuses on 
hospital and SNF admissions where CMS believes there is the greatest 
opportunity to target interventions and improve outcomes, and during 
which there is more time to initiate discharge planning than during an 
emergency department visit. However, we note that a state Medicaid 
agency could choose to require a notification for full-benefit dual 
eligible individuals who are high utilizers of emergency departments, 
where there may be opportunities to address barriers to accessing 
primary care and unmet health care needs.
     We considered proposing that the notification occur not 
later than 48 hours after the D-SNP learns of the admission or 
discharge. We opted instead to defer to the state Medicaid agency on 
such matters. We believe that states may choose to use this information 
for their own purposes, including program oversight; alternatively, or 
in addition, a state Medicaid agency may opt to require a direct 
notification between the D-SNP and Medicaid managed care organization 
(MCO) or a specified Medicaid provider to allow for the timeliest 
action following a care transition or other significant event.
     We considered focusing on better coordination of 
individual health needs assessments and mechanisms to reduce assessment 
burden for enrollees. We continue to hear of scenarios where a D-SNP 
enrollee is assessed separately by the D-SNP and then again by their 
Medicaid MCO, even though there may be a high degree of overlap in what 
each organization is assessing and ultimately what each organization is 
asking of the enrollee. Because we are unclear on the scope of the 
problem, we solicit comment on how pervasive this issue is and the 
extent of overlap in the assessment instruments and degree of burden on 
providers and beneficiaries. We welcome feedback for our consideration 
in the final rule, specifically on the extent to which the requirements 
that we propose do not accomplish enough or should be modified to 
address this issue. For example, we seek comment on whether a 
coordination obligation for D-SNPs should be adopted that could 
require, for example, each D-SNP to take affirmative steps to schedule 
its assessments at the same time as similar outreach is conducted by 
the Medicaid managed care plan, to use a combined or aligned assessment 
instrument, or take other steps that would minimize the burden on 
enrollees or providers.
     We considered requiring D-SNPs to identify any enrollees 
who are in need of LTSS and behavioral health services and transmitting 
such information to the state Medicaid agency. However, D-SNPs are 
already required, at Sec.  422.101(f), to develop individualized care 
plans and perform health risk assessments that identify the physical, 
psychosocial, and functional needs of each SNP enrollee. We do not wish 
to duplicate an existing requirement, but to the extent the current 
regulation text is insufficient to accomplish this or additional 
regulatory standards for identifying and sharing information are 
necessary, we welcome comment on that topic.
     We considered requiring D-SNPs to train plan staff and 
their network providers on the availability of LTSS and behavioral 
health services covered by Medicaid. While we believe that such 
awareness, understanding, and training are vitally important to 
delivering appropriate care to full-benefit dual eligible individuals, 
we also believe that it is an intrinsic administrative function of a D-
SNP in fulfilling its responsibility to coordinate the delivery of 
Medicare and Medicaid benefits and therefore potentially duplicative of 
existing requirements, including the requirement to train plan staff 
and network providers on the D-SNP model of care.
     We considered requiring D-SNPs to solicit state input on 
the plan's model of care (which is currently required and submitted to 
CMS pursuant to Sec.  422.101(f)), health risk assessment instrument, 
and beneficiary communication materials. However, we were disinclined 
to impose such a requirement on D-SNPs that do not have exclusively 
aligned enrollment. Further, in states without capitated arrangements 
with D-SNPs for the provision of Medicaid services, Medicaid agencies 
may not see a role for themselves in reviewing such documents, and we 
did not want such a requirement to create additional burden for states. 
State Medicaid Agencies, however, can choose to require that a D-SNP 
provide such documents for state input through their contracts with D-
SNPs. We seek comment on whether our assumptions about state burden are 
correct and whether there are compelling reasons why additional 
contracting requirements in this area may be necessary.
     Finally, we considered the merits of requiring D-SNPs to 
share data with state Medicaid agencies or entities designated by State 
Medicaid Agencies that would benefit the coordination of Medicare and 
Medicaid items and services, as described in section 
1859(f)(8)(D)(i)(I) of the Act, as an example for implementing that 
provision. However, we ultimately decided against proposing such a 
requirement here so we can further assess the operational and technical 
hurdles and costs for both state Medicaid agencies and D-SNPs. Instead,

[[Page 54998]]

we are proposing to focus initially on establishing the notification 
requirement for hospital and SNF admissions, which we believe will lead 
to more immediate improvements in the care transitions process. 
However, we solicit comment on whether there should be additional 
regulatory requirements around data sharing.
    We seek feedback on our notification proposal at Sec.  422.107(d), 
including the ways that State Medicaid Agencies and plans would fulfill 
this requirement, and the additional contracting requirements we 
considered, as summarized in this section.
    In addition to the new requirement for contracts between the State 
and MA organization at proposed Sec.  422.107(d) for D-SNPs that are 
not FIDE SNPs or HIDE SNPs, we are proposing to include additional 
specifications in the regulations governing D-SNP contracts with State 
Medicaid Agencies at Sec.  422.107 by amending paragraph (b) and 
several provisions in paragraph (c). We do not believe that these 
specifications materially alter these agreements; however, we are 
proposing them in response to questions raised since the State Medicaid 
agency contracting requirements were promulgated in the September 2008 
interim final rule (73 FR 54226). We also believe that these changes 
align with the integration requirements for D-SNPs in the Bipartisan 
Budget Act of 2018.
    We are proposing to modify the general rule for contracts with D-
SNPs at Sec.  422.107(b) to strike ``The MA organization retains 
responsibility under the contract for providing benefits, or arranging 
for benefits to be provided, for individuals entitled to receive 
medical assistance under Title XIX. Such benefits may include long-term 
care services consistent with state policy.'' We believe that these 
sentences would no longer be necessary to describe the mandatory 
content of the contract. Our proposed definition at Sec.  422.2 of ``D-
SNP'' requires the plan to provide, as applicable, and coordinate the 
delivery of Medicare and Medicaid services; we believe this is 
sufficient for D-SNPs to be aware of the requirement and for CMS to 
enforce it.
    We propose to revise the contracting requirement at Sec.  
422.107(c)(1), which currently requires the contract to document the MA 
organization's responsibility, including financial obligations, to 
provide or arrange for Medicaid benefits to specify instead that the 
contract must document the MA organization's responsibility to provide, 
as applicable, and coordinate the delivery of Medicaid benefits, 
including LTSS and behavioral health services, for individuals who are 
eligible for such services. This proposed revision would clarify that 
in some cases, the D-SNP may cover (that is, provide directly or pay 
health care providers for providing) Medicaid benefits under a 
capitated contract with the State Medicaid agency, but in all cases, it 
must coordinate the delivery of Medicaid benefits. In addition to being 
codified in our proposed revisions to Sec.  422.107(c)(1), this is 
consistent with our proposed definition of ``dual eligible special 
needs plan,'' which indicates that each D-SNP ``coordinates the 
delivery of Medicare and Medicaid services.'' Current regulations use 
the phrase ``providing benefits, or arranging for benefits to be 
provided'' but do not describe what it means for D-SNPs to provide or 
arrange for Medicaid benefits; we believe this proposed amendment to 
impose an affirmative duty to provide benefits, as applicable, and 
otherwise coordinate the delivery of benefits clarifies that D-SNPs 
must play an active role in helping beneficiaries access such services 
as necessary. We further believe that ``coordination'' more aptly 
describes the activity in which D-SNPs are engaged with respect to a 
beneficiary's Medicaid benefits. We solicit comment on whether our 
proposed amendments to this section fully communicate what we intend to 
require of D-SNPs or whether there are additional revisions we ought to 
consider to express our intent more clearly for D-SNPs, State Medicaid 
Agencies, and other stakeholders.
    In Sec.  422.107(c)(2), we propose to revise the current 
requirement that the contract between the D-SNP and the State Medicaid 
Agency document the categories of dual eligible individuals who are 
eligible to enroll in the D-SNP. This provision currently requires the 
contract to specify whether the D-SNP can enroll categories of partial-
benefit dual eligible individuals or whether enrollment is limited to 
full-benefit dual eligible individuals. We are proposing to revise this 
requirement to specify not only the categories of eligibility but also 
any additional criteria of eligibility to account for such conditions 
of eligibility under Medicaid as nursing home level of care and age. 
These criteria could also include a requirement for D-SNP enrollees to 
enroll in a companion Medicaid plan to receive their Medicaid services.
    Finally, at Sec.  422.107(c)(3), we propose that the contract 
between the D-SNP and the State Medicaid Agency document the Medicaid 
services the D-SNP is responsible for covering in accordance with a 
capitated contract with the D-SNP directly or through a risk contract, 
defined at Sec.  438.2, with the companion Medicaid managed care 
organization operated by the D-SNP's parent organization. We believe 
that this change, if finalized as proposed, would reduce burden on D-
SNPs to identify and document in the contract every Medicaid-covered 
service. D-SNPs often submit to CMS a list of all Medicaid services in 
their State Medicaid Agency contracts, even those for which the D-SNP 
is not under a capitated contract and for which the D-SNP bears no 
risk. Even with this change, we continue to expect D-SNPs, for purposes 
of coordinating their enrollees' Medicaid benefits as required in the 
proposed definition of a D-SNP in Sec.  422.2, to know and understand 
all services covered in each state's approved state plan, including any 
services that may be carved out and covered separately from the D-SNP. 
This clarifying change would enable us to identify the particular 
Medicaid services that are covered under a capitated contract for FIDE 
SNPs and HIDE SNPs, and we seek comment on whether the regulatory 
change fully communicates what we wish to require. We intend to issue 
sub-regulatory guidance to address any changes made under this 
rulemaking that impact D-SNPs contracts with State Medicaid Agencies.
(3) Conforming and Technical Changes (Sec. Sec.  422.60(g), 422.102(e), 
422.107(b), and 422.111(b)(2)(iii))
    We are also proposing to make conforming changes to several 
sections of Part 422 that address D-SNPs by adopting consistent 
terminology with respect to dual eligible individuals and creating 
cross-references to the newly proposed definitions. First, at Sec.  
422.60(g), which addresses CMS authority to implement passive 
enrollment, we propose to use the term ``highly integrated dual 
eligible special needs plan'' in place of text referring to D-SNPs that 
meet a high level of integration. This is consistent with our new 
proposed definition in Sec.  422.2. This technical change would not 
materially change the plan types that are eligible for passive 
enrollment; the existing rule simply refers to them as D-SNPs that meet 
a high standard of integration under the supplemental benefit authority 
at Sec.  422.102(e). Second, we also propose clarifying at Sec.  
422.102(e) that not only HIDE SNPs meeting minimum quality and 
performance standards are eligible to offer supplemental benefits, but 
FIDE SNPs that similarly meet minimum quality and performance standards 
may do so as well. While this amendment does not

[[Page 54999]]

change what has occurred in practice, we believe it clarifies the types 
of plans that are eligible to offer enhanced supplemental benefits. 
Third, in the general rule at Sec.  422.107(b), we are proposing to 
substitute a ``special needs plan serving beneficiaries eligible for 
both Medicare and Medicaid (dual-eligible)'' with ``dual eligible 
special needs plan.'' Already explicit in the proposed definition of a 
D-SNP is that such plans exclusively serve individuals who are eligible 
for Medicaid under Title XIX of the Act, and we believe that the 
language in the current regulations is extraneous. Finally, at Sec.  
422.111(b)(2)(iii), which requires D-SNPs to provide written 
information to dual eligible enrollees about their eligibility for 
cost-sharing protections and Medicaid benefits, we propose to use the 
term ``dual eligible special needs plan'' consistent with the proposed 
definition.
(4) Eligibility of Partial-Benefit Dual Eligible Individuals for Dual 
Eligible Special Needs Plans
    We considered proposing limits on the enrollment of partial-benefit 
dual eligible individuals in D-SNPs, since there are no Medicaid 
services that the D-SNP is integrating or coordinating on their behalf. 
We continue to question the benefit that partial-benefit dual eligible 
individuals derive from their enrollment in a D-SNP relative to the 
challenges associated with allowing such enrollment. For example, 
allowing D-SNPs to enroll both partial- and full-benefit dual eligible 
individuals significantly limits the ability of plans, CMS, and states 
to simplify beneficiary communications materials. We ultimately decided 
against proposing any such limits on enrollment at this time but 
continue to consider this issue. We invite comments on this topic.
(5) Suspension of Enrollment for Non-Compliance With D-SNP Integration 
Standards (Sec.  422.752)
    Section 50311(b) of the Bipartisan Budget Act of 2018 amended 
section 1859(f) of the Act by creating a new paragraph (8)(D)(ii) to 
permit the Secretary, for plan years 2021 through 2025, to impose an 
intermediate sanction of stopping all new enrollment into a D-SNP if 
the Secretary determines that the D-SNP is failing to comply with the 
integration requirements set forth in section 1859(f)(8)(D)(i) of the 
Act. By establishing statutory requirements that established a minimum 
level of integration of D-SNPs in section 50311 of the Bipartisan 
Budget Act of 2018, we believe the goal was for all dual eligible 
beneficiaries enrolled in D-SNPs to receive a greater level of 
integration of Medicare and Medicaid benefits than is the case under 
current regulations. Because the Bipartisan Budget Act of 2018 limited 
the applicability of the Secretary's authority to impose an 
intermediate sanction on plans that do not comply with the integration 
requirements to plan years 2021 through 2025, we believe that the 
intent of this provision is to offer an alternative to outright 
contract or plan termination for D-SNPs that fail to meet the new 
integration requirements during the period of 2021 through 2025. We 
believe the enrollment sanction authority is a lesser penalty than a 
contract or plan termination to provide time for D-SNPs to transition 
to the new integration requirements without creating potentially 
significant disruption to current D-SNP enrollees as a result of 
outright termination. In addition to authorizing this lesser sanction, 
the statute requires a corrective action plan, which we believe 
strengthens our interpretation, as it illustrates a preference for 
ultimate compliance by D-SNPs with the integration requirements. As 
provided in section 1859(f)(8)(D)(i) of the Act, in the event that such 
a sanction is imposed, the plan must submit to the Secretary (at a 
time, and in a form and manner, specified by the Secretary) information 
describing how the plan will come into compliance with the integration 
requirements.
    The statute authorizes this lesser sanction but does not require 
that it be used, leaving it to our discretion whether an enrollment 
sanction combined with a corrective action plan is sufficient to 
achieve the goals of the statute. We believe that it would be 
appropriate to impose the enrollment sanction for non-compliant D-SNPs 
before initiating any contract termination or other sanction or 
enforcement action. Therefore, we propose to amend Sec.  422.752 by 
adding a new paragraph (d) that would require CMS to impose an 
enrollment suspension when CMS finds that the plan is non-compliant 
with the integration requirements during plan years 2021 through 2025, 
rather than initiating outright termination. While the statute grants 
the Secretary discretion to sanction plans that fail to meet the new 
integration requirements, starting in 2021, by stopping all new 
enrollment into such plans, our proposal would establish predictability 
for states, beneficiaries, and MA organizations by requiring its 
imposition for non-compliant plans in lieu of termination or other 
actions. However, we stress that we interpret this proposal as leaving 
discretion for CMS, if the D-SNP does not submit an acceptable 
corrective action plan or fails to abide by the correction action plan, 
to determine that contract termination or other action is still 
possible. In addition, in the event that any harm to enrollees is 
imminent, we retain authority to immediately terminate the contract. We 
also propose in Sec.  422.752(d) that the suspension of enrollment 
would continue in effect until CMS is satisfied that the deficiencies 
that are the basis for the sanction determination have been corrected 
and are not likely to recur. The procedures, remedies, and appeal 
rights available to plans subject to intermediate sanctions provided in 
Sec.  422.756 would apply to D-SNPs that are sanctioned under this new 
authority.
b. Unified Grievance and Appeals Procedures for Dual Eligible Special 
Needs Plans and Medicaid Managed Care Plans at the Plan Level 
(Sec. Sec.  422.560-562, 422.566, 422.629-634, 438.210, 438.400, and 
438.402)
    Section 1859(f)(8)(B) of the Act, as added by the Bipartisan Budget 
Act of 2018, directs the Secretary to establish new procedures that 
unify, to the extent feasible, Medicare and Medicaid grievance and 
appeals procedures for D-SNPs. This new authority provides an important 
opportunity to address an area of longstanding misalignment between the 
Medicare and Medicaid programs. Medicare and Medicaid grievance and 
appeal processes have developed independently and operate entirely 
separately. Medicare's fee-for-service appeals processes (authorized 
primarily under section 1869 of the Act for Part A and B claims 
appeals), and MA's processes (authorized under sections 1852(f) and 
1852(g) of the Act for grievance and appeal processes) are subject only 
to federal regulation and oversight as part of the federally-
administered Medicare program. Medicaid grievances and appeals are 
authorized under sections 1902(a)(3) and 1902(a)(5) of the Act for 
Medicaid programs more generally and section 1932(b)(4) of the Act for 
Medicaid managed care plans. Unlike Medicare and MA, Medicaid appeals 
and grievance procedures are subject to both federal and state 
regulation and are primarily subject to state oversight and 
administration as part of a joint federal-state financed program. 
Medicare Part D grievances and appeals are authorized under sections 
1860D-4(f) and (g) of the Act and are outside the scope of our 
authority to unify grievances and

[[Page 55000]]

appeals under new section 1859(f)(8)(B) of the Act; we note, however, 
that D-SNPs are all required to provide Part D prescription drug 
coverage pursuant to Sec.  422.2.
    Both the Medicare and Medicaid grievance and appeals systems 
include regulations establishing procedures for the fee-for-service 
programs as well as regulations governing managed care plans, including 
processes at the plan and post-plan levels for adjudicating appeals. 
Medicare rules are found at 42 CFR part 405 subpart I (general) and 
part 422 subpart M (Medicare Advantage); Medicaid rules are at 42 CFR 
part 431 subpart E (general) and part 438 subpart F (managed care). 
Regulations for the Medicare and Medicaid programs take broadly similar 
approaches to managed care appeals in that both programs establish a 
process for resolving a dispute at the plan level initially, followed 
by an opportunity for post-plan review. However, these appeals systems 
operate independently with sometimes subtle but important differences 
related to notices, adjudication timeframes, availability of benefits 
continuing while the appeal is pending, and levels of review. 
Similarly, regulations for the Medicare and Medicaid programs take 
different approaches with respect to some processes for grievances, 
including filing and adjudication timeframes and the availability of an 
expedited grievance process.
    Although comparatively few beneficiaries file grievances or 
appeals,\11\ these processes are vital safeguards to ensure that 
beneficiaries' concerns and needs are met promptly. Because of Medicare 
and Medicaid's misalignments in this area, beneficiaries who are dually 
eligible for Medicare and Medicaid can face a confusing array of 
choices when they seek to file a grievance or appeal. They may not know 
whether their complaint is tied to Medicare or Medicaid, and thus may 
not know where to direct their grievance. They may be uncertain if the 
item or service they seek is covered by Medicare, by Medicaid, or 
potentially by both programs, and thus may not know when or where to 
file an appeal following the denial of a service. The issue is 
particularly complicated for items and services such as home health and 
certain durable medical equipment that are sometimes covered by both 
programs but under different circumstances.
---------------------------------------------------------------------------

    \11\ For example, in 2016, Medicare Part C plans reported 2.93 
complaints (grievances) per 1,000 enrollees per month and 19.3 
reconsideration requests (appeals) per 1,000 enrollees per month. 
See Analysis of Calendar Year 2016 Medicare Part C Reporting 
Requirements Data, available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/PartCDDataValidation.html.
---------------------------------------------------------------------------

    This confusion for beneficiaries and for those assisting them can 
result in costly and inefficient duplication of effort, as 
beneficiaries may file grievances and appeals under both programs when 
only one was necessary. Health plans and federal and state agencies may 
incur additional burdens and costs from having to administer parallel 
appeals systems. Finally, these misalignments may lead to unintended 
harms in the form of delayed or denied access to needed services as 
beneficiaries expend time and energy pursuing ultimately fruitless 
appeals in one program when they should have been pursuing them in the 
other.
    We have made previous efforts to better align Medicare and Medicaid 
grievances and appeals for dual eligible individuals. The success of 
these prior efforts suggests to us that further alignment in this area 
is feasible. Under Sec.  460.122, the Programs of All-inclusive Care 
for the Elderly (PACE) include an integrated appeals system that 
handles all initial appeals at the organization level. The Medicaid 
managed care May 2016 final rule (81 FR 27478) took several steps to 
bring Medicaid managed care grievance and appeals rules into closer 
alignment with both Medicare and the private insurance market. Notable 
changes for Medicaid managed care enrollees in that final rule included 
requiring one single level of plan review prior to the state fair 
hearing as well as aligning many timeframes for resolving grievances 
and appeals.
    The operation of Medicare-Medicaid Plans (MMPs) in the CMS' 
Financial Alignment Initiative capitated model demonstrations has 
provided us with the most extensive experience integrating grievances 
and appeals for dually eligible enrollees in the managed care setting. 
MMPs are responsible for covering the full range of Medicare and 
Medicaid benefits and operating integrated grievance and appeals 
systems. We have developed these systems in collaboration with 
participating State Medicaid Agencies, using waiver authority under 
section 1115A of the Act and, in some cases, section 1115 of the Act. 
Development of these systems has required in-depth examination of 
various aspects of Medicare and Medicaid grievance and appeals rules to 
determine where misalignments exist and to decide how to resolve these 
misalignments in a way that is maximally protective of beneficiaries' 
rights. Our experience with MMPs suggests that, although implementing a 
new system can be challenging, once in operation integrated grievance 
and appeals systems can be simpler for beneficiaries to navigate than 
separate systems for Medicare and Medicaid.
    Under the newly enacted amendments to section 1859(f)(8)(B) of the 
Act, the Secretary is required to establish, not later than April 2020 
and for inclusion in contracts for D-SNPs for 2021 and subsequent 
years, procedures unifying grievances and appeals procedures consistent 
with several principles:
     Under paragraph (8)(B)(ii), the new unified procedures 
must include provisions that are most protective for the enrollee and, 
to the extent feasible as determined by the Secretary, are compatible 
with unified timeframes and consolidated access to external review. The 
statute requires that the procedures take into account differences 
under state Medicaid plans, and be easily navigable by enrollees.
     Additionally, under paragraph (8)(B)(iii), the integrated 
processes implemented are required to include a single written notice 
that includes all relevant grievance and appeal rights; a single 
pathway for resolution of covered items and services; notices written 
in plain English and available in languages and formats that are 
accessible to enrollees (including in non-English languages that are 
prevalent in the service area of the specialized MA plan); unified 
timelines for processes such as filing, acknowledging, and resolving 
the appeal or grievance; and requirements for plans to process, track, 
and resolve the grievances and appeals to ensure enrollees are notified 
timely of decisions and can track the status of their grievance or 
appeal.
     Finally, under paragraph (8)(B)(iv), new grievance and 
appeals procedures shall, with respect to all benefits under Medicare 
Parts A and B and Medicaid subject to appeal under such procedures, 
incorporate provisions under current law and implementing regulations 
that provide continuation of benefits pending appeal under Title XVIII 
and Title XIX. We address this statutory provision in section 
II.A.2.b.(7).
    Using this statutory framework, we developed the following goals to 
guide development of proposals to implement the unified grievance and 
appeals provisions:
     Adopt provisions that are most protective of the enrollee;
     Reduce burden on beneficiaries (and those assisting them), 
plans, states, and providers; and

[[Page 55001]]

     Maintain state flexibility and minimize disruption by 
building on existing rules and policies.

These policy goals also reflect our belief that timely, efficient, 
accessible, and well-functioning grievance and appeals systems are 
critical to ensuring that beneficiaries have access to needed items and 
services. Such systems are especially vital for dually eligible 
beneficiaries who typically lack financial resources that might enable 
other beneficiaries to pay out-of-pocket for needed items or services 
while a dispute is pending. We welcome comments regarding these policy 
goals and the extent to which the proposed regulations are consistent 
with them.
    Our policy goal of minimizing disruption is informed by statutory 
language directing the Secretary to establish unified provisions to the 
extent feasible (section 1859(f)(8)(B)(i) of the Act). Consistent with 
this statutory standard, we are primarily proposing incremental changes 
that are currently feasible, conform to other current law, and build 
upon existing systems. As we gain further experience with unified 
grievances and appeals, we may consider additional changes in the 
future, consistent with our authority.
    Our proposals under this notice of proposed rulemaking can be 
divided into two substantively different types in addition to technical 
amendments proposed. We propose to incorporate these changes into and 
conform existing regulations in parts 422 and 438. First, we are 
proposing to establish requirements for all D-SNPs, relative to the 
role they play in assisting full-benefit dual eligible individuals, to 
assist with Medicaid-related coverage issues and grievances (Sec.  
422.562(a)). Second, we are also proposing new requirements in 
accordance with section 1859(f)(8)(B) of the Act to create integrated 
grievance and appeals systems for a limited subset of D-SNPs 
(``applicable integrated plans''), identified using terms and concepts 
we propose to define in amendments to Sec.  422.561, with the 
integrated processes established by proposed new regulations 
(Sec. Sec.  422.629-422.634). Finally, we propose a number of changes 
of a technical and conforming nature to existing provisions in parts 
422 and 438 (Sec. Sec.  422.560, 422.562, 422.566, 438.210, 438.400, 
and 438.402).
    Section 1859(f)(8)(B)(i) of the Act requires the Secretary to 
establish unified grievance and appeals procedures for D-SNPs not later 
than April 2020, and section 1859(f)(8)(C) of the Act requires the use 
of these unified procedures in D-SNP contracts for 2021 and subsequent 
years. The statute does not, however, explicitly rule out the 
possibility of implementing such unified processes prior to 2021. We 
interpret the statute as permitting a state to adopt unified grievance 
and appeals processes for integrated D-SNPs and Medicaid plans in that 
state consistent with our final regulations on this topic starting as 
soon as the regulations establishing such procedures are final. Such a 
state could require establishment of unified appeals and grievance 
procedures consistent with CMS' regulations in its Medicaid agency 
contract required under Sec.  422.107. We solicit comments on this 
interpretation of the statutory implementation date requirements and 
our proposal to make unified procedures available to states in this way 
before 2021.
(1) Assisting With Medicaid Coverage Issues and Grievances (Sec.  
422.562(a)(5))
    As an incremental step towards improving all D-SNP enrollees' 
experiences with accessing Medicaid benefits, and pursuing grievances 
and appeals, we propose new regulation text to require all D-SNPs to 
assist beneficiaries with Medicaid coverage issues and grievances, 
including authorizations for or appeals related to Medicaid-related 
services at Sec.  422.562 by adding a new paragraph (a)(5). These new 
requirements are consistent with our existing guidance and expectations 
for D-SNPs, but we are proposing regulations to define their scope and 
set mandatory standards to which we can hold D-SNPs accountable. 
Consistent with the statutory requirement at section 1859(f)(3)(D) of 
the Act that D-SNPs arrange for their enrollee's Medicaid benefits, we 
believe that all D-SNPs should assist enrollees with resolving Medicaid 
coverage problems, including assistance with filing grievances, 
requesting coverage, and requesting appeals. Such assistance is 
consistent with the standard we are proposing as part of the definition 
of a D-SNP in section II.A.2.a of this proposed rule, which states that 
all D-SNPs provide a minimum level of coordination across Medicare and 
Medicaid. Under our proposal, D-SNPs have a responsibility to 
coordinate the delivery of Medicaid services for enrollees whether or 
not the D-SNP itself contracts with the state to provide Medicaid 
services. We clarify here that the requirements at 422.562(a)(5) are 
additional requirements for D-SNPs, specifically related to assisting 
with access to benefits, appeals and grievances. At Sec.  
422.562(a)(5), we propose to supplement the obligation to provide, as 
applicable, and coordinate Medicaid benefits by adding a requirement 
that when a D-SNP receives an enrollee's request for services, appeal, 
or grievance related to Medicaid-covered services (regardless of 
whether such coverage is in Medicaid fee-for-service or a Medicaid 
managed care plan, such as a Medicaid MCO, PIHP, or PAHP as defined in 
Sec.  438.2), the D-SNP must provide a certain level of assistance to 
the enrollee. This proposal, which we hope would result in a more 
seamless process for enrollees in accessing Medicaid benefits and 
pursuing grievance and appeals for D-SNP enrollees, complements how we 
believe section 1859(8)(f)(B) of the Act directs us to unify D-SNP and 
Medicaid appeal and grievance procedures to the extent feasible.
    In new paragraph (a)(5)(i), we propose to describe the types of 
assistance we would require all D-SNPs to provide to their enrollees 
regarding Medicaid-related coverage issues and grievances, including 
authorization of services, and appeals. We propose in paragraph 
(a)(5)(i) to include assistance for all D-SNP enrollees, regardless of 
the type of Medicaid coverage in which they are enrolled. While we 
specifically list Medicaid fee-for-service and Medicaid managed care 
plans, it is not our intention to exclude any type of Medicaid delivery 
system. However, we request comment on whether there are other systems 
that should be noted specifically, or if there are specific 
circumstances where providing the assistance contemplated in this 
section is ill-advised or infeasible.
    Our proposed regulation at Sec.  422.562(a)(5)(i) includes a list 
of illustrative examples, at paragraphs (5)(i)(A) through (5)(i)(C), 
which we do not intend to be an exhaustive list of how a D-SNP would be 
required to comply with the assistance obligation in Sec.  
422.562(a)(5)(i). In paragraph (a)(5)(i)(A), we address explaining to a 
D-SNP enrollee how to request Medicaid authorization and file an 
appeal. Our proposed text includes examples of the type of assistance 
we expect D-SNPs to provide to their enrollees when the enrollees need 
information and explanations about obtaining Medicaid services. We 
recognize that state Medicaid systems vary substantially, and that the 
specific forms of assistance will also vary from market to market. We 
do not seek to be overly prescriptive in the types of assistance a D-
SNP must provide, and our examples are not intended to be exhaustive. 
We propose, in paragraphs (5)(i)(A)(1) through (5)(i)(A)(3), examples 
of the types of assistance that

[[Page 55002]]

a D-SNP must offer, and upon acceptance or request, provide its 
enrollees, such as specific instructions on how to contact the entity 
that may cover the service (for example, the Medicaid managed care plan 
or a contact in the fee-for-service system), and assistance in 
obtaining and filling out forms necessary for the next steps in the 
process.
    In paragraph (a)(5)(i)(B), we propose that D-SNPs provide 
assistance in the actual filing of grievances and appeals. Not all 
enrollees would need such assistance; for many enrollees, simply 
receiving information under paragraph (a)(5)(i) would be sufficient. 
When a D-SNP enrollee needs assistance with the act of filing a 
Medicaid grievance or appeal, their D-SNP should provide that help. 
However, the D-SNP is not obligated to represent the enrollee in 
Medicaid appeals. We welcome comments regarding this proposal; in 
particular, we ask for comments regarding how D-SNPs that do not have 
aligned enrollment would comply with this requirement when such 
entities might have financial and clinical responsibility for the 
disputed services, potentially presenting a conflict of interest.
    In paragraph (a)(5)(i)(C),we propose that the D-SNP assist the 
enrollee in obtaining documentation in support of a request for 
authorization or appeal. Obtaining documents such as medical records 
can be a challenge for any beneficiary, especially for those with 
limited resources who may lack broadband access to receive large 
documents electronically, may have unreliable mail service, may not be 
able to afford printing costs, and may not have easy access to 
transportation to pick up documents in person. We believe that D-SNP 
care coordinators are a logical choice to help an enrollee assemble 
medical documentation and may be particularly well-positioned to assist 
in compiling records, as they would have insight into the types of 
documentation enrollees need to support similar requests made to the D-
SNP.
    The examples listed in proposed paragraph (a)(5)(i)(A) through (C) 
are not intended to be an exhaustive list, but rather are to provide 
some leading examples of the assistance we believe any D-SNP should 
provide. Accordingly, it would not be acceptable for a D-SNP to tell an 
enrollee simply to contact ``Medicaid'' in general when the enrollee 
encounters a problem with his or her Medicaid coverage or is obviously 
in need of assistance in figuring out how to file an appeal of a denial 
of Medicaid-covered benefits. We invite comments on this proposal, 
specifically whether the regulation text is clear enough that the 
examples are not an exhaustive list of methods of assistance that the 
D-SNP must offer its enrollees, as well as suggestions for other 
examples of assistance that we should include in regulation or address 
in subsequent subregulatory guidance.
    In proposing these amendments to Sec.  422.562(a)(5), we recognize 
that offering and providing useful, effective assistance--and therefore 
compliance with this proposed requirement--may appear challenging. For 
example, some D-SNPs today may have difficulty determining what type of 
Medicaid coverage a member has (for example, fee-for-service vs. 
managed care; which specific managed care plan the enrollees is in; 
which services are carved out). Without accurate and timely information 
on the enrollee's Medicaid coverage, it is difficult to effectively 
help the enrollee navigate, for example, which entity to contact, and 
what forms are necessary, to pursue coverage or an appeal. Full 
compliance with our proposal requires that D-SNPs and states maintain 
data sharing that allows D-SNPs to determine the type and source of 
Medicaid coverage of their enrollees. However, we believe it is 
reasonable to expect that D-SNPs, as plans focused on serving dually 
eligible beneficiaries, take steps to access such information to 
provide effective care coordination for dual eligible enrollees and to 
implement more seamless (even if not unified) grievance and appeals 
systems. Moreover, providing such assistance may further be in a D-
SNP's interest, if the enrollee's access to Medicaid-covered services 
like personal care services and other HCBS prevents an otherwise 
avoidable hospitalization, for example. We welcome comments on this 
proposal, suggestions for additional examples of assistance, as well as 
comments on challenges D-SNPs and others envision in implementing the 
provisions of proposed paragraph (a)(5).
    We also propose language related to enrollees accepting the offer 
of assistance in proposed paragraph (a)(5)(i). We do not expect or want 
D-SNPs to implement any processes that might act as barriers to 
enrollees in accessing assistance nor do we want to create barriers to 
D-SNPs providing such assistance; if an enrollee does not want the D-
SNP's help in resolving an issue, then the D-SNP would not be obligated 
under our proposal to provide assistance against the enrollee's wishes. 
At the same time, we do not intend to create any affirmative obligation 
on the D-SNP to assist enrollees if they decline the offer of 
assistance. Enrollees are free to decide for themselves how to navigate 
their Medicaid coverage. In our proposal, the only obligation on D-SNPs 
is to offer assistance, and when a request is made or an offer of 
assistance is accepted, to provide it. We welcome comments on whether 
the regulation text, as we have proposed it, is the best way to achieve 
this goal.
    In paragraph (a)(5)(ii), we propose to specify that the D-SNP's 
obligation to offer assistance arises whenever the D-SNP becomes aware 
of an enrollee's need for a Medicaid-covered service. Our proposal 
includes text explicitly clarifying that enrollees do not need to make 
a specific request to their D-SNP for assistance. We expect that D-
SNPs, as plans with expertise in serving dually eligible beneficiaries, 
should be able to identify a potential Medicaid coverage issue as part 
of their regular assessments and care management processes. For 
example, a D-SNP may become aware that an enrollee is unsatisfied with 
the personal care services she is receiving based on the work of a care 
coordinator or from a call or email from the enrollee or enrollee's 
family. Our proposed regulation text does not explicitly require a D-
SNP to use its care coordination or case management programs to 
identify this type of issue. However, if the issue comes to the 
attention of the D-SNP, we would expect the plan to offer to assist the 
enrollee in resolving the coverage issue(s) or grievance given the D-
SNP's responsibility, consistent with our proposed definition of a D-
SNP at Sec.  422.2, that such a D-SNP provide, as applicable, and 
coordinate the delivery of Medicare and Medicaid services for its 
enrollees. We request comments on whether we should include such 
explicit direction to D-SNPs in the regulation to identify issues that 
an enrollee is having, or whether our proposed regulation text is 
sufficiently clear that D-SNPs will understand and meet our goal of 
providing assistance to an enrollee such that the enrollee can access 
benefits regardless of whether the benefit is covered by Medicare or 
Medicaid. We are not proposing any new requirements related to 
assistance with Medicare covered services. We are also not proposing 
any new requirements related to services for partial-benefit dual 
eligible enrollees. Partial-benefit dual eligible enrollees do not 
qualify for the full range of Medicaid services, and therefore, we do 
not believe the proposed rule creates any new obligation for D-SNPs to 
offer assistance for such enrollees. We welcome comments regarding the 
provisions at proposed

[[Page 55003]]

Sec.  422.562(a)(5)(ii) and the need for any further clarification 
limiting the scope of Sec.  422.562(a)(5) to full-benefit dual eligible 
individuals.
    In paragraph (a)(5)(iii), we propose to provide further detail on 
the methods of assistance required by proposed paragraph (a)(5)(i). The 
methods we propose in the regulation are intended to be examples of 
what a D-SNP will be required to offer and provide to enrollees and 
will depend, to some extent, on the needs and preferences of the 
enrollee. In paragraph (a)(5)(iii)(A), we note that a D-SNP may provide 
coaching to the enrollee to promote self-advocacy. Some dually eligible 
enrollees are highly adept at advocating for themselves, and may 
require only modest assistance--for example, a phone number or 
direction to an appropriate website--or help with technical terms in 
explaining why they need a specific piece of equipment. We welcome 
comments on the methods of assistance and whether further detail is 
needed. In paragraph (a)(5)(iii)(B) we propose to make explicit a 
requirement that a D-SNP provide whatever reasonable assistance an 
enrollee needs in navigating the Medicaid grievance and appeals 
systems, such as assistance completing forms. We note that existing 
regulations (for example, Sec. Sec.  422.111(h)(1)(iii) and 438.406(a)) 
address the provision of interpretation services. In the context of 
grievances and appeals, Medicaid requirements also currently require 
auxiliary aids and services for enrollees who have limited English 
proficiency or disabilities that require accommodation (Sec.  
438.406(a)).\12\ The language in this section is very similar to 
obligations already required of Medicaid managed care organizations at 
Sec.  438.406(a). Medicare plans also have existing obligations under 
Title VI of the Civil Rights Act of 1964 to take reasonable steps to 
ensure meaningful access by individuals with limited English 
proficiency and under section 504 of the Rehabilitation Act to take 
appropriate steps to ensure effective communication with individuals 
with disabilities, including the provision of auxiliary aids and 
services. We have opted not to specify the preferred technical forms of 
assistance that would be required under this proposal, as the evolution 
of technology and the increases in integration over time may change the 
analysis of what methods of assistance are reasonable for a D-SNP to be 
required to provide to its enrollees. However, because D-SNPs are 
already required to provide similar assistance to their enrollees in 
other circumstances, we do not anticipate that compliance with this 
provision should be burdensome to plans. We welcome comments on this 
matter, including whether and how our goals might be met with more 
specific regulation text.
---------------------------------------------------------------------------

    \12\ In addition, the Medicaid managed care regulation at Sec.  
438.10(d) addresses the requirement to provide translation and 
assistance in a broader context.
---------------------------------------------------------------------------

    In paragraph (a)(5)(iv), we propose to require that a D-SNP provide 
documentation to CMS upon request that demonstrates how the D-SNP is 
providing the assistance proposed under paragraph (a)(5)(i).
    In paragraph (a)(5)(v), we propose to clarify that D-SNPs are not 
required to represent enrollees in Medicaid appeals. We welcome 
comments regarding whether any further clarification is needed on this 
issue.
(2) Statutory Basis and Scope for Unifying Grievances and Appeals 
(Sec.  422.560)
    In Sec.  422.560, we propose to add new paragraphs (a)(4) and 
(b)(5) to address the statutory basis and scope of our proposal to 
establish unified grievance and appeals processes for a subset of D-
SNPs. Specifically, we are proposing a new paragraph (a)(4) to cite 
section 1859(f)(8) of the Act and provide that the procedures under 
that section apply in place of otherwise applicable grievance and 
appeals procedures with respect to items and services provided by 
certain D-SNPs. We are also proposing to add new paragraph (b)(5) to 
identify the scope of the new proposed regulations--that is, 
requirements for applicable integrated plans with regard to unified 
appeals and grievance procedures. The substance of these proposals is 
addressed in sections II.A.2.a.(3) through (11) of this proposed rule.
(3) Definitions of ``Applicable Integrated Plan'', ``Integrated 
Appeal'', ``Integrated Grievance'', ``Integrated Organization 
Determination'', and ``Integrated Reconsideration,'' and General 
Requirements for Applicable Integrated Plans (Sec. Sec.  422.561 and 
422.629)
    A central challenge to implementing unified grievance and appeals 
systems for D-SNPs and the Medicaid managed care organization operated 
by such plan's parent organization is the variety of enrollment 
scenarios across states. There are only a limited number of D-SNPs in 
which aligned enrollment, as defined in proposed Sec.  422.2, is 
possible--that is, a situation when a full-benefit dual eligible 
individual is enrolled in a D-SNP and receives coverage of Medicaid 
benefits from the D-SNP or from a Medicaid managed care organization, 
as defined in section 1903(m) of the Act, operated by the D-SNP's 
parent organization or by another entity that is owned and controlled 
by the D-SNP's parent organization. Even fewer D-SNPs operate in states 
where that State Medicaid Agency mandates such aligned enrollment. With 
exclusively aligned enrollment, all of the enrollees of the D-SNP also 
receive Medicaid services through the D-SNP or an affiliated Medicaid 
managed care organization operated by such plan's parent organization. 
We believe it is most feasible to unify grievance and appeals systems 
under exclusively aligned enrollment because one organization is 
responsible for both Medicare and Medicaid coverage, albeit through 
separate contracts.
    The bulk of D-SNP enrollment, however, is not exclusively aligned. 
In most states, the majority of D-SNP enrollees have Medicaid coverage 
either through a different organization's Medicaid MCO, in a prepaid 
ambulatory or inpatient health plan (PAHP or PIHP), or through a 
state's Medicaid fee-for-service system. In these circumstances, the D-
SNP has no control over the Medicaid grievance and appeals processes. 
Even a D-SNP that has a Medicaid managed care organization operated by 
such plan's parent organization available to its enrollees, but whose 
members may instead enroll in other Medicaid plans, can only unify the 
procedures for Medicaid appeals and grievances of those enrollees who 
are also simultaneously enrolled in the Medicaid managed care 
organization operated by such plan's parent organization. We do not 
believe it is feasible at this time to implement fully unified 
grievance and appeals systems for D-SNPs and Medicaid managed care 
plans that do not have the same enrollees or where the organizations 
offering the D-SNPs and Medicaid plans are unaffiliated or even 
competitors.
    We propose to add definitions for new terms used in this notice of 
proposed rulemaking to govern the integrated grievance and appeals 
processes. In Sec.  422.561 we propose new definitions for ``applicable 
integrated plan,'' which is the specific type of D-SNP and affiliated 
Medicaid plan that would be governed by the new integrated grievance 
and appeals regulations. In our definition of applicable integrated 
plan, we propose to include only a subset of D-SNPs, that is, only FIDE 
SNPs and HIDE SNPs with exclusively aligned enrollment, terms that are 
defined at proposed Sec.  422.2 and described in section II.A.2.a.(1) 
of this proposed rule. We propose that the

[[Page 55004]]

affiliated Medicaid plan be a Medicaid managed care organization, as 
defined in section 1903(m) of the Act, that is offered by--(1) the D-
SNP with exclusively aligned enrollment; (2) the parent organization of 
such D-SNP; or (3) another entity that is owned and controlled by the 
parent organization of such D-SNP. Thus, our proposal for unified 
grievance and appeals procedures would apply only to the enrollees of 
the subset of D-SNPs that are FIDE SNPs or HIDE SNPs with exclusively 
aligned enrollment and the affiliated Medicaid managed care 
organizations through which such enrollees receive their Medicaid 
services. As we note in our discussion of the proposed definition of 
aligned enrollment in section II.A.2.a of this proposed rule, we would 
not consider a D-SNP's companion Medicaid plan to be an applicable 
integrated plan where it is a prepaid inpatient health plan (PIHP) or 
prepaid ambulatory health plan (PAHP) in the state's Medicaid program. 
We solicit comments on our proposed definition of an applicable 
integrated plan and how it reflects which plans and entities would have 
to use the unified grievance and appeals procedures we propose in this 
rule. We also seek comment on whether limiting our proposed policies to 
MCOs, rather than including PIHPs and PAHPs, is appropriate in light of 
the statute and our policy goals.
    The requirements for non-fully integrated D-SNPs would remain 
unchanged. This means that there would be different sets of 
requirements for different types of D-SNPs, and we are proposing these 
new defined terms to make these separate requirements distinct. We 
estimate that, currently, this subset of plans comprises a small share 
of the overall D-SNP market: 37 plans in 8 states, covering 
approximately 150,000 enrollees nationwide. We believe that these are 
the plans for which integrated grievance and appeals processes as we 
propose here are most suitable. We seek comment on our belief that 
exclusively aligned enrollment provides the most feasible context for 
unifying grievance and appeals systems and--recognizing that states can 
organize managed care enrollment policy in a variety of ways--whether 
our use of the term ``exclusively aligned enrollment'' captures the 
optimal universe of managed care arrangements for such unification.
    For the purpose of differentiating the terminology and procedures 
within this framework, we propose to establish definitions for 
``integrated organization determination,'' ``integrated appeal,'' 
``integrated reconsideration,'' and ``integrated grievance'' and apply 
them exclusively to applicable integrated plans.
    Integrated organization determinations would encompass both 
Medicare organization determinations, as described in Sec.  422.566, 
and adverse benefit determinations, as defined in Sec.  438.400(b); 
however, these determinations would be made by applicable integrated 
plans and would therefore be subject to the integrated organization 
determination procedures in proposed Sec. Sec.  422.629, 422.631, and 
422.634. These would be the first decisions made by the applicable 
integrated plan regarding coverage, approval, or payment for a covered 
service. We propose to define this term by referencing Medicare 
organization determinations as described in Sec.  422.566, actions as 
defined in Sec.  431.200, and adverse benefit determinations as defined 
in Sec.  438.400(b) to parallel the scope of the MA, Medicaid, and 
Medicaid managed care regulations, rather than by using a specific list 
of decisions or actions to ensure that the applicable regulations using 
this term truly unify and integrate the applicable concepts from both 
the Medicare and Medicaid programs.
    Similarly, integrated reconsiderations would be the appeal of the 
adverse integrated organization determinations by an applicable 
integrated plan with respect to the health care services the enrollee 
believes he or she is entitled to receive, including delay in 
providing, arranging for, or approving the health care services (such 
that a delay would adversely affect the health of the enrollee), or on 
any amounts the enrollee must pay for a service. Under our proposal, an 
integrated reconsideration would be the same as an MA plan's 
reconsideration (in Sec.  422.580) of an organization determination 
(defined in Sec.  422.566) and the appeal (defined in Sec.  438.400(b)) 
of an adverse benefit determination. Integrated reconsiderations would 
encompass both Medicare reconsiderations, as described in Sec. Sec.  
422.578, 422.580, 422.582, and 422.584, and appeals, as defined for the 
Medicaid managed care context in Sec.  438.400(b). However, these 
determinations would be made by applicable integrated plans and 
therefore subject to the integrated reconsideration procedures in 
proposed Sec.  422.629 and 422.632 through 422.634.
    We propose defining integrated appeals to encompass integrated 
reconsiderations, and any additional post-plan level unified appeal 
processes that may be implemented in the future. Our proposed 
definition is similar to the definition of appeal in MA, at Sec.  
422.561, which encompasses both the reconsideration level of the appeal 
process, as well as additional stages of the appeals process such as 
review by an independent entity, hearings before ALJs, review by the 
Medicare Appeals Council and judicial review.
    Additionally, we propose to define an integrated grievance as a 
dispute or complaint that would be defined and covered, for grievances 
filed by an enrollee in non-applicable integrated plans, under Sec.  
422.564 or Sec. Sec.  438.400 through 438.416. Integrated grievances 
would not include appeals procedures or QIO complaints, as described in 
Sec.  422.564(b) and (c), respectively. An integrated grievance made by 
an enrollee in an applicable integrated plan would be subject to the 
integrated grievance procedures in Sec. Sec.  422.629 and 422.630. This 
means that an integrated grievance would include a Medicare or Medicaid 
complaint or dispute about the applicable integrated plan or the 
enrollee's providers that is not a complaint or dispute about such 
plan's coverage determination (referred to as an integrated 
organization determination in this proposed rule).
    Our proposed definitions for integrated grievance, integrated 
organization determination, and integrated reconsideration are intended 
to replicate the scope and meaning of the parallel terms in parts 422 
subpart M and part 438 subpart E regarding the appeals and grievance 
procedures required of, respectively, MA organizations and Medicaid 
managed care plans because we are proposing that the regulations and 
procedures proposed here take the place of those part 422 and part 438 
procedures for applicable integrated plans. We solicit comment whether 
our proposal adequately accomplishes this.
    We propose at Sec.  422.629 to establish general requirements for 
applicable integrated plans, as defined in Sec.  422.561. In paragraphs 
(a) and (b), we propose language that sets forth the scope of the 
requirements and general process that applicable integrated plans must 
implement. In paragraph (a)(1), we propose to specify that the proposed 
rules apply in lieu of the general requirements for MA organizations at 
Sec. Sec.  422.564, 422.566(c) and (d) and 422.568-422.596, and 
Medicaid managed care plans at Sec. Sec.  438.404-438.424, and 
encompass integrated grievances, integrated organization 
determinations, and integrated reconsiderations. In paragraph (b), we 
set forth the general requirement that applicable integrated plans 
create

[[Page 55005]]

integrated processes to administer these grievance and appeals 
requirements.
    In proposed paragraph (c), we address an overarching question about 
whether a state may establish requirements that are different for the 
applicable integrated plan(s) using the state Medicaid agency contract 
required under Sec.  422.107. Specifically, we propose to apply the 
flexibility offered to states under Medicaid regulations, which 
establish a floor for enrollee protections, while also offering states 
flexibility to impose more stringent requirements for timeframes and 
notices so long as they are more protective of beneficiaries. States 
may already have laws in effect that take advantage of this 
flexibility. For example, under Sec.  438.408(b)(2), a Medicaid managed 
care plan must resolve a standard appeal within a timeframe established 
by the state, but not to exceed 30 calendar days. The maximum timeframe 
for an MA organization to decide a standard reconsideration is also no 
later than 30 calendar days (Sec.  422.590(a)(1)). Ohio Medicaid, 
however, sets this timeframe for its Medicaid managed care plans at 15 
days unless an extension is granted.\13\ If an integrated appeals 
process under this proposal were to be implemented in Ohio, we would 
allow adoption of that 15-day standard for all standard integrated 
appeals. We believe that by preserving state flexibility in adopting 
more stringent, beneficiary-protective requirements, we are adhering to 
the direction set forth in sections 1859(f)(8)(B)(ii)(I) and (II) of 
the Act for us to take into account differences in state plans under 
Title XIX. Finally, in paragraph (c), we propose to codify the 
opportunity for states to establish standards that differ from the 
standards set forth in these regulations in its State Medicaid Agency 
contract, per Sec.  422.107, with the applicable integrated plans. We 
are soliciting comments on our proposed approach, and specifically how 
we propose to allow state flexibilities to be incorporated into the 
unified procedures for an applicable integrated plan.
---------------------------------------------------------------------------

    \13\ See Ohio Administrative Code 5160-58-08.4(D)(6), available 
at http://codes.ohio.gov/oac/5160-58-08.4.
---------------------------------------------------------------------------

    In paragraph (d), we propose that the applicable integrated plan 
provide the enrollee who is requesting the integrated reconsideration a 
reasonable opportunity, in writing and in person, to present evidence 
and testimony and make legal and factual arguments in support of their 
appeal. On this topic, both the MA standard at Sec.  422.586 and the 
Medicaid standard at Sec.  438.406(b)(4) are similar in granting this 
right to the enrollee for the plan-level appeal; however, under 
Medicaid regulation, this right extends to grievances, whereas in MA, 
it does not. We also propose to require that applicable integrated 
plans inform enrollees of the limited time available for these 
opportunities in cases were the timeframe is expedited, similar to 
Sec.  422.586 and Sec.  438.406(b)(4).
    In paragraph (e), we propose to require applicable integrated plans 
to provide reasonable assistance to the enrollee with respect 
completing and submitting their integrated appeals and integrated 
grievances, as well as on navigating this process. This proposal would 
impose on applicable integrated plans a similar standard as applies to 
Medicaid managed care plans pursuant to Sec.  438.406(a). As discussed 
earlier, plans have existing obligations under Title VI of the Civil 
Rights Act of 1964 and section 504 of the Rehabilitation Act, so we do 
not believe that incorporating this beneficiary protection to this 
context would create an unreasonable burden. Here, as also discussed 
earlier in this preamble related to proposed Sec.  422.562(b)(3)(ii), 
we opted not to specify the preferred technical forms of assistance, as 
preferred standards can change as technology evolves.
    We propose at paragraph (f) a general rule, using cross-references 
to the requirements in Sec. Sec.  422.560, 422.561, 422.562, 422.566, 
and 422.592 through 422.626, to specify the regulations that apply to 
the applicable integrated plan for grievance and appeals processes 
unless otherwise noted.
    We propose at paragraph (g) to require applicable integrated plans 
to send the enrollee an acknowledgement of receipt in writing for all 
integrated grievances and integrated reconsiderations. Currently, the 
Medicaid regulation at Sec.  438.406(b) requires acknowledgement of 
grievances and appeals, and MA guidance explains the need for written 
acknowledgement of oral requests for reconsideration (see Medicare 
Managed Care Manual Chapter 13, section 70.2). Section 
1859(f)(8)(B)(iii)(IV) of the Act, as added by section 50311(b) of the 
Bipartisan Budget Act of 2018, specifically calls for unified timelines 
and procedures for acknowledgement of appeals and grievances We propose 
to adopt the standard currently in Sec.  438.406(b) for applicable 
integrated plans, and we propose to clarify that the acknowledgement 
should be in written form. We believe that this requirement is both 
beneficial to enrollees and assists them in determining the status of 
the grievance or appeal, and thus is in alignment with the standard in 
section 1859(f)(8)(B) of the Act for the unified procedures.
    In paragraph (h), we propose to adopt Medicaid's grievance and 
appeals recordkeeping requirements, as required for Medicaid managed 
care plans at Sec.  438.416, to require applicable integrated plans to 
maintain records of integrated appeals and grievances and review them 
as part of their ongoing monitoring procedures. The requirements that 
we propose also align with relevant MA requirements for grievance 
recordkeeping (see Sec.  422.564(g)) and are consistent with the MA 
requirements for general recordkeeping (see Sec.  422.504(d)).
    We propose in paragraphs (i) and (j) to incorporate similar 
provisions as are imposed on Medicaid managed care plans pursuant to 
Sec. Sec.  438.410(b) and 438.414 regarding relationships between the 
plan and its contracted network providers. Specifically, in paragraph 
(i), we propose to prohibit an applicable integrated plan from taking 
any punitive action against a provider for requesting an integrated 
organization determination or integrated reconsideration, similar to 
the provisions in Sec. Sec.  422.570(f) and 438.410(b). We believe that 
these standards would establish beneficiary protections in the context 
of applicable integrated plans because the threat of punitive action 
might otherwise discourage a provider from pursuing, on the enrollee's 
behalf, or supporting an enrollee in pursuing, an integrated appeal for 
a needed item or service. We also propose requiring, in paragraph (j), 
such a plan to disclose information about its appeals and grievances 
procedures at the time it enters into a contract with a provider or 
subcontractor. We propose to include specific topics which must be 
covered in this information to providers, and these specific topics are 
the same as in existing Medicaid regulations (see Sec.  438.414, which 
cites to Sec.  438.10(g)(2)(xi) for this purpose). Although there are 
no specific MA regulations that impose the same requirements on D-SNPs, 
Medicare regulations require that MA organizations communicate 
information on medical policy and medical management procedures (see 
Sec.  422.202(b)). We believe this proposed requirement aligns with the 
goals of the statute in educating providers to help ensure an easily 
navigable system for enrollees, where providers understand the system 
and their role in it.
    In paragraph (k), we propose regulatory standards controlling who 
must review an integrated organization determination. The part 422 and 
part

[[Page 55006]]

438 regulations each impose standards of this type but they are not 
identical. In developing our proposal, we sought to combine the MA and 
Medicaid managed care requirements for who must review an organization 
determination. This new requirement would apply to grievances, as is 
currently the case Sec.  438.406 but not in the applicable MA 
regulations. In paragraph (k)(1), we propose to include the requirement 
from Medicaid (Sec.  438.406(2)(iii)) that any individual who reviews 
an integrated appeal or grievance must consider all information 
submitted by the enrollee, regardless of whether the information was 
previously made available to the plan. In paragraph (k)(2), we propose 
to include the requirements for reviews of Medicaid grievances (from 
Sec.  438.406(2)) for who can review a grievance to integrated 
grievances. There are no requirements in Medicare for who can review a 
grievance; however, we believe that ensuring that the individual who 
reviews a grievance has appropriate expertise for the circumstances is 
an important enrollee protection that should be applied to integrated 
grievances.
    In paragraph (k)(3), we propose to include the existing 
requirements from MA (Sec.  422.566) for who can review an organization 
determination. There are no requirements in Medicaid for who can review 
a service authorization request; however, we believe that ensuring that 
the individual who reviews an integrated organization determination has 
appropriate expertise for the circumstances is an important enrollee 
protection that should be applied to integrated organization 
determination. We also propose language that, in accordance with 
current MA regulations (Sec.  422.566(d)) requires that physicians or 
other health care professionals who review integrated organization 
determinations have an unrestricted license and be acting within the 
scope of that license.
    In paragraph (k)(4) we propose to combine existing MA and Medicaid 
requirements for who can review a reconsideration or adverse benefit 
determination since both sets of existing regulations have relevant 
requirements. MA and Medicaid requirements are largely similar for 
individuals who review appeals be someone who was not involved in a 
previous level of review, and, in cases involving medical necessity, 
someone who has appropriate clinical expertise (Sec. Sec.  422.590 and 
438.406(b)(2)). These existing requirements are reflected in our 
proposed requirements.
(4) Authorization for Filing Appeals (Sec.  422.629(l))
    We propose at Sec.  422.629(l) to combine the MA and Medicaid 
requirements, such that a treating provider or authorized 
representative can file an appeal on behalf of an enrollee. Medicaid 
managed care rules at Sec.  438.402(c)(1)(ii) require written 
authorization from the enrollee where a physician or other authorized 
representative files an appeal involving a benefit to which the 
enrollee may be entitled. MA rules at Sec.  422.566(c), however, allow 
a treating provider to file an appeal on behalf of an enrollee without 
written authorization from the enrollee, although the provider is 
required to provide notice to the beneficiary. We believe the MA 
requirement is generally more beneficial to beneficiaries, as it 
imposes fewer procedural requirements to filing an appeal for the 
enrollee, for example, if an enrollee has factors that make signing an 
authorization difficult. The Medicaid requirements, on the other hand, 
may serve to mitigate the risk that a provider would file an appeal 
against an enrollee's interest and without an enrollee's consent, 
particularly to take advantage of the Medicaid provisions that allow a 
benefit to continue while the appeal is pending, an issue we discuss in 
more detail in section II.A.1.b.(7) of this preamble for proposed Sec.  
422.632. We believe our proposal reduces barriers for enrollees to have 
appeals filed, while also accounting for risk to enrollees by requiring 
the enrollee's written consent only when there is a request for 
continuation of benefits. However, we invite comments as to whether an 
approach closer to Medicaid's, in which written authorization would be 
required in all cases when a provider files an appeal on behalf of a 
beneficiary, would be preferable.
(5) Integrated Grievances (Sec.  422.630)
    At Sec.  422.630, we propose to largely parallel Medicare and 
Medicaid requirements where these requirements are the same with regard 
to the treatment of integrated grievances. Where MA includes a 
requirement that Medicaid does not, or vice versa, or where the MA and 
Medicaid regulations conflict, we propose applying the requirement that 
best aligns with the principles and statutory requirements discussed in 
section II.A.1.b. of this preamble. For integrated grievances, we 
specifically propose:
     At paragraph (a), to establish the general purpose of the 
regulation, similar to Sec.  438.402(a) and Sec.  422.564(a), by 
requiring that an applicable integrated plan provide meaningful 
procedures for timely hearing and resolving integrated grievances filed 
by an enrollee. We propose to define the scope of the required 
procedures as being applicable to any grievances between the enrollee 
and the plan or any entity or individual through which the applicable 
integrated plan covers health care services. We propose this 
requirement for the applicable integrated plan to be responsible for 
ensuring timely and appropriate resolution of a grievance even if the 
grievance pertains to an act or decision by one of the applicable 
integrated plan's contracted providers or vendors. Our proposed 
regulation text mirrors the Medicare Advantage language at Sec.  
422.564(a) for this requirement. We believe that clearly ensuring that 
an applicable integrated plan is ultimately responsible for resolving 
all grievances related to services that it is responsible for providing 
is an important enrollee protection and provides enrollees with an 
easily navigable, single pathway for resolution of grievances, 
consistent with sections 1859(f)(8)(B)(ii)(I) and (III) and (iii)(II) 
of the Act.
     At paragraph (b), to provide that an enrollee may file a 
grievance at any time. The relevant Medicaid regulation (Sec.  
438.402(c)(2)(i)) allows a grievance to be filed at any time, while the 
MA regulation (Sec.  422.564(d)(a)) limits grievance filing to within 
60 days of the event at issue. We propose to impose the standard that 
is more protective of enrollees on applicable integrated plans.
     At paragraph (c), to allow grievances orally or in 
writing, in alignment with Medicare and Medicaid requirements, while 
allowing for integrated grievances related to Medicaid benefits to be 
filed with the state, in states that have processes in place in 
accordance with Sec.  438.402(c)(3). We propose to include current 
state processes, where they exist, for enrollees to file grievances 
with the state that relate to Medicaid benefits. The option for a state 
to accept grievances currently exists in the Medicaid regulations (see 
Sec.  438.402(c)(3)). We believe that this is an important protection 
for enrollees and, in proposing requirements that are most protective 
to the enrollee and take into account differences in state plans, we 
are proposing to leave this option for filing grievances open to 
enrollees, if it is otherwise an option in the state's Medicaid 
program.
     At paragraph (d), we propose to largely parallel the 
Medicare Advantage requirements (at Sec.  422.564(f)) for when an 
enrollee can file an expedited

[[Page 55007]]

grievance because we find them a protection for beneficiaries. Medicare 
Advantage regulations require that plans provide for expedited 
grievances in cases when: (1) A plan extends the timeframe for 
resolving an organization determination or reconsideration, or (2) the 
grievance involves a refusal to grant an enrollee's request for an 
expedited organization determination or reconsideration (Sec.  
422.564(f)). The Medicaid managed care regulations do not include a 
federal provision for expedited grievances.
     At paragraph (e)(1), to parallel Medicare Advantage's 30-
day timeframe for resolving the grievance and Medicare Advantage's 
requirements for how the applicable integrated plan must respond to 
grievances, depending on how the grievance is received and the basis 
upon which the enrollee filed the grievance; again we find the Medicare 
Advantage provision to be more protective of enrollees. Medicaid 
requires plans to resolve grievances within 90 days (Sec.  
438.408(b)(1)), while Medicare Advantage regulations require that plans 
resolve them within 30 days (Sec.  422.564(e)). Medicare Advantage 
regulations address the issue of how a managed care plan must respond 
to grievances depending on how the grievance was received and the issue 
in dispute (Sec.  422.564(e)(3)). Medicaid leaves requirements for 
responding to grievances to the state to determine, provided that the 
requirements set by the state meet, at a minimum, the requirements 
described at Sec.  438.10 (Sec.  438.408(d)(1)).
     At paragraph (e)(2), to include a provision permitting the 
applicable integrated plan to extend the time period in which a 
determination on an integrated grievance must be issued to the 
enrollee. We propose this provision to parallel Medicare Advantage 
(Sec.  422.564(e)(2)) and Medicaid managed care (Sec.  438.408(c)(1)) 
requirements that extend the grievance resolution timeframe by up to 14 
days. We also propose to adopt a combination of the Medicare Advantage 
and Medicaid managed care requirements for how an applicable integrated 
plan must notify an enrollee of an extension. MA regulations require 
that the MA plan immediately notify the enrollee in writing of the 
reason for the delay (Sec.  422.564(e)(2)), while Medicaid managed care 
requires notice within 2 calendar days (Sec.  438.408(c)(2)). We have 
combined those requirements in our proposal here, such that applicable 
integrated plans must notify enrollees immediately, but no later than 
within 2 calendar days, which we believe to be in line with the 
principles identified in section 1859(f)(8)(B)(iii) of the Act for 
timely, clear notification for enrollees.
    We invite comments on these topics, specifically whether the 
proposed regulation text accurately incorporates the standards from the 
underlying part 422 or part 438 regulation that are more beneficial to 
the enrollee.
    For each of these issues, we propose to adopt the requirement that 
is most protective for enrollees and that ensures timely, clear, and 
understandable resolution and notification. We propose to give 
enrollees the most flexibility in filing a grievance by not putting any 
limits on when it can be filed and providing clear guidance to ensure 
enrollees can support their cases with relevant information. We also 
propose timeframes that ensure plans resolve the grievance quickly and 
provide clear notice to enrollees of the resolution. We solicit comment 
on whether we have adequately captured all relevant enrollee 
protections here.
(6) Integrated Organization Determinations (Sec.  422.631)
    In proposed Sec.  422.631, we describe the procedures applicable 
integrated plans would follow in making an integrated organization 
determinations. In paragraph (a), we propose that, as part of a unified 
process, all requests for benefits covered by applicable integrated 
plans must be subject to the same integrated organization determination 
process.
    In paragraph (b), we propose to adopt the MA provisions at Sec.  
422.568(a) allowing an enrollee to request an integrated organization 
determination either orally in writing, but requiring requests for 
payment to be made in writing. The Medicaid managed care regulations do 
not include specific rules in this area.
    In paragraph (c), we propose to articulate the standard for making 
an expedited organization determination. Both MA (at Sec.  422.570(c)) 
and Medicaid (at Sec.  438.210(d)(2)) have similar standards for an 
expedited organization determination, and we propose to reflect the 
standards of both programs. This proposed provision tracks existing MA 
regulation language more closely than the Medicaid language with 
respect to who can make the request (proposed paragraph (c)(1)), and 
how it should be considered and decided (proposed paragraph (c)(3)), 
though we believe the MA and Medicaid requirements are functionally the 
same. At paragraph (c)(2), we propose to include the more specific 
language from the MA regulations at Sec.  422.570(b)(1) that the 
request to expedite the appeal can be made orally or in writing. We 
invite comments regarding alternative phrasing.
    In paragraph (d), we propose rules regarding timeframes and notices 
when resolving integrated coverage determinations. In paragraph (d)(1), 
we propose to require that an applicable integrated plan send a written 
integrated notice when the organization determination (standard or 
expedited) is adverse to the enrollee. We propose to include text 
specifically identifying as adverse determinations requiring a notice 
any decision to authorize a service or item in an amount, duration, or 
scope that is less than the amount requested or previously requested or 
authorized for an ongoing course of treatment. We also propose to 
include text specifying, consistent with Medicaid managed care 
requirements (Sec.  438.404(c)(5)), that the applicable integrated plan 
must send an integrated determination notice when it fails to make a 
timely decision, since such a failure constitutes an adverse decision, 
and that the enrollee may then request an integrated reconsideration. 
The proposed notice would include information about the determination, 
as well as information about the enrollee's appeal rights for both 
Medicare and Medicaid covered benefits. Though integrating information 
on Medicare and Medicaid appeal rights would be a new requirement if 
this proposed requirement is finalized, we propose content requirements 
for the notice that generally largely align with current requirements 
in Medicaid (Sec.  438.404(b)) and MA (Sec.  422.572(e)). We also 
propose that the notice be written in plain language and available in a 
language and format that is accessible to the enrollee consistent with 
1859(f)((8)(B)(iii)(III) of the Act.
    In paragraph (d)(2), we propose timelines for sending this notice 
that largely align with both existing Medicare and Medicaid 
requirements. We propose, in paragraph (d)(2)(i)(A), to require that 
applicable integrated plans send a notice of an integrated organization 
determination at least 10 days before the date of action if a 
previously authorized benefit is being reduced, suspended or 
terminated, as is currently required for Medicaid managed care plans 
under Sec.  438.404(c), with some exceptions in accordance with 
Sec. Sec.  431.213 and 431.214. Exceptions under Sec.  431.213 include 
circumstances where the enrollee cannot, or does not wish to, be 
reached--for example, there exists factual information confirming the 
enrollee's death or the enrollee is no longer eligible for services, or 
if the State Medicaid Agency determines that

[[Page 55008]]

the beneficiary has been accepted for Medicaid services in another 
jurisdiction. Exceptions under Sec.  431.214 allow for less advance 
notice to the enrollee in cases of probable fraud. This standard for 
the timing of these notices (within 10 days subject to specific 
exceptions) is adopted from Medicaid and aligns with the timing for 
enrollees to request (under Sec.  438.420) continuation of a previously 
authorized benefit while the integrated reconsideration is pending 
because it gives the enrollee enough time, upon receiving the notice, 
to request that the benefit continue without a potential gap in the 
benefit. We propose, in paragraph (d)(2)(i)(B), to require that 
applicable integrated plans send the notice as expeditiously as the 
enrollee's health condition requires but no later than 14 calendar days 
from receipt of the request for a standard integrated organization 
determination, and propose to permit extensions, in proposed paragraph 
(d)(2)(ii), in circumstances that largely parallel those that exist in 
Medicare and Medicaid currently. In paragraph (d)(2)(iii), we propose 
requirements for notice in cases of extension which largely parallel 
current MA and Medicaid requirements at Sec.  422.572(b)(2) and Sec.  
438.404(c)(4)(i), respectively. Both MA and Medicaid currently require 
that the health plan notify the enrollee of the delay and the right to 
file a grievance. Section 422.631(d)(2)(iii)(A) as proposed largely 
parallels Sec.  422.572(b)(2), which provides more specific direction 
on timing of the notice. We are proposing to apply the MA requirement 
that the enrollee be notified of the right to file an expedited 
grievance in these instances. We also propose in paragraph 
(d)(2)(iii)(B) regulatory text controlling when the notice of the 
determination must be sent in cases where the applicable integrated 
plan takes an extension.
    In paragraph (d)(2)(iv)(A), we propose the deadline for issuing 
notice of expedited integrated organization determinations. Both MA and 
Medicaid require expedited organization determinations (or adverse 
actions) within 72 hours of the request, with the possibility of 
extending that timeframe by 14 calendar days. We propose, at paragraph 
(d)(2)(iv)(B), to mirror the MA requirements (Sec.  422.570(d)), with 
required procedures when an applicable integrated plan denies a request 
for expediting an organization determination. In paragraph 
(d)(2)(iv)(C) we propose to include requirements, which parallel MA 
requirements (Sec.  422.572(d)), for applicable integrated plans when 
obtaining necessary information from noncontract providers. These 
requirements specify that the applicable integrated plan must reach out 
to a noncontract provider within 24 hours of the initial request for an 
expedited integrated organization determination. Though Medicaid 
managed care regulations to not contain a similar requirement, Medicaid 
managed care plans currently must resolve expedited appeals under the 
same timeframes and, therefore, should already be reaching out to 
providers for information necessary to process expedited appeals in a 
similarly timely manner.
(7) Continuation of Benefits Pending Appeal (Sec.  422.632)
    Section 50311(b) of the Bipartisan Budget Act of 2018 amended 
section 1859(f) of the Act by creating a new paragraph (8)(B)(iv) 
requiring that the unified appeals procedures we develop with respect 
to all benefits under Medicare Parts A and B and Title XIX that are 
subject to appeal under such unified procedures incorporate provisions 
under current law and implementing regulations that provide 
continuation of benefits pending appeal under Titles XVIII and XIX. We 
interpret this provision as requiring CMS to apply continuation of 
benefits to all Medicare Parts A and B and Medicaid benefits under our 
proposed unified appeals processes. The statutory language ``with 
respect to all benefits under parts A and B and title XIX subject to 
appeal under such procedures'' modifies the verb ``incorporate.'' 
Therefore, we interpret the provision as requiring CMS to incorporate 
statutory and regulatory provisions for continuation of benefits into 
the unified appeal procedures for all Parts A and B benefits, and not 
only those benefits that are already permitted to be continued under 
current law (Medicaid benefits and limited Medicare benefits, as 
described in more detail later in this section of the proposed rule).
    We considered current laws and implementing regulations related to 
continuation of benefits under Medicare and Medicaid and found that 
Medicare's continuation of benefits provisions are of limited 
relevance, but that there are significant Medicaid provisions that must 
be incorporated in our integrated standards. Continuation of benefits 
exists in very limited circumstances in Medicare currently. A Medicare 
beneficiary can receive an extension of inpatient hospital stays when 
the beneficiary appeals a notice of discharge to the Quality 
Improvement Organization (QIO) under Sec. Sec.  405.1205 through 
405.1208 and Sec. Sec.  422.620 and 422.622. We do not propose any 
changes to the existing QIO process, as its specialized nature does not 
lend itself readily to expansion to other services such as those 
covered by Medicaid.
    Medicaid's continuation of benefits provisions are considerably 
more comprehensive, and we propose to incorporate them into this 
unified appeals process. These Medicaid rules, found in Sec. Sec.  
431.230 and 431.231 (general) and Sec.  438.420 (managed care), are 
grounded in constitutional due process principles articulated in 
Goldberg v. Kelly, 397 U.S. 254 (1970), that recognize the importance 
of allowing people with limited financial resources to challenge a 
decision prior to the decision taking effect. Under Sec.  438.420, a 
Medicaid managed care plan is required, upon request of the enrollee, 
to cover certain Medicaid benefits while an appeal is pending, provided 
that: (1) The enrollee files the request for an appeal timely in 
accordance with Sec.  438.402(c)(1)(ii) and (c)(2)(ii); (2) the appeal 
involves the termination, suspension, or reduction of previously 
authorized services; (3) the services were ordered by an authorized 
provider; (4) the period covered by the original authorization has not 
expired; and (5) the enrollee timely files for continuation of 
benefits.
    We also note that continuation of benefits has been included as 
part of the integrated appeals process in the Financial Alignment 
Initiative demonstrations, under processes that largely parallel what 
we are proposing in these regulations. We request comment on our 
interpretation of the statutory requirements related to continuation of 
benefits pending appeal.
    Accordingly, we propose that the existing standards for 
continuation of benefits at Sec.  438.420 apply to applicable 
integrated plans for Medicare benefits under Parts A and B and Medicaid 
benefits in our proposed integrated appeals requirements at Sec.  
422.632. Under our proposal, as is applicable to Medicaid managed care 
plans currently, if an applicable integrated plan decides to stop (as a 
termination or suspension) or reduce a benefit that the enrollee is 
currently authorized to receive, the enrollee could request that the 
benefit continue to be provided at the currently authorized level while 
the enrollee's appeal is pending through the integrated 
reconsideration. The enrollee would be required to make a timely 
request for the continuation, as further detailed below.
    We anticipate that this provision will simplify the appeals process 
for both

[[Page 55009]]

plans and beneficiaries, as it will be unnecessary to determine which 
ongoing benefits are subject to continuation pending appeal. This has 
been our experience in the Financial Alignment Initiative 
demonstrations. In addition, as we note in the Regulatory Impact 
Analysis, relatively few Medicare benefits are continuing in nature, 
and we therefore do not anticipate a significant financial cost related 
to the implementation of this provision by applicable integrated plans.
    We propose, at paragraph (a), a definition for ``timely files.'' 
This definition would mirror the definition at Sec.  438.420(a), with 
minor revisions to make the text applicable to applicable integrated 
plans instead Medicaid managed care plans.
    We propose, at paragraph (b), to require a previously authorized 
service covered under Medicaid or Medicare Part A or Part B, excluding 
supplemental benefits as defined at Sec.  422.103, to be continued 
pending an appeal of a termination of those services. We propose to 
require that the continuation of these services as a covered benefit 
would be conditioned on the same five criteria listed in Sec.  438.420 
being met.
    We propose, at paragraph (c), to require that an applicable 
integrated plan continue such services pending issuance of the 
integrated reconsideration. We note that for Medicaid managed care 
plans that are not applicable integrated plans, continuation of these 
services after the integrated reconsideration and pending resolution of 
the state fair hearing is controlled by Sec.  438.420(c). Our proposal 
for continuation of services pending appeal would provide a unified, 
consistent rule for Medicaid and Medicare Part A and Part B benefits, 
excluding supplemental benefits defined in Sec.  422.103, for the 
duration of the unified appeals process proposed here for all plan 
level appeals. Proposed Sec.  422.632(c)(2) therefore provides that 
continuation of services ends when the applicable integrated plan 
issues an adverse integrated reconsideration. If the applicable 
integrated plan finds in favor of the enrollee, benefits would continue 
in accordance with the favorable integrated reconsideration. In 
proposed Sec.  422.632(c)(3), we propose requirements for Medicaid-
covered benefits to continue after the applicable integrated plan 
issues an adverse integrated reconsideration, mirroring the 
requirements currently in Medicaid managed care regulations (see Sec.  
438.420(c)(2)). The enrollee must make the request and file for a state 
fair hearing within 10 calendar days after the applicable integrated 
plan sends the notice of the integrated reconsideration. We also 
propose to mirror requirements from Sec.  438.420 for how long 
Medicaid-covered benefits must continue by requiring that the benefits 
continue until the enrollee withdraws the request for the state fair 
hearing or until the state fair hearing decision is issued.
    We considered alternative approaches to implementing benefits 
pending appeal, and we believe integrating through the plan-level 
reconsideration stage of the appeal process is the most feasible 
approach at this time. The right for a Medicaid beneficiary to have 
Medicaid benefits continue through a state fair hearing, which is the 
second level of appeal for an enrollee, would not be impacted by this 
proposal. The process that we propose for an enrollee's benefits to 
continue during the state fair hearing process mirrors the current 
process under Medicaid regulations at Sec.  438.420.
    In proposed paragraph (d), we address whether an applicable 
integrated plan can seek recovery for the costs of services provided 
while an appeal is pending. Medicaid regulations allow states to 
determine whether or not a plan, or the state, can seek recovery for 
the costs of services provided pending appeal (Sec.  431.230(b)). If a 
state permits such recovery under managed care, plans must inform 
enrollees of this possibility (Sec.  438.420(d)). As noted in the 
preamble to the 2016 final Medicaid managed care rule, such notices can 
have the effect of deterring enrollees from exercising the right to 
appeal.\14\ Moreover, Medicare's provision allowing benefits to 
continue is limited, as noted earlier, to an extension of inpatient 
hospital stays when the beneficiary appeals a notice of discharge to 
the Quality Improvement Organization (QIO) under Sec. Sec.  405.1205 
through 405.1208, and 422.620 and 422.622.\15\ Finally, in a number of 
our Financial Alignment Initiative demonstrations, we and our state 
partners have explicitly declined to allow MMPs to recover of the costs 
of services provided pending appeal. Neither MMPs nor states have noted 
any adverse impact on the costs of services provided pending appeal. 
Therefore, in paragraph (d), we propose to prohibit recovery of the 
costs of services provided pending the integrated reconsideration and, 
for Medicaid-covered benefits, any state fair hearing, to the extent 
that services were continued solely under Sec.  422.632, for all 
applicable integrated plans and state agencies.
---------------------------------------------------------------------------

    \14\ 81 FR 27512 (May 6, 2016).
    \15\ We note that while regulations at 42 CFR 405.1200 through 
405.1204 and 422.624 and 422.626 address appeal rights for Medicare 
beneficiaries related to terminations of certain facility services 
and potential continuation of services pending those appeals, those 
regulations generally require the beneficiary to pay for services 
received after the date and time designated on the termination 
notice him or herself unless the beneficiary prevails on the appeal. 
As an individual always has the right to choose to receive non-
covered services when bearing financial responsibility for those 
services, we believe these scenarios are not truly continuations of 
benefits pending appeal as the services might not be covered.
---------------------------------------------------------------------------

    We considered several alternatives to this approach. We considered 
proposing to use the same rule as Sec.  438.420(d) and applying it to 
all services provided pending appeal by applicable integrated plans. 
Under this alternative, a state's Medicaid recoupment policy would also 
apply to Medicare benefits provided by an applicable integrated plan 
pending appeal. However, there is no recoupment provision under 
Medicare that parallels the recoupment process under Medicaid managed 
care. As we noted earlier, continuation of services without imposing 
financial liability on the enrollee in Medicare exists in the narrow 
circumstances related to extension of inpatient hospital stays when the 
beneficiary appeals a notice of discharge to the Quality Improvement 
Organization (QIO). If an enrollee files a timely request for QIO 
review of the discharge, the enrollee is not responsible for the costs 
of the hospital services during the QIO review, even if the QIO 
ultimately finds that the hospital stay should not be continued (Sec.  
422.422(f)). Developing a recoupment policy in Medicare, and 
communicating it to enrollees, could become administratively complex 
while offering little benefit to enrollees or plans, considering the 
limited financial resources of dually eligible enrollees.
    We also considered adopting the Medicaid rule at Sec.  438.420(d) 
only for services provided under Title XIX--that is, Medicaid-covered 
services. This approach would preserve state flexibility, but it would 
risk creating administrative complexity for plans and confusion for 
enrollees, as it would necessitate differentiating between services for 
which financial recovery was possible and those for which it was not. 
We invite comments on our proposed approach to prohibit the recovery of 
the costs of services provided pending appeal, our considered 
alternatives, and any other possible approaches.

[[Page 55010]]

(8) Integrated Reconsiderations (Sec.  422.633)
    In proposed Sec.  422.633, we lay out our proposed provisions for 
an integrated reconsideration process for applicable integrated plans. 
As with other provisions, we compared relevant Medicare and Medicaid 
provisions, and where they differ, we chose to adopt the policy that is 
most protective of the beneficiary.
    In paragraph (a), we propose that applicable integrated plans may 
only have one plan level of appeal. This provision is consistent with 
Sec.  438.402(b), which prohibits more than one plan level of appeals, 
and Sec.  422.590, which permits only one internal reconsideration 
before an adverse decision is subject to review by the independent 
review entity.
    In paragraph (b), we propose to adopt a rule similar to Sec.  
438.402(c)(1)(i)(B) regarding the permissibility of external medical 
reviews: Medicaid managed care plan enrollees may be offered an 
opportunity to elect external medical review under a state external 
review process. Under our proposal, the ability to elect external 
medical review would apply only to Medicaid covered services that are 
the subject of an adverse integrated reconsideration issued by an 
applicable integrated plan because D-SNPs, like all MA plans, are not 
subject to state external review procedures.\16\
---------------------------------------------------------------------------

    \16\ Section 1856(b)(3) of the Act preempts state regulation of 
Medicare Advantage plans.
---------------------------------------------------------------------------

    In paragraph (c), we propose a right for each enrollee, and their 
representatives, to review the medical records in the enrollee's case 
file, consistent with the protection for Medicaid enrollees under Sec.  
438.406(b)(5). We believe that this protection for Medicaid enrollees 
in a managed care plan is appropriate for dually eligible enrollees and 
should apply to applicable integrated plans. In particular, we propose 
adopting Medicaid's provision prohibiting plans from charging for 
copies of records, as we believe the policy applicable for MA plans, 
which permits plans to charge beneficiaries reasonable copying fees, is 
inappropriate and less protective of dual eligible individuals, who 
typically have limited income. We invite comments on this proposal.
    In paragraph (d)(1), we propose timelines for filing for a standard 
integrated reconsideration that, consistent with both MA (at Sec.  
422.582(b)) and Medicaid managed care (at Sec.  438.402(c)(2)(ii)) 
regulations, would require that an integrated reconsideration be filed 
within 60 days of the date of the denial notice. We propose, in 
paragraph (d)(2), that oral inquiries seeking to make an integrated 
reconsideration be treated as integrated reconsiderations; this is 
generally consistent with Sec.  438.406(b)(3), which we find to be the 
more protective of enrollees than the MA provision at Sec.  422.582(a) 
which gives MA plans discretion in deciding to accept oral requests for 
reconsideration. We believe that applying the Medicaid rule to 
applicable integrated plans is appropriate because initiating an 
integrated reconsideration orally may be the easiest way for enrollees 
to start the integrated reconsideration process quickly, and timely 
filing can be especially important to ensure aid continues pending the 
integrated reconsideration resolution under proposed Sec.  422.632. We 
are not proposing to include the language in Sec.  438.406(b)(3) 
requiring beneficiaries to provide written confirmation of oral 
requests because such a requirement would be inconsistent with MA 
policy that directs plans that do accept oral requests for 
reconsideration to provide written confirmation to the beneficiary (see 
Medicare Managed Care Manual Chapter 13, section 70.2). We propose, in 
paragraph (d)(3), to include current requirements from MA (at Sec.  
422.582(c)) that allow for extending the timeframe for an enrollee, or 
a physician acting on behalf of an enrollee, to file a late 
reconsideration. As in MA, we propose to allow late filing when a party 
to the integrated organization determination or a physician acting on 
behalf of the enrollee can show good cause for the extension and makes 
the request in writing. We find that this is an important beneficiary 
protection that should be applied to our proposed integrated process.
    In paragraph (e), we propose to address procedures for filing 
expedited integrated reconsiderations. Both MA (at Sec.  422.584) and 
Medicaid (at Sec.  438.408(b)(3)) regulations permit filing of 
expedited appeals. The MA regulation provides greater detail regarding 
how plans are to consider requests for expedited reconsiderations. The 
proposed language in paragraphs (e)(1), and (e)(2) aligns with Sec.  
422.584 in permitting the enrollee or health care provider to file a 
written or oral request for an expedited reconsideration. The proposed 
language in paragraph (e)(3) aligns with Sec.  422.584 in setting the 
standard that the applicable integrated plan must use in deciding 
whether to expedite the integrated reconsideration. We invite comments 
regarding whether additional specificity or harmonizing between 
Medicare and Medicaid's requirements is needed in this area.
    In paragraph (e)(4), we propose notice requirements related to 
requests for expedited integrated reconsiderations. We propose 
requirements that parallel Medicaid managed care requirements for 
notice to the enrollee when the request for an expedited integrated 
reconsideration is denied (Sec.  438.410(c)(2))--specifically, that the 
plan must give prompt oral notice and written notice within 2 calendar 
days and transfer the matter to the standard timeframe for making an 
integrated reconsideration (that is, the timeframe specified in 
paragraph (f)(1)). The MA requirements for notice, when an enrollee's 
request for an expedited integrated reconsideration is denied, are for 
the plan to provide prompt oral notice and, subsequently, written 
notice within 3 calendar days (Sec.  422.584(d)(2)). We find that the 
Medicaid managed care requirements are more protective for enrollees by 
requiring faster notification when the request to expedite is denied. 
We propose to apply the MA requirements for what applicable integrated 
plans must include in the written notice to enrollees when the request 
to expedite the integrated reconsideration is denied (Sec.  
422.584(d)(2)). The MA requirements for the contents of this notice are 
more extensive than the Medicaid managed care requirements (Sec.  
438.410(c)(2)). We find the additional content requirements to be more 
protective of enrollees by providing them more information on options, 
and also helping to make the process more navigable for enrollees.
    In paragraph (e)(5) we propose to include requirements, which 
mirror MA requirements (Sec.  422.590(d)(3)), for applicable integrated 
plans when obtaining necessary information from noncontract providers. 
These requirements specify that the applicable integrated plan must 
reach out to a noncontract provider within 24 hours of the initial 
request for an expedited integrated reconsideration. Though Medicaid 
managed care regulations do not contain a similar requirement, Medicaid 
managed care plans currently must resolve expedited appeals under the 
same timeframes and, therefore, should already be reaching out to 
providers for information necessary to process expedited appeals in a 
similarly timely manner.
    In paragraph (f), we propose timelines and procedures for resolving 
an integrated reconsideration request. We propose specific requirements 
for applicable integrated plans. Both MA (at Sec.  422.590(a)) and 
Medicaid (at Sec.  438.408(b)(2)) require resolution of

[[Page 55011]]

pre-service standard appeal requests within 30 calendar days. We 
propose the same rule in paragraph (f)(1), with the addition of a 
provision mirroring Sec.  422.590(a)(2), that the integrated 
reconsideration decision be issued as expeditiously as the enrollee's 
health requires but no later than 30 calendar days from the date the 
applicable integrated plan receives the request for the integrated 
reconsideration.
    However, MA and Medicaid managed care differ in the timeframes 
within which plans must resolve post-service appeals (that is, appeals 
related to payment requests). Medicaid regulations at Sec.  
438.408(b)(2) do not distinguish between pre-service and post-service 
appeals--all appeals must be resolved within 30 calendar days. In 
contrast, while MA regulations require that plans resolve standard 
reconsiderations within 30 calendar days for pre-service appeals, plans 
have 60 days to resolve post-service denials of payment. Although we do 
not believe the volume of appeals for payment is high for individuals 
dually eligible for Medicare and Medicaid, it is more protective for 
enrollees to have all integrated reconsiderations resolved in 30 
calendar days, particularly given what may be significant financial 
needs for the individual. Similarly, we are not proposing to 
incorporate into the unified appeals process MA's regulation that 
expedited organization determinations are not required in post-service 
payment cases. Again, we do not believe the volume of post-service 
cases that otherwise qualify under the requirements for an expedited 
integrated organization determination would be high, so we do not 
expect this to be a burden to D-SNPs that would be required to comply 
with unified appeals requirements we propose here. There may be 
circumstances in which an enrollee's financial need is particularly 
pressing. Accordingly, in Sec.  422.633(f)(1), we propose to require 
that all integrated reconsiderations be resolved within 30 calendar 
days of receipt similar to the Medicaid managed care regulations. We 
considered applying the approach taken in the MA regulations that gives 
MA plans more time to resolve post-service payment cases so that plans 
can prioritize cases where an enrollee is waiting for a service to 
start or an item to be provided. However, given the financial 
circumstances of enrollees in applicable integrated plans, we propose 
requiring the same resolution timeframe for all integrated 
reconsideration to ensure prompt repayment. We invite comments on this 
proposal--both on the overall 30 calendar day period and on permitting 
expedited post-service integrated reconsideration--as we recognize this 
would constitute a change to current D-SNP operations.
    In paragraph (f)(2), we propose to establish the timeframes for 
expedited reconsiderations. Both MA (at Sec.  422.590(d)(1)) and 
Medicaid (at Sec.  438.408(b)(3)) allow 72 hours for resolution of an 
expedited reconsideration or appeal. We propose to adopt the same rule 
for integrated reconsiderations. We also propose to apply the Medicaid 
managed care requirement (at Sec.  438.408(d)(2)(ii)) by requiring that 
applicable integrated plans make reasonable efforts to give enrollees 
oral notice of the resolution in expedited cases, in addition to 
sending the written notice within 72 hours of receipt of the request.
    In paragraph (f)(3)(i), we propose criteria for an applicable 
integrated plan to extend the timeframe for resolving either a standard 
or expedited reconsideration. MA (at Sec.  422.590(e)) and Medicaid (at 
Sec.  438.408(c)) have similar rules, both allowing 14-day extensions 
upon request of the enrollee (or the enrollee's representative) and 
when the plan can demonstrate an extension is in the enrollee's 
interest. We propose to adopt a similar standard here, generally using 
the standard in Sec.  438.408(c) that the plan must show that the 
extension is in the enrollee's interest and that the information is 
necessary. We also propose to use the MA standard that the timeframe 
may be extended if there is a need for additional information and there 
is a reasonable likelihood that receipt of such information would lead 
to approval of the request, as this standard is more protective of the 
enrollee. Using this standard, an applicable integrated plan would be 
prohibited from extending the deadline for its integrated 
reconsideration in order to gather information to justify continuing 
its original denial of coverage. We request comments regarding whether 
additional specificity is needed.
    In paragraph (f)(3)(ii), we propose requirements for the notice 
that applicable integrated plans must send to enrollees when the plan 
extends the timeframe for making its determination, in accordance with 
the requirements in this paragraph. We propose to require that the 
applicable integrated plan make reasonable efforts to give the enrollee 
prompt oral notice and give the enrollee written notice within 2 
calendar days. These requirements align with current Medicaid managed 
care regulations at Sec.  438.408(c)(2). The MA regulation requires 
that the plan notify the enrollee in writing as expeditiously as the 
enrollee's health condition requires, but no later than the expiration 
of the extension period (Sec.  422.590(e)(2)). We find the Medicaid 
managed care requirements to be more protective to enrollees since they 
are likely to provide faster notice to the enrollee of the 
determination. We also propose that the notice of the extension include 
the reason for the delay and inform the enrollee of the right to file 
an expedited grievance if the enrollee disagrees with the decision to 
extend the timeframe. Both Medicaid managed care and MA require similar 
information. However, only MA requires information on an expedited 
grievance process, since only MA includes an expedited grievance 
process. Since we are proposing to include an expedited grievance 
process, we are proposing to require information about that process in 
this notice.
    In paragraph (f)(4), we propose requirements for providing 
appellants with notices regarding the resolution of reconsiderations. 
We propose to require that applicable integrated plans send notices 
within the resolution timeframes established in this section for all 
integrated reconsideration determinations. Medicaid managed care 
regulations require notices of all determinations. MA regulations will 
no longer, effective for the 2019 plan year, require MA plans to send 
written determinations in cases where the determination is fully or 
partially unfavorable to the enrollee because MA enrollees will still 
receive a notice from the independent entity once the MA plan forwards 
the case for fully or partially unfavorable determinations (see 83 FR 
16634 through 16635). We believe that requiring applicable integrated 
plans to send notices for all integrated reconsideration determinations 
is in line with the principles identified in section 1859(f)(8)(B) of 
the Act for a unified process, and timely, clear notification for 
enrollees. We also propose to include language requiring that the 
notice be written in plain language and available in a language and 
format that is accessible to the enrollee consistent with section 
1859(8)(B)(iii)(III) of the Act. We also propose, in paragraphs 
(f)(4)(i) and (ii), to adopt the standards similar to those governing 
the content of a notice found in Sec.  438.408(e)--namely, that the 
plan must provide a notice of the integrated reconsideration for an 
adverse decision that includes the reason for the decision and the date 
of completion. We propose in paragraph (f)(4)(ii)(A) that, for 
integrated notices not resolved wholly in the enrollee's favor, the 
notice include an explanation

[[Page 55012]]

of the next level of appeal under both Medicare and Medicaid, and what 
steps the enrollee must take to further pursue the appeal. Our 
expectation is that the integrated notice will enable the enrollee to 
understand which program covers the benefit at issue. We also propose 
in paragraph (f)(4)(ii)(B) that the notice include specific information 
about the ability to request continuation of Medicaid-covered benefits 
pending appeal.
(9) Effect (Sec.  422.634)
    We propose, at Sec.  422.634(a), to use the same standard as in 
existing MA and Medicaid regulations related to a plan's failure to 
made a timely determination. If an applicable integrated plan fails to 
make a timely determination at any point in the appeals process (for an 
integrated organizational determination or an integrated 
reconsideration), that failure would constitute an adverse 
determination, such that the enrollee could move forward with the next 
level of appeal procedures (see Sec. Sec.  438.400(b)((b), 
438.402(c)(1)(i)(A), 438.408(c)(3), 422.568(f), and 422.572(f)).
    We propose, at Sec.  422.634(b), to establish the next steps in the 
appeals process if the enrollee receives an adverse decision from the 
applicable integrated plan on the integrated reconsideration. For cases 
involving Medicare benefits, we propose, for applicable integrated 
plans at Sec.  422.634(b)(1)(i), the same processes as currently exist 
in MA at Sec.  422.590(a)(2) and (d)(4) for forwarding the case file 
and timing. In Sec.  422.634(b)(1)(ii) and (iii), we propose to mirror 
the MA regulations (Sec.  422.590(a)(2) and (d)(3)) with requirements 
for applicable integrated plans to forward the case file to the 
independent entity.
    At Sec.  422.634(b)(2), we propose that for cases involving 
Medicaid benefits, the enrollee may initiate a state fair hearing no 
later than 120 calendar days from the date of the applicable integrated 
plan's notice of resolution. This proposal would, in effect, impose the 
same process on appeals from integrated reconsiderations related to 
Medicaid coverage as applies under Sec.  438.408(f)(2) and (3). We also 
propose to include the requirement that a provider who has not already 
obtained the written consent of an enrollee must do so before filing a 
request for a state fair hearing, in accordance with existing Medicaid 
requirements, since our proposed regulations would only apply new 
processes and requirements through the integrated reconsideration.
    We also propose to parallel, at proposed Sec.  422.634(c), MA 
regulation language at Sec.  422.576 clarifying that determinations are 
binding on all parties unless the case is appealed to the next 
applicable level of appeal. We also propose to specify that this means 
that, in the event that an enrollee pursues an appeal in multiple 
forums simultaneously (for example, files for an external state medical 
review and an integrated reconsideration with the applicable integrated 
plan, and the integrated reconsideration decision is not in the 
enrollee's favor but the external state medical review decision is), an 
applicable integrated plan would be bound by, and must implement, 
decisions favorable to the enrollee from state fair hearings, external 
medical reviews, and independent review entities (IRE).
    We propose, at Sec.  422.634(d), to parallel Medicaid requirements, 
from Sec.  438.424(a), detailing how quickly services must be put in to 
place for an enrollee after he or she receives a favorable decision on 
an integrated reconsideration or state fair hearing. We propose to 
include the current Medicaid managed care requirement that, if a 
decision is favorable to the enrollee, the applicable integrated plan 
must authorize or provide the disputed benefit as expeditiously as the 
enrollee's health condition requires but no later than 72 hours from 
the date it receives notice reversing the determination. MA's rule for 
effectuation of a standard organization determination at Sec.  
422.618(a) also requires effectuation as expeditiously as the 
enrollee's health requires, but allows a maximum of 30 days. We believe 
the shorter, 72-hour maximum is more protective of the needs of dually 
eligible beneficiaries. We also note that a 72-hour effectuation period 
is the same as Medicare's timeframe for an expedited determination at 
Sec.  422.619(a), so that plans should be accustomed to effectuating 
decisions under this timeframe. Finally, we also propose in this 
paragraph to maintain the same effectuation timelines for reversals by 
the Medicare independent review entity as apply to other MA plans.
    We propose, at Sec.  422.634(e), for Medicaid-covered benefits, to 
parallel Medicaid requirements from Sec.  438.424(b) governing how 
services that were continued during the appeal must be paid for, if the 
final determination in the case is a decision to deny authorization of 
the services. For Medicare-covered services, we propose that the 
applicable integrated plan will cover the cost of the benefit.
(10) Unifying Medicare and Medicaid Appeals Subsequent to Integrated 
Reconsideration
    The new section 1859(f)(8)(B)(ii) of the Act directs us to include, 
to the extent we determine feasible, consolidated access to external 
review under an integrated process. We interpret ``external review'' in 
this statutory provision as meaning review outside the plan, including 
by a government agency or its designee. For MA, this includes the 
independent review entity (IRE) and ALJ review described in Sec. Sec.  
422.592 through 422.602. For Medicaid, this includes the state fair 
hearing process described in Part 431 Subpart E, as well as any 
additional external review offered under state law.
    A unified and integrated appeals process subsequent to a plan 
decision could be significantly simpler for beneficiaries to navigate, 
as they would not have to determine whether they should be pursuing a 
Medicare appeal, a Medicaid appeal, or both. Such a process could 
reduce burden for plans, states, and the federal government by reducing 
the number of duplicative appeals. However, unifying D-SNP and Medicaid 
appeals subsequent to the reconsideration level also presents 
considerable challenges. Currently, once a D-SNP or Medicaid managed 
care plan makes a final decision on an appeal, the federally-
administered Medicare and state-administered Medicaid appeals processes 
are entirely separate. Although they have some common principles, such 
as ensuring access to an independent administrative hearing, they 
differ in many respects. Specific differences include:
     Reconsideration by an independent entity: Section 
1852(g)(4) of the Act, which is implemented in MA rules at Sec. Sec.  
422.592 through 422.596, requires that all adverse plan appeal 
decisions be reviewed by an independent entity. Under the regulations, 
this review is on the record and happens automatically for Part C 
claims, as the MA plan is required to forward any adverse 
reconsideration to the IRE. This IRE review takes place before a 
beneficiary can request an administrative hearing before an 
administrative law judge but, because each adverse reconsidered 
determination is automatically forwarded to the IRE, the enrollee is 
not required to initiate these reviews. In the Medicaid managed care 
context, there is no federal regulation or statute that similarly 
requires a review by an external entity before access to a governmental 
review; pursuant to Sec. Sec.  438.402(c)(1)(i)(B) and

[[Page 55013]]

438.408(f)(1)(ii), a state may make a voluntary external medical review 
process available to enrollees in a Medicaid managed care plan so long 
as the process does not interfere with enrollees' right to proceed to a 
state fair hearing.
     Immediate access to an administrative hearing: The 
applicable Medicaid managed care program regulations (Sec. Sec.  
438.402(c)(1)(i)(B) and 438.408(f)) specify that any external review 
cannot be required before allowing a beneficiary to proceed to the 
state fair hearing, so that the state fair hearing process is available 
immediately following the Medicaid managed care plan's appeal 
determination if the enrollee elects.
     Amount in controversy: Section 1852(g)(5) of the Act 
requires that an amount in controversy be met for a hearing before the 
Secretary on appeal and for judicial review. In 2018, those thresholds 
are $160 for an Administrative Law Judge hearing and $1,600 for 
judicial review.\17\ Medicaid has no similar provision.
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    \17\ 82 FR 45592 (September 29, 2017).
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     Reviewing agency and subsequent review: Medicaid program 
rules at Part 431 Subpart E (which are not limited to Medicaid managed 
care plans but also control appeals in the Medicaid fee-for-service 
context) require that beneficiaries always have the right to request a 
hearing before the state agency for a review of a denial of service 
(Sec.  431.205(b)(1)) or for a reduction, termination, or reason 
described at Sec.  431.220(a). Medicaid hearings are held by the state 
Medicaid agency or, in limited circumstances, its designee. Subsequent 
review procedures vary based on state law. Section 1852(g)(5) of the 
Act provides that a MA enrollee is entitled, if the amount in 
controversy threshold is met, to a hearing before the Secretary to the 
same extent as is provided in section 205(b) of the Act. The MA 
regulations (at Sec. Sec.  422.562(b)(4)(iv)-(vi) and (d), and 
Sec. Sec.  422.600 through 422.616) implement this requirement by 
providing for appeals to be made to the Office of Medicare Hearings and 
Appeals and Medicare Appeals Council using substantially the same 
procedures and processes used for appeals of claims denials under Part 
A and Part B of Medicare.
     Timelines and procedural rules: Medicaid's procedural 
rules on matters such as timelines and location of a hearing vary by 
state and may differ from the rules applicable to MA. For example, 
Medicaid rules at Sec.  431.224 allow for expedited fair hearing 
hearings under certain circumstances, whereas there is no equivalent 
expedited hearing process at the Medicare ALJ level for Part C/MA 
appeals.
    In addition, our authority to unify appeals procedures under 
Medicare and Medicaid and to provide consolidated access to external 
review under section 1859(f)(8)(B) of the Act cannot be used to 
diminish any appeal rights under Medicare or Medicaid. In the context 
of establishing the unified procedures for appeals and grievances, the 
statute provides authority to waive only section 1852(g)(1)(B) of the 
Act (which imposes certain notice requirements for MA organizations) 
and directs unification--rather than amendment or elimination--of 
procedures under sections 1852(f), 1852(g), 1902(a)(3), 1902(a)(5), and 
1932(b)(4) of the Act. In many ways, those statutory provisions do not 
direct specific procedures but provide some measure of discretion in 
effectuating appeal rights. But where those statutory provisions are 
specific, we generally do not have authority under section 
1859(f)(8)(B) of the Act to waive the specific requirements in 
establishing unified procedures and processes. In addition to the 
statutory differences we have already outlined earlier, section 
1852(g)(5) of the Act providing Medicare beneficiaries with an 
opportunity for a hearing before the Secretary, and the analogous 
provision at section 1902(a)(3) of the Act providing Medicaid 
beneficiaries with a hearing before the state Medicaid agency, are 
rights that must be met and present challenges in establishing a 
consolidated, unified, post-plan appeals process. We believe that a 
state-level unified appeals process to adjudicate both Medicare and 
Medicaid claims would satisfy section 1902(a)(3) of the Act in 
providing Medicaid beneficiaries with access to a state fair hearing. 
However, to comply with section 1852(g)(5) of the Act, such a system 
would need to include a pathway for a federal review of Medicare 
claims, in a manner that provides a hearing before the Secretary. 
Conversely, a federal-level unified appeals process would satisfy 
section 1852(g)(5) of the Act but would need to include a pathway for 
an enrollee to elect additional state agency review of Medicaid claims. 
Finally, we believe as a practical matter that any entity adjudicating 
cases in a unified process outside its traditional jurisdiction (that 
is, a state entity reviewing Medicare claims or a federal entity 
reviewing Medicaid claims) should be subject to some additional review 
to ensure that its decisions were consistent with the applicable law 
(that is, federal Medicare and state Medicaid criteria for benefits 
coverage).
    Based on these complexities, we believe it is not feasible to 
propose a unified post-plan appeals process (that is, adjudication of 
appeal subsequent to an applicable integrated plan's integrated 
reconsideration of an initial adverse determination) at this time. 
Instead we ask for comments on viable paths forward given the 
constraints presented by the statutory mandates for the MA and Medicaid 
appeals processes and our experience gained through demonstrations. We 
hope to propose the establishment of a unified post-plan appeals 
process in a future rulemaking, based on comments from this request for 
information and additional experience. We discuss our experiences and 
key areas for comment below.
    Our sole experience with a unified appeals process subsequent to 
the plan's final reconsideration of an initial benefit denial operates 
under demonstration authority at the state level through a partnership 
between CMS and the state of New York as part of the Financial 
Alignment Initiative capitated model demonstrations. The New York 
Financial Alignment Initiative demonstration, called Fully Integrated 
Duals Advantage (FIDA), includes a fully integrated appeals process for 
appeals from Medicare-Medicaid Plans (MMPs) authorized under section 
1115A waiver authority.\18\ We note that this model was established 
under demonstration authority prior to enactment of section 
1859(f)(B)(8) of the Act, and some aspects of the model may not be 
fully consistent with the provisions of Titles XVIII and XIX as they 
would operate under a unified process implemented under the new 
statute. In the FIDA integrated process, all adverse decisions by FIDA 
MMPs, regardless of amount in controversy, are automatically forwarded 
to a specialized unit of the New York administrative hearing agency 
that conducts state Medicaid fair hearings. This specialized unit has 
staff trained in both Medicare and Medicaid coverage rules, schedules 
each denial for a hearing, and applies both Medicare and Medicaid 
coverage criteria in reviewing the decision. Decisions affirming an 
MMP's denial may be appealed to the federal Departmental Appeals 
Board's Medicare Appeals Council, thereby ensuring an

[[Page 55014]]

opportunity for federal review of Medicare claims.
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    \18\ Section 2.13 of the FIDA contract, available at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Downloads/NYFIDAContract01012018.pdf.
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    Our experience with the New York FIDA unified appeals process 
suggests that any procedures we establish for a unified post-plan 
appeals process should be available as an option for states to 
implement in partnership with CMS, rather than a nationwide 
requirement. The New York FIDA experience has taught us that operating 
a unified process requires considerable commitment, planning, and 
coordination by both CMS and the state Medicaid agency, as well as from 
other agencies that are part of the administrative hearing and review 
process for Medicare and Medicaid (in this case, the New York state 
hearing agency and the federal Departmental Appeals Board (DAB)). 
Although models other than the New York FIDA model are feasible, any 
unified adjudication entity for D-SNP appeals subsequent to the plan's 
reconsideration would need to administer its own procedures and be 
familiar with the substance of both Medicare and state-specific 
Medicaid coverage rules. Given the resources and commitment needed, we 
anticipate that only a limited number of states would wish to pursue a 
unified system with CMS for appeals processes following the decisions 
by applicable integrated plans. In addition, based on our experience 
with the Financial Alignment Initiative demonstrations in other states, 
we believe an appeals system that is integrated at the plan level but 
which diverges subsequently can also be effective at ensuring 
appropriate review of plan decisions. Therefore, we believe that 
mandating a unified process subsequent to reconsideration for all 
states would be unwise and likely infeasible.
    We also believe that any post-plan appeals process should be 
limited to appeals of decisions made by applicable integrated plans as 
we propose to define them in Sec.  422.561. We believe the integrated 
organization determination and integrated reconsideration processes we 
propose in Sec. Sec.  422.631 and 422.633 lend themselves to an 
integrated post-plan appeals process much more than a system that 
attempts to integrate appeals made by separate MA and Medicaid managed 
care plans.
    Any regulation to establish a post-plan unified appeals process 
would need to address the following misalignments in particular:
     Harmonizing the Medicare Advantage requirement 
for an external independent review with Medicaid's prohibition on 
additional levels of administrative review between a plan decision and 
a state fair hearing: The approaches to post-plan review do not align 
neatly across Medicare Advantage and Medicaid managed care. Section 
1852(g)(4) of the Act (governing Medicare Advantage appeals processes) 
requires that CMS contract with an independent external entity to 
conduct an external review of all adverse reconsiderations. CMS has 
implemented this provision at Sec.  422.592 by requiring an automatic 
referral of adverse plan reconsiderations to the IRE for an 
administrative review. In the appeals structure for Medicaid managed 
care plans, a plan's adverse action is not reviewed automatically, but 
beneficiaries may request a fair hearing before the state Medicaid 
agency (or, in limited cases, its designee) immediately following a 
plan's decision, under procedures described in Part 431 Subpart E. 
Requiring an additional level of external review for all integrated 
appeals prior to allowing a state fair hearing would be inconsistent 
with Medicaid policy, as we have only permitted establishment of 
external medical reviews for Medicaid managed care plans if such 
reviews do not impede access to a state fair hearing (see, for example, 
Sec.  438.408(f)(1)(ii) and discussion at 81 FR 27518 (May 6, 2016)). 
We are concerned that having a requirement for external review of all 
adverse integrated reconsiderations before access to the state fair 
hearing would impede dually eligible beneficiaries' timely access to a 
fair hearing. However, allowing beneficiaries to proceed directly to a 
governmental hearing to address Medicare-related issues without prior 
external review could be inconsistent with the MA statutory requirement 
for independent, external review. Furthermore, if the review, be it 
external or by state fair hearing, were not automatic, then an adverse 
reconsideration might not be reviewed at all, which would be 
inconsistent with protection provided by the automatic referral in 
Sec.  422.592. We do not believe either a purely Medicare-based or 
Medicaid-based procedure is desirable in a unified post-plan appeals 
process.
    We have considered one approach that could accommodate these 
constraints. Under this potential approach, a state entity with 
expertise in both Medicare and Medicaid coverage rules would review all 
adverse integrated reconsiderations issued by the plan. This entity 
would conduct its review in the form of an automatic state fair hearing 
consistent with Medicaid hearing procedures (such as the opportunity to 
present evidence), as is done in the New York FIDA demonstration. The 
automatic fair hearing would also constitute the independent external 
review required by section 1852(g)(4) of the Act. In order to comply 
with the statute, CMS and the state entity would have to enter into a 
contract to perform the independent review. Following this state fair 
hearing, appeals regarding Medicare-related issues would be subject to 
additional appeal rights, but as we discuss below, operationalizing 
those rights presents challenges as well.
    We invite comments on the feasibility and desirability of this 
approach. We are particularly interested in whether there are 
instructive analogous examples of state-federal contracting that 
successfully demonstrate states performing a task subject to federal 
oversight. We also seek input regarding any advantages and 
disadvantages to providing the automatic review in the form of a state 
fair hearing. Finally, we welcome suggestions for alternative models 
that could harmonize the MA and Medicaid managed care requirements 
while maintaining compliance with all statutory provisions.
     Preserving the right to hearing before the 
Secretary: Section 1852(g)(5) of the Act requires the opportunity for 
Medicare beneficiaries to have a hearing before the Secretary when an 
amount in controversy threshold is met. In order to preserve that 
right, a unified process would need to allow a beneficiary whose appeal 
is unsuccessful at the independent review level to request a hearing 
before the Secretary (presumably through the Office of Medicare 
Hearings and Appeals (OMHA)) when an appeal involves a Medicare item or 
service (meaning a Part A benefit, Part B benefit, or supplemental 
benefit offered under the Medicare Advantage contract) meeting the 
amount in controversy threshold. But this appeal level would not be 
available for appeals of Medicaid-based cases or for Medicare cases not 
meeting the amount in controversy. In effect, this would mean 
beneficiaries would need to split their cases into separate Medicare 
and Medicaid pathways if they wished to seek a hearing before the 
Secretary for their Medicare claims meeting the amount in controversy. 
In addition, it would essentially create the possibility for two 
hearings: First an automatic integrated independent review and fair 
hearing at a state-level integrated entity, followed by an optional 
Medicare-only hearing at OMHA for Medicare matters meeting the amount 
in controversy threshold. Although such a process could be

[[Page 55015]]

operationalized, we believe it might also be confusing to beneficiaries 
and inconsistent with the goal of a simpler unified appeals process. We 
therefore seek comments how best to preserve beneficiaries' rights 
under section 1852(g)(5) of the Act and simultaneously establish a 
unified process.
     Pathways for subsequent review: We seek input on 
the related question of how to structure other forms of subsequent 
review for a unified post-plan appeal. Any unified procedure must 
preserve both state-specific avenues for further review of Medicaid-
related fair hearing decisions (for example, additional administrative 
review and state court review) and ensure that Medicare-related 
decisions are reviewable consistent with section 1852(g)(5) of the Act 
(for example, review by the Medicare Appeals Council and federal 
judicial review under certain circumstances). We believe that 
maintaining all these routes of appeal would mean that a unified case 
would eventually have to be separated into Medicaid and Medicare 
components, which could be difficult for beneficiaries and plans to 
navigate. We invite comments regarding how to approach this problem. We 
are considering providing state Medicaid agencies with the authority to 
delegate review of a state fair hearing decision to a federal entity 
(at state option and only with the federal entity's consent) in order 
to keep the unified appeal together. This is the approach in the New 
York FIDA demonstration, where the Medicare Appeals Council can review 
Medicaid aspects of a FIDA decision. Such an approach may be 
technically feasible, but we seek input regarding the advantages and 
disadvantages of such a delegation.
     Specificity of rulemaking: Depending on the 
resolution of these issues in developing a unified post-plan appeals 
process, additional federal rulemaking is likely to be necessary to 
amend or create exceptions to the current MA requirements for IRE 
review and the governmental administrative appeals process (see 
Sec. Sec.  422.592 through 422.619). In addition to statutory 
requirements for rulemaking (for example, the Administrative Procedure 
Act and section 1871 of the Act), it would also be necessary to ensure 
that all stakeholders have an opportunity to review and comment on the 
proposal. However, establishing a specific process in federal 
regulation constrains our ability to accommodate state-specific 
flexibility. Some flexibility is possible: For example, timelines for 
review by an independent entity are not established by Medicare 
regulation. Timelines for a unified independent review and fair hearing 
could therefore also vary by state to reflect state-specific fair 
hearing rules. But any substantial variation that affected appeal 
rights for MA (specifically D-SNP) enrollees might be subject to 
additional federal rulemaking. For example, a model that would limit 
unified post-plan appeals to only certain benefits (for example, 
services like home health and durable medical equipment where Medicare 
and Medicaid have differing coverage rules), would be subject to 
additional rulemaking. We seek comment regarding what aspects of a 
unified post-plan appeals process would necessitate state-specific 
flexibility, including discussion of whether any of those aspects would 
implicate rights under MA statute or would otherwise necessitate 
additional federal rulemaking.
    In summary, we believe that establishment of a unified post-plan 
appeals process may be feasible in the future if we can address these 
issues, and we believe that such a process could offer benefits to 
beneficiaries, plans, states, and the federal government. We welcome 
feedback from all stakeholders on the issues raised earlier, as well as 
any others pertaining to a post-plan appeals process.
(11) Conforming Changes to Medicare Managed Care Regulations and 
Medicaid Fair Hearing Regulations (Sec.  422.562, Sec.  422.566, Sec.  
438.210, Sec.  438.400, and Sec.  438.402)
    We propose a number of changes to Medicaid managed care, Medicaid 
fair hearing, and Medicaid single state agency regulations to conform 
with our proposed unified grievance and appeals provisions. Following 
is a summary of these proposed changes.
     In Sec.  422.562(a)(1)(i) and (b), we propose to add cross 
references to the proposed integrated grievance and appeals regulations 
along with new text describing how the provisions proposed in this rule 
for applicable integrated plans would apply in place of existing 
regulations.
     In Sec.  422.566, we propose to add additional language to 
paragraph (a) to establish that the procedures we propose in this rule 
governing integrated organization determinations and integrated 
reconsiderations at proposed Sec.  422.629 through Sec.  422.634 apply 
to applicable integrated plans in lieu of the procedures at Sec. Sec.  
422.568, 422.570, and 422.572.
     In Sec.  438.210(c) and (d), we propose to add cross 
references to the proposed integrated grievance and appeals regulations 
along with new text describing how the provisions proposed in this rule 
for applicable integrated plans would apply in place of existing 
regulations to determinations affecting dually eligible individuals who 
are also enrolled in a D-SNP with exclusively aligned enrollment, as 
those terms are defined in Sec.  422.2. In Sec.  438.210(f), we propose 
to make these Medicaid changes applicable to applicable integrated 
plans no later than January 1, 2021, but, consistent with our 
discussion earlier on the effective dates of our proposed unified 
appeals and grievance procedures overall, we would not preclude states 
from applying them sooner.
     In Sec.  438.400, we propose adding a new paragraph (a)(4) 
to include the statutory basis for the proposed integration regulations 
(section 1859(f)(8) of the Act). We also propose to amend Sec.  
438.400(c) to clarify that these Medicaid changes apply to applicable 
integrated plans no later than January 1, 2021, but, consistent with 
our discussion earlier on the effective dates of this rule overall, we 
would not preclude states from applying them sooner.
     In Sec.  438.402, we propose amending paragraph (a) to 
allow a Medicaid managed care plan operating as part of an applicable 
integrated plan to the grievance and appeal requirements laid out in 
Sec. Sec.  422.629 through 422.634 in lieu of the normally applicable 
Medicaid managed care requirements.
3. Proposal for Prescription Drug Plan Sponsors' Access to Medicare 
Parts A and B Claims Data Extracts (Sec.  423.153)
a. Background
    This proposed rule sets forth the manner in which CMS proposes to 
implement section 50354 of the Bipartisan Budget Act of 2018 (BBA), 
Public Law 115-123, enacted on February 9, 2018. Section 50354 amends 
section 1860D-4(c) of the Social Security Act by adding a new paragraph 
(6) entitled ``Providing Prescription Drug Plans with Parts A and B 
Claims Data to Promote the Appropriate Use of Medications and Improve 
Health Outcomes''. Specifically, section 1860D-4(c)(6)(A), as added by 
section 50354 of the BBA, provides that the Secretary shall establish a 
process under which the sponsor of a Prescription Drug Plan (PDP) that 
provides prescription drug benefits under Medicare Part D may request, 
beginning in plan year 2020, that the Secretary provide on a periodic 
basis and in an electronic format standardized extracts of Medicare 
claims data about its plan

[[Page 55016]]

enrollees. Such extracts would contain a subset of Medicare Parts A and 
B claims data as determined by the Secretary. In defining the specific 
data elements and time frames for the Parts A and B claims data 
included in such extracts, hereinafter referred to as ``Medicare claims 
data,'' the Secretary is instructed, at section 1860D-(4)(c)(6)(D) of 
the Social Security Act, to include data ``as current as practicable.''
    Section 1860D-4(c)(6)(B), as added by section 50354 of the BBA, 
further specifies that PDP sponsors receiving such Medicare claims data 
for their corresponding PDP plan enrollees may use the data for: (i) 
Optimizing therapeutic outcomes through improved medication use; (ii) 
improving care coordination so as to prevent adverse healthcare 
outcomes, such as preventable emergency department visits and hospital 
readmissions; and (iii) for any other purposes determined appropriate 
by the Secretary. Finally, section 1860D-4(c)(6)(C) states that the PDP 
sponsor may not use the data: (i) To inform coverage determinations 
under Part D; (ii) to conduct retroactive reviews of medically accepted 
conditions; (iii) to facilitate enrollment changes to a different PDP 
or a MA-PD plan offered by the same parent organization; (iv) to inform 
marketing of benefits; and (v) for any other purpose the Secretary 
determines is necessary to include in order to protect the identity of 
individuals entitled to or enrolled in Medicare, and to protect the 
security of personal health information.
b. Provisions of the Proposed Rule
    To implement the new statutory provision at section 1860D-4(c)(6), 
as added by section 50354 of the BBA, we propose to add a new paragraph 
(g) at Sec.  423.153. Throughout this discussion of our proposed 
approach, we identify options and alternatives to the policies we 
propose. We strongly encourage comments on our proposed approach, as 
well as any alternatives.
c. Purposes and Limitations on the Use of Data
    Section 1860D-4(c)(6)(B) of the Act expressly permits the use of 
Medicare claims data for two specified purposes: (1) To optimize 
therapeutic outcomes through improved medication use and (2) to improve 
care coordination so as to prevent adverse health outcomes. In 
addition, section 1860D-4(c)(6)(B)(iii) provides that the Secretary can 
determine if there are other appropriate purposes for which the data 
may be used.
    Therefore, consistent with the statute, we propose at Sec.  
423.153(g)(3), that PDP sponsors would be permitted to use Medicare 
claims data to optimize therapeutic outcomes through improved 
medication use, and to improve care coordination so as to prevent 
adverse health outcomes. In addition, we propose to permit PDP sponsors 
to use Medicare claims data for the purposes described in the first or 
second paragraph of ``health care operations'' under 45 CFR 164.501, or 
that qualify as ``fraud and abuse detection or compliance activities'' 
under 45 CFR 164.506(c)(4). We also propose to permit disclosures that 
qualify as a ``required by law'' disclosure as defined at 45 CFR 
164.103. We believe these uses should encompass the full range of 
activities for which the PDP sponsors will need Medicare claims data. 
However, we request comments on whether there are any additional 
purposes for which PDP sponsors should be permitted to use Medicare 
claims data provided under this subsection.
    Section 1860D-4(c)(6)(C) of the Act places specific limitations on 
how Medicare claims data provided to the PDP sponsors may be used and 
also permits the Secretary to determine if any additional limitations 
should be imposed to protect the identity of individuals entitled to, 
or enrolled for, benefits under Medicare and to protect the security of 
personal health information. Therefore, consistent with these statutory 
limitations, at Sec.  423.153(g)(4), we propose that PDP sponsors must 
not use Medicare claims data provided by CMS under this subsection for 
any of the following purposes: (i) To inform coverage determinations 
under Part D; (ii) To conduct retroactive reviews of medically accepted 
indications determinations; (iii) To facilitate enrollment changes to a 
different prescription drug plan or an MA-PD plan offered by the same 
parent organization; and/or (iv) to inform marketing of benefits.
    Section 1860D-4(c)(6)(C)(v) of the Act provides that the Secretary 
may place additional limitations on the use of Medicare claims data as 
necessary to protect the identity of individuals entitled to, or 
enrolled for, benefits under Part D, and to protect the security of 
personal health information. CMS is committed to ensuring beneficiary-
level data is protected by strict privacy and security requirements. 
Therefore, at Sec.  423.153(g)(4)(v), we also propose to require that 
the PDP sponsor contractually bind its Contractors that it anticipates 
giving access to Medicare claims data, and any other potential 
downstream data recipients, to the terms and conditions imposed on the 
PDP Sponsor under the proposed provision at Sec.  423.153(g). In 
addition, we propose at Sec.  423.153(g)(4)(vi) that CMS may refuse to 
make future releases of Medicare claims data to the PDP sponsor if it 
makes a determination or has a reasonable belief that unauthorized 
uses, reuses, or disclosures have taken place.
    We believe that PDP sponsors are business associates receiving 
Medicare claims data on behalf of the PDP, a health plan and HIPAA 
covered entity. We also believe that Medicare claims data provided to 
PDP sponsors under Sec.  423.153(g) is protected health information 
(PHI). As a business associate, the PDP sponsor is required to comply 
with the HIPAA Rules, including Privacy, Security and Breach 
Notification requirements for PHI. Therefore, we do not propose any 
additional limitations on the PDP sponsors' use of the Medicare claims 
data. However, we request comments on whether there are any additional 
limitations that should be placed on Medicare claims data provided 
under Sec.  423.153(g). To ensure that the PDP sponsors understand the 
purposes for which the Medicare claims data may be used and the 
limitations on its use, we propose at Sec.  423.153(g)(5)) to require 
that, as a condition of receiving the requested data, the PDP sponsor 
must attest that it will adhere to the permitted uses and limitations 
on the use of the Medicare claims data in paragraphs (3) and (4) of 
Sec.  423.153(g). We propose to require this attestation as a means of 
ensuring an understanding of, and compliance with, the terms and 
conditions of data access. We believe that our proposal to require PDP 
sponsors to attest that they will comply with these requirements is 
necessary to ensure the protection of the identities of Medicare 
beneficiaries and the security of the Medicare claims data. We request 
comments on our proposal to require PDP sponsors to submit an 
attestation and on the specific requirements that should be included in 
that attestation.
d. Data Request
    Section 1860D-4(c)(6)(A) of the Act provides that the Secretary 
shall establish a process under which a PDP sponsor of a prescription 
drug plan may submit a request for the Secretary to provide the sponsor 
with standardized extracts of Medicare claims data for its enrollees. 
Therefore, we propose at Sec.  423.153(g)(1) to establish a process by 
which a PDP sponsor may submit a request to CMS to receive standardized 
extracts of Medicare claims data for its enrollees. We propose to 
accept data requests on an ongoing basis beginning

[[Page 55017]]

January 1, 2020. We propose to require that such data requests must be 
submitted in a form and manner specified by CMS. Consistent with the 
discretion accorded to the Secretary under section 1860D-4(c)(6)(D) of 
the Act, we propose not to allow PDP sponsors to request data for 
subsets of their enrolled beneficiary populations. We propose allowing 
requests to be submitted without an end date, such that the request, 
once reviewed for completeness and approved, will remain in effect 
until one or more of the following occur: The PDP sponsor notifies CMS 
that it no longer wants to receive Medicare claims data, CMS cancels 
access to Medicare claims data when a PDP sponsor leaves the Part D 
program, or CMS concludes or has a reasonable belief, at its sole 
discretion, that the PDP sponsor has used, reused or disclosed the 
Medicare claims data in a manner that violates the requirements of 
section 1860D-4(c)(6) and Sec.  425.153(g) of the Act. Upon receipt of 
the request from the PDP sponsor and the PDP's execution of an 
attestation discussed earlier, and review for completeness and approval 
of the application by CMS or its contractor, we propose that the PDP 
sponsor would be provided access to Medicare claims data. We note that 
access to Medicare claims data will be further subject to all other 
applicable laws, including, but not limited to, the part 2 regulations 
governing access to certain substance abuse records (42 CFR part 2).
d. Data Extract Content
    To develop a proposed data set to include in the standardized 
extracts of Medicare claims data, we first considered what Medicare 
claims data PDP sponsors might require if they were to undertake the 
activities expressly permitted by section 1860D-4(c)(6)(B) of the Act. 
In doing so, we attempted to limit the data set to the minimum data 
that we believe PDP sponsors would need to carry out those statutory 
activities and the additional activities we are proposing to permit 
under Sec.  423.153(g)(3). That is, we sought to establish data access 
limits that would comport with the HIPAA Privacy Rule's minimum 
necessary concept at 45 CFR 164.502(b) and 164.514(d), and CMS' policy-
driven data release policies.
    We believe that data from all seven claim types, including 
inpatient, outpatient, carrier, durable medical equipment, hospice, 
home health, and skilled nursing facility data, would be required to 
carry out the permitted uses of the data under section 1860D-4(c)(6)(B) 
and the proposed provision at Sec.  423.153(g)(3). We believe that 
information on all Parts A and B services provided to a patient, as 
well as the dates on which those services were furnished, would provide 
a more complete picture of a patient's health care services and support 
care coordination and quality improvement activities. In addition, this 
claims information would provide insight into the services or 
procedures that resulted in a patient receiving a certain prescription 
drug, and the particular care setting in which the drug was prescribed, 
which will assist PDP sponsors in promoting the appropriate use of 
medication and improving health outcomes for their enrollees.
    We also considered the types of data elements that other entities 
request when they ask for data to conduct care coordination and quality 
improvement work. For example, we looked at the data elements requested 
by entities participating in the CMS Oncology Care Model (OCM). OCM 
aims to provide higher quality, more highly coordinated oncology care 
at the same or lower cost to Medicare. Because Section 1860D-4(c)(6) 
focuses on providing Medicare claims data to promote the appropriate 
use of medications and improve health outcomes, we propose to initially 
include the following Medicare Parts A and B claims data elements 
(fields) in the standardized extract: An enrollee identifier, diagnosis 
and procedure codes (for example, ICD-10 diagnosis and Healthcare 
Common Procedure Coding System (HCPCS) codes); dates of service; place 
of service; provider numbers (for example, NPI); and claim processing 
and linking identifiers/codes (for example, claim ID, and claim type 
code). CMS will continue to evaluate the data elements provided to PDP 
sponsors to determine if data elements should be added or removed based 
on the information needed to carry out the permitted uses of the data. 
In making decisions about adding data elements to the standardized 
extracts, CMS will consider whether the additional data elements 
support the purposes for which the data can be used. Any proposed 
changes would be established through rulemaking.
    We next considered the beneficiary population for which we should 
draw the identified data elements, and what time span of data would 
best serve PDP sponsors while honoring the requirement at section 
1860D-4(c)(6)(D) of the Act that the data should be as current as 
practicable. Taking into account the purpose for which Medicare claims 
data is being provided, namely to support the appropriate use of 
medications and improve health outcomes, we believe that only the most 
current data is relevant. Therefore, because only the most timely data 
is needed for care coordination purposes, we propose at Sec.  
423.153(g)(2) to draw the standardized extracts of Medicare claims data 
for items and services furnished under Medicare Parts A and B to 
beneficiaries who are enrolled in a Part D plan offered by the Part D 
sponsor at the time of the disclosure. We anticipate that Medicare 
claims data would be provided at least quarterly with approximately a 3 
month lag from the last day of the last month of the prior quarter. In 
addition, we anticipate it can take up to two months to process and 
ship the data extracts from the date the quarterly data is available. 
Therefore, we propose that the first standardized data extract would be 
available to PDP sponsors no earlier than August 15, 2020, which would 
include, at a minimum, data for the period beginning January 1, 2020, 
and ending on March 1, 2020. In addition, given the permitted uses of 
the data, we propose to use a standard format to deliver the resulting 
data to each PDP sponsor with standard format extracts, meaning that 
CMS would not customize the extracts for a PDP sponsor. We propose to 
make these standardized data extracts available to eligible PDP 
sponsors at least quarterly, as described earlier, but only on a 
specified release date that would be applicable to all eligible PDP 
Sponsors. That is, we propose that newly eligible PDP sponsors would 
not have an opportunity to request standardized data extracts generated 
retroactively after the passing of the release date for a given 
release. Therefore, if a PDP sponsor submits a request, is approved to 
receive data, and executes its attestation after the release of a set 
of data extracts (for example, after the release date for Quarter 1 
2020), we anticipate that the newly eligible PDP Sponsor would not 
receive data until the next standardized data extract is available (for 
example, the release date for Quarter 2 of 2020).
    We believe that these standardized data extracts would provide PDP 
sponsors with the minimum data necessary to carry out the permitted 
uses specified in section 1860D-4(c)(6)(B) of the Act and as proposed 
at Sec.  423.153(g)(3). We seek comments about the proposed frequency 
and contents of the standardized data extracts.

[[Page 55018]]

B. Improving Program Quality and Accessibility

1. Medicare Advantage and Part D Prescription Drug Plan Quality Rating 
System (Sec. Sec.  422.162(a) and 423.182(a), Sec. Sec.  422.166(a) and 
423.186(a), Sec. Sec.  422.164 and 423.184, and Sec. Sec.  
422.166(i)(1) and 423.186(i)(1))
a. Introduction
    Earlier this year, in the April 2018 final rule, CMS codified at 
Sec. Sec.  422.160, 422.162, 422.164, and 422.166 (83 FR 16725 through 
83 FR 16731) and Sec. Sec.  423.180, 423.182, 423.184, and 423.186 (83 
FR 16743 through 83 FR 16749) the methodology for the Star Ratings 
system for the MA and Part D programs, respectively. This was part of 
the Administration's effort to increase transparency and advance notice 
regarding enhancements to the Part C and D Star Ratings program. Going 
forward CMS must propose through rulemaking any changes to the 
methodology for calculating the ratings, the addition of new measures, 
and substantive measure changes. The April 2018 final rule included 
mechanisms for the removal of measures for specific reasons (low 
statistical reliability and when the clinical guidelines associated 
with the specifications of measures change such that the specifications 
are no longer believed to align with positive health outcomes) but, 
generally, removal of a measure for other reasons would also occur 
through rulemaking.
    Commenters to last year's Notice of Proposed Rulemaking (NPRM) 
expressed overall support for the use of the hierarchical clustering 
algorithm which is the methodology used for determining the non-
Consumer Assessment of Healthcare Providers and Systems (CAHPS) 
measure-specific cut points. The cut points are used to separate a 
measure-specific distribution of scores into distinct, non-overlapping 
groups, or star categories. However, the majority of commenters also 
recommended some enhancements be made to the proposed clustering 
methodology to capture the attributes that they consider important. 
Commenters expressed a strong preference for cut points that are 
stable, predictable, and free from undue influence of outliers. 
Further, some commenters expressed a preference for caps to limit the 
amount of movement in cut points from year to year. CMS did not 
finalize any changes in last year's rule to the clustering algorithm 
for the determination of the non-CAHPS cut points for the conversion of 
measure scores to measure-level Star Ratings to allow the necessary 
time to simulate and examine the feasibility and impact of the 
suggestions provided in response to the proposed rule. In addition, CMS 
evaluated the degree to which the simulations captured the desired 
attributes identified by the commenters.
    At this time, we are proposing enhancements to the cut point 
methodology for non-CAHPS measures. We are also proposing substantive 
updates to the specifications for 2 measures for the 2022 Star Ratings 
and substantive updates to the specifications for 1 measure for the 
2023 Star Ratings. We are also proposing rules for calculating Star 
Ratings in the case of extreme and uncontrollable circumstances. Unless 
otherwise stated, data would be collected and performance would be 
measured as described in these proposed rules and regulations for the 
2020 measurement period; the associated quality Star Ratings would be 
released prior to the annual election period held in late 2021 for the 
2022 contract year and would be used to assign Quality Bonus Payment 
ratings for the 2023 payment year. Because of the timing of the release 
and use in conjunction with the annual coordinated election period, 
these would be the ``2022 Star Ratings.''
b. Definitions
    We propose to add the following definitions for the respective 
subparts in part 422 and part 423, in paragraph (a) of Sec. Sec.  
422.162 and 423.182, respectively. These proposed new definitions are 
relevant for our proposed policies and are used in that context.
     Absolute percentage cap is a cap applied to non-CAHPS 
measures that are on a 0 to 100 scale that restricts movement of the 
current year's measure-threshold-specific cut point to no more than the 
stated percentage as compared to the prior year's cut point.
     Cut point cap is a restriction on the change in the amount 
of movement a measure-threshold-specific cut point can make as compared 
to the prior year's measure-threshold-specific cut point. A cut point 
cap can restrict upward movement, downward movement, or both.
     Guardrail is a bidirectional cap that restricts both 
upward and downward movement of a measure-threshold-specific cut point 
for the current year's measure-level Star Ratings as compared to the 
prior year's measure-threshold-specific cut point.
     Mean resampling refers to a technique where measure-
specific scores for the current year's Star Ratings are randomly 
separated into 10 equal-sized groups. The hierarchical clustering 
algorithm is done 10 times, each time leaving one of the 10 groups out. 
The method results in 10 sets of measure-specific cut points. The mean 
cut point for each threshold per measure is calculated using the 10 
values.
    By leaving out one of the 10 groups for each run, 9 of the 10 
groups which is 90 percent of the applicable measure scores are used 
for each run of the clustering algorithm.
     Restricted range is the difference between the maximum and 
minimum measure score values using the prior year measure scores 
excluding outer fence outliers (first quartile -3 * Interquartile Range 
(IQR) and third quartile + 3 * IQR).\19\
---------------------------------------------------------------------------

    \19\ The first quartile is median of the lower half of the data, 
or in other words the value in the data once arranged in numerical 
order that divides the lower half into two equal parts. The third 
quartile is the median of the upper half of the data.
---------------------------------------------------------------------------

    We propose to specify in the definition the criteria used to 
identify the values that correspond to the outer fences which are used 
to identify extreme outliers in the data. Outer fence outliers use 
established statistical criteria for the determination of the boundary 
values that correspond to the outer fences. The outer fences are the 
boundary values for an outer fence outlier such that any measure score 
that either exceeds the value of the upper outer fence (third quartile 
+ 3*IQR) or that is less than the lower outer fence (first quartile -3 
* IQR) is classified as an outer fence outlier and excluded from the 
determination of the value of the restricted range cap.
     Restricted range cap is a cap applied to non-CAHPS 
measures that restricts movement of the current year's measure-
threshold-specific cut point to no more than the stated percentage of 
the restricted range of a measure calculated using the prior year's 
measure score distribution.
    We welcome comments on these definitions.
c. Measure-Level Star Ratings (Sec. Sec.  422.166(a), 423.186(a))
    At Sec. Sec.  422.166(a) and 423.186(a) we codified the methodology 
for calculating Star Ratings at the measure level. The methodology for 
non-CAHPS measures employs a hierarchical clustering algorithm to 
identify the gaps that exist within the distribution of the measure-
specific scores to create groups (clusters) that are then used to 
identify the cut points. The Star Ratings categories are designed such 
that the scores in the same Star Ratings category are as similar as 
possible and the scores in different Star Ratings categories are as 
different as possible. The current methodology uses only data that

[[Page 55019]]

correspond to the measurement period of the data used for the current 
Star Ratings program. The cut points, as implemented now, are 
responsive to changes in performances from one year to the next. 
Changes in the measure-level specific cut points across a Star Ratings 
year reflect lower or higher measure performance than the prior year, 
as well as shifts in the distribution of the scores.
    In the April 2018 final rule, CMS detailed the goals of the Star 
Ratings program. The overarching goals of the Star Ratings program and 
the specific sub-goals of setting cut points serve as the rationale for 
any proposed changes.
    The Star Ratings display quality information on Medicare Plan 
Finder to help beneficiaries, families, and caregivers make informed 
choices by being able to consider a plan's quality, cost, and coverage; 
to provide information for public accountability; to incentivize 
quality improvement; to provide information to oversee and monitor 
quality; and to accurately measure and calculate scores and stars to 
reflect true performance. In addition, pursuant to section 1853(o) of 
the Act and the Medicare Program; Changes to the Medicare Advantage and 
the Medicare Prescription Drug Benefit Programs for Contract Year 2012 
and Other Changes Final Rule (76 FR 21485 through 21489), the Star 
Ratings are also used to assign Quality Bonus Payments as provided in 
Sec.  422.558(d).
    To separate a distribution of measure scores into distinct groups 
or star categories, a set of values must be identified to separate one 
group from another group. The set of values that break the distribution 
of the scores into non-overlapping groups is referred to as a set of 
cut points. The primary goal of any cut point methodology is to 
disaggregate the distribution of scores into discrete categories such 
that each grouping accurately reflects true performance.
    The current MA Star Ratings methodology converts measure-specific 
scores to measure-level Star Ratings so as to categorize the most 
similar scores within the same measure-level Star Rating while 
maximizing the differences across measure-level Star Ratings. To best 
serve their purpose, the Star Ratings categories must capture 
meaningful differences in quality across the Star Ratings scale and 
minimize the risk of misclassification. For example, it would be 
considered a misclassification if a ``true'' 4-star contract were 
scored as a 3-star contract, or vice versa, or if nearly-identical 
contracts in different measure-level star categories were mistakenly 
identified. CMS currently employs hierarchical clustering to identify 
the cut points for non-CAHPS measures to ensure that the measure-level 
Star Ratings accurately reflect true performance and provide a signal 
of quality and performance on Medicare Plan Finder to empower 
beneficiaries, families, and caregivers to make informed choices about 
plans that would best align with their priorities.
    We solicited comments regarding the approach to convert non-CAHPS 
measure scores to measure-level Star Ratings (82 FR 56397 through 
56399). We requested stakeholders to provide input on the desirable 
attributes of cut points and recommendations to achieve the suggested 
characteristics. In addition, we requested that commenters either 
suggest alternative cut point methodologies or provide feedback on 
several options detailed in the regulation such as setting the cut 
points by using a moving average, using the mean of the 2 or 3 most 
recent years of data, or restricting the size of the change in the cut 
points from 1 year to the next.
    The commenters identified several desirable attributes for the cut 
points that included stability, predictability, attenuation of the 
influence of outliers, restricted movement of the cut points from 1 
year to the next, and either pre-announced cut points before the plan 
preview period or pre-determined cut points before the start of the 
measurement period. In the April 2018 final rule (83 FR 16567), we 
expressed appreciation for our stakeholders' feedback and stated our 
intent to use it to guide the development of an enhanced methodology. 
So as not to implement a methodology that may inordinately increase the 
risk of misclassification, CMS has analyzed and simulated alternative 
options to assess the impact of any enhancements on the Star Ratings 
program and assess the degree to which the alternative methodology 
captures the desirable attributes that were identified by stakeholders. 
While CMS balances the request of stakeholders to increase 
predictability and stability of the cut points from year to year, the 
goals of the Star Ratings program, the integrity of the methodology, 
and the intent of the cut point methodology remain the same. The intent 
of the cut point methodology is still to accurately measure true 
performance. We intend our proposal to serve these goals and solicit 
comment on whether we have met our objective in this respect.
    A Technical Expert Panel (TEP), comprised of representatives across 
various stakeholder groups, convened on May 31, 2018 to provide 
feedback to CMS's Star Ratings contractor (currently RAND Corporation) 
on the Star Ratings framework, topic areas, methodology, and 
operational measures. Information about the current members of the TEP 
can be found at https://www.rand.org/content/dam/rand/pubs/conf_proceedings/CF300/CF391/RAND_CF391.members.pdf. One topic 
discussed was possible enhancements to the clustering methodology used 
to convert non-CAHPS measure scores to measure-level Star Ratings. The 
TEP provided input on the importance of the cut point attributes of 
predictability and stability. To increase the level of predictability, 
several TEP members discussed the use of caps. Further, the TEP 
suggested that the influence of outliers should be addressed in the 
methodology. While some TEP members spoke to the utility of pre-
announced thresholds to allow contracts to make decisions, other TEP 
members stated that there are real risks in doing so. After reviewing 
the data that would need to be employed for pre-announced cut points 
along with the measure score and cut point trends, TEP members were 
concerned about using older data to predict cut points. For example, 
high performers may stop their focus on particular measures if they 
knew in advance that they would receive a 5-star rating. Likewise, 
contracts whose measure performance would not reach high Star Ratings 
may stop working on achieving a goal perceived to be unattainable. Some 
of the TEP members requested that CMS, in addition to addressing 
outliers, establish guardrails so cut points do not fluctuate too much 
from year to year. Additional information about the TEP can be found at 
http://www.rand.org/star-ratings-analyses.
    CMS has examined numerous alternative methodologies to minimize the 
influence of outliers, to restrict the upward or downward movement of 
cut points from one year to the next, and to simulate prediction models 
to allow either limited advance notice or full advance notice of cut 
points prior to the measurement period. As part of our analyses, we 
have analyzed trends in performance across the Star Ratings measures. 
The ability to announce cut points before (full advance notice) or 
during (partial advance notice) the measurement period requires the use 
of modeling and older data to project the cut points, as well as the 
need for an alternative methodology for new measures introduced to the 
Star Ratings program. Modeling is challenging given differences in the 
performance trends over time across the Star Ratings measures, thus a 
single approach for

[[Page 55020]]

predicting all future performance does not accurately reflect 
performance for all measures.
    Using prediction models to establish future cut points may have 
unintended consequences and misalign with the underlying goals of the 
Star Ratings program and sub-goals of setting cut points. Predicting 
future cut points using older data can lead to both over or under-
estimations of performance which results in a distorted signal of the 
Star Ratings. Over projections in the cut points will result in higher 
cut points and lower measure-level Star Ratings. Conversely, under 
projections can lead to lower cut points and higher measure-level Star 
Ratings. The risk of misclassification is heightened when the accuracy 
of the projected cut points is diminished. The use of older data for 
setting cut points does not allow the Star Ratings to be responsive to 
changes in performance in the current year. Furthermore, setting cut 
points in advance of the measurement year may lead to MA organizations 
and Part D sponsors not focusing on certain areas once they achieve a 
set threshold, eliminating incentives for improvement.
    For example, CMS provided incentives for eligible providers to 
adopt certified Electronic Health Records (EHRs) and report quality 
measures under the Meaningful Use (MU) initiative. There were large 
gains in performance for a subset of Star Ratings measures that were 
enabled through the EHR, a structural change among health care 
providers in the delivery of care. Further, an examination of 
performance over time of EHR-enabled measures indicates a decrease in 
variability of measure scores with contract performance converging 
toward greater uniformity. Modeling future performance using past 
performance would fail to capture the large gains in performance in the 
EHR-enabled measures, which would have resulted in cut points that were 
artificially low and measure-level Star Ratings that were higher than 
true performance.
    Pre-announced cut points for other subsets of measures in the Star 
Ratings would present different challenges as compared to EHR-enabled 
measures. Performance on new measures typically has more room to 
improve, and large year-to-year gains are possible and desirable from a 
quality improvement perspective. Projecting cut points using older data 
from periods of rapid improvement would artificially inflate future cut 
points which would cause artificially low measure-level Star Ratings. 
Measures that demonstrate very slow, consistent growth over time could 
have projected cut points that are artificially high. The further the 
projection is in advance of the measurement period, the larger the 
potential for unintended consequences. In addition, there exists the 
possibility of external factors, other than structural, that are 
unanticipated and unforeseen that could impact the distribution of 
scores for which modeling would not capture.
    Some of the challenges of full or partial advance notice include 
all of the following:
     Older data often do not accurately reflect current 
performance.
     The trend in average performance is not always linear.
     External or structural factors may occur that can lead to 
substantial changes from period to period rather than steady slow year-
over-year improvement.
     Larger gains in performance year to year exist for 
relatively new measures, compared to more established measures.
     The rate of change is less likely to be linear at lower 
threshold levels where contracts have greater opportunities for 
improvement.
     Decreasing variation in measure scores reflects greater 
improvements in performance for lower versus higher-performing 
contracts--contract performance is converging over time toward greater 
uniformity.
    These challenges are critical to consider because if we modify the 
current methodology to predict (or set) cut points using older data and 
a single model across all measures, we risk causing unintended 
consequences such as significantly diminishing incentives for 
improvement or having the Star Ratings misaligned with changes in 
performance that may be due to external or structural factors.
    Based on stakeholder feedback and analyses of the data, we propose 
two enhancements to the current hierarchical clustering methodology 
that is used to set cut points for non-CAHPS measure stars in 
Sec. Sec.  422.166(a)(2)(i) and 423.186(a)(2)(i). The first proposed 
enhancement is mean resampling. With mean resampling, measure-specific 
scores for the current year's Star Ratings are randomly separated into 
10 equal-sized groups. The hierarchical clustering algorithm is done 10 
times, each time leaving one of the 10 groups out. The method results 
in 10 sets of measure-specific cut points. The mean cut point for each 
threshold per measure is calculated using the 10 values. Mean 
resampling reduces the sensitivity of the clustering algorithm to 
outliers and reduces the random variation that contributes to 
fluctuations in cut points and, therefore, improves the stability of 
the cut points over time. Mean resampling uses the most recent year's 
data for the determination of the cut points; thus, it does not require 
assumptions for predicting cut points over time and it continues to 
provide incentives for improvement in measure scores. The drawback of 
mean resampling alone is that it does not restrict the movement of the 
cut points, so the attribute of predictability is not fully captured 
with this methodology.
    To increase the predictability of the cut points, we also propose a 
second enhancement to the clustering algorithm: A guardrail for 
measures that have been in the Part C and D Star Ratings program for 
more than 3 years. The proposed guardrail of 5 percent would be a bi-
directional cap that restricts movement both above and below the prior 
year's cut points. A 5 percent cap restricts the movement of a cut 
point by imposing a rule for the maximum allowable movement per measure 
threshold; thus, it allows a degree of predictability. The trade-off 
for the predictability provided by bi-directional caps is the inability 
to fully keep pace with changes in performance across the industry. 
While cut points that change less than the cap would be unbiased and 
keep pace with changes in the measure score trends, changes in overall 
performance that are greater than the cap would not be reflected in the 
new cut points. A cap on upward movement may inflate the measure-level 
Star Ratings if true gains in performance improvements cannot be fully 
incorporated in the current year's ratings. Conversely, a cap on 
downward movement may decrease the measure-level Star Ratings since the 
ratings would not be adjusted fully for downward shifts in performance.
    A measure-threshold-specific cap can be set multiple ways and the 
methodology may differ based on whether the measure is scored on a 0 to 
100 scale or an alternative scale. For measures on a 0 to 100 scale, 
the cap can restrict the movement of the measure cut points from one 
year to the next by a fixed percentage, such as an absolute 5 
percentage point cap. For measures not on a 0 to 100 scale, the cap can 
be determined for each measure by using a percentage of the measure's 
score distribution or a subset of the distribution, such as 5 percent 
of the range of the prior year scores without outer fence outliers, 
referred to as a restricted range cap. Alternatively, a restricted 
range cap can be used for all measures, regardless of scale, using a 
cap based on the range of the prior year scores without outliers. We 
propose an absolute 5 percentage point cap for all

[[Page 55021]]

measures scored on a 0 to 100 scale and 5 percent of the restricted 
range for all measures not on a 0 to 100 scale, but we are also 
considering alternatives to the 5 percent cap, such as using 3 percent; 
we believe that any cap larger than 5 percent would not provide the 
predictability requested by stakeholders that we are trying to 
incorporate. While smaller caps provide more predictability, it is more 
likely that the cut points will not keep pace with changes in measure 
scores in the industry as the cap size gets smaller, and may require 
future larger one-time adjustments to reset the measure cut points. 
Therefore, we are not sure that a smaller cap, even at a 3 percent 
threshold, would meet our programmatic needs and goals of providing 
accurate pictures of the underlying performance of each contract and 
its comparison to other contracts. We are proposing 5 percent because 
the use of the cap allows predictability of the cut points from year to 
year, but also balances the desire to continue to create incentives for 
contracts to focus on the quality of care of their enrollees and strive 
to improve performance. If the cut points are not keeping pace with the 
changes in the scores over time, CMS may need to propose in the future 
how to periodically adjust the cut points to account for significant 
changes in industry performance.
    In summary, we propose to modify Sec. Sec.  422.166(a)(2)(i) and 
423.186(a)(2)(i) to add mean resampling to the current clustering 
algorithm to attenuate the effect of outliers, and measure-specific 
caps in both directions to provide guardrails so that the measure-
threshold-specific cut points do not increase or decrease more than the 
cap from one year to the next. We propose a 5 percentage point absolute 
cap for measures on a 0 to 100 scale and a 5 percent restricted range 
cap ((0.05) * (maximum value-minimum value), where the maximum and 
minimum values are calculated using the prior year's measure score 
distributions excluding outer fence outliers). For any new measures 
that have been in the Part C and D Star Rating program for 3 years or 
less, we propose to use the hierarchal clustering methodology with mean 
resampling for the first 3 years in the program in order to not cap the 
initial increases in performance that are seen for new measures. We 
welcome comments on this proposal, including comments on the percentage 
used for the cap, whether the cap should be an absolute percentage 
difference for measures on a 0 to 100 scale, whether the cap should be 
a percent of the range of prior year scores without outliers for all 
measures or for the subset of measures not on a 0 to 100 scale, whether 
the cap should be in both the upward and downward directions, and 
alternative methods to account for outliers.
d. Updating Measures (Sec. Sec.  422.164, 423.184)
    In the April 2018 final rule (83 FR 16537), CMS stated that due to 
the regular updates and revisions made to measures, CMS would not 
codify a list of measures and specifications in regulation text; CMS 
adopted a final list of measures for the contract year 2019 measurement 
period and indicated how changes to that list--additions, updates, 
removals--would be done in the future, using the Advance Notice and 
Rate Announcement under section 1853(b) of the Act or rulemaking. The 
regulations at Sec. Sec.  422.164 and 423.184 specify the criteria and 
procedure for adding, updating, and removing measures for the Star 
Ratings program. CMS lists the measures used for the Star Ratings each 
year in the Technical Notes or similar guidance document with 
publication of the Star Ratings. In this rule, CMS is proposing measure 
changes to the Star Ratings program for performance periods beginning 
on or after January 1, 2020 and performance periods beginning on or 
after January 1, 2021. For new measures and substantive updates to 
existing measures, as described at Sec. Sec.  422.164(c) and (d)(2), 
and Sec. Sec.  423.184(c) and (d)(2), CMS will initially announce and 
solicit comment through the process described for changes in and 
adoption of payment and risk adjustment policies in section 1853(b) of 
the Act and subsequently propose these measures through rulemaking to 
be added to the Star Ratings program. Proposals here for substantive 
updates have been discussed in prior Call Letters (contract years 2018 
and 2019). We will continue the process of announcing our intent with 
regard to measure updates in future Call Letters. Any measures with 
substantive updates must be on the display page for at least 2 years 
before use in the Star Ratings program. For new measures and measures 
with substantive updates, as described at Sec. Sec.  422.166(e)(2) and 
423.186(e)(2), the measure will receive a weight of 1 for the first 
year in the Star Ratings program. In the subsequent years, the measure 
will be assigned the weight associated with its category.
(1) Proposed Measure Updates
(a) Controlling High Blood Pressure (Part C)
    Due to the release of new hypertension treatment guidelines from 
the American College of Cardiology and American Heart Association,\20\ 
NCQA has implemented updates to the Controlling High Blood Pressure 
measure for HEDIS 2019. NCQA has revised the blood pressure target to 
<140/90 mmHg. NCQA has also made some structural changes to the measure 
that included allowing two outpatient encounters to identify the 
denominator and removing the medical record confirmation for 
hypertension, allowing the use of telehealth services for one of the 
outpatient encounters in the denominator, adding an administrative 
approach that utilizes CPT category II codes for the numerator, and 
allowing remote monitoring device readings for the numerator. Given the 
change to the blood pressure target and our rules for moving measures 
with substantive changes to the display page, this measure will be 
moved to the display page for the 2020 and 2021 Star Ratings. We 
propose to return this measure as a measure with substantive updates by 
the measure steward (NCQA) to the 2022 Star Ratings using data from the 
2020 measurement year with, as required by Sec.  422.164(d)(2) and 
Sec.  422.166(e)(2), a weight of 1 for the first year and a weight of 3 
thereafter.
---------------------------------------------------------------------------

    \20\ See Whelton P.K., Carey R.M., Aronow W.S., et al. (2018). 
Guideline for the prevention, detection, evaluation, and management 
of high blood pressure in adults: A report of the American College 
of Cardiology/American Heart Association Task Force on Clinical 
Practice Guidelines. Journal of the American College of Cardiology. 
71(19): e127-e248. Available at http://www.onlinejacc.org/content/71/19/e127?_ga=2.143510773.1362500146.1536262802-126396490.1536262802.
---------------------------------------------------------------------------

(b) MPF Price Accuracy (Part D)
    Continued evaluation of sponsors' pricing data used by 
beneficiaries is important; therefore, we propose to make enhancements 
to the MPF Price Accuracy measure to better measure the reliability of 
a contract's MPF advertised prices. In accordance with Sec.  
423.184(d)(2), the substantively updated measure would be a display 
measure for 2020 and 2021 and we are proposing to use it in the 2022 
Star Ratings in place of the existing MPF Price Accuracy measure, which 
will remain in the Star Ratings until that replacement under Sec.  
423.184(d)(2). The proposed update would measure the magnitude of 
difference, as well as the frequency of price differences. We propose 
to implement the following changes for this measure:

[[Page 55022]]

     Factor both how much and how often prescription drug event 
(PDE) prices exceeded the prices reflected on the MPF by calculating a 
contract's measure score as the mean of the contract's Price Accuracy 
and Claim Percentage scores, based on the indexes in this rule:
    ++ The Price Accuracy index compares point-of-sale PDE prices to 
plan-reported MPF prices and determines the magnitude of differences 
found. Using each PDE's date of service, the price displayed on MPF is 
compared to the PDE price. The Price Accuracy index is computed as:

(Total amount that PDE is higher than MPF + Total PDE cost)/(Total PDE 
cost)

    ++ The Claim Percentage index measures the percentage of all PDEs 
that meet the inclusion criteria with a total PDE cost higher than 
total MPF cost to determine the frequency of differences found. The 
Claim Percentage index is computed as:

(Total number of claims where PDE is higher than MPF)/(Total number of 
claims)

    ++ The best possible Price Accuracy index is 1 and the best 
possible Claim Percentage index is 0. This indicates that a plan did 
not have PDE prices greater than MPF prices.
    ++ A contract's measure score is computed as:

--Price Accuracy Score = 100 - ((Price Accuracy Index - 1) * 100)
--Claim Percentage Score = (1 - Claim Percentage Index) * 100
--Measure Score = (0.5 * Price Accuracy Score) + (0.5 * Claim 
Percentage Score)

     Increase the claims included in the measure:
    ++ Expand the days' supply of claims included from 30 days to 
include claims with fills of 28-34, 60-62, or 90-100 days.
    ++ Identify additional retail claims using the PDE-reported 
Pharmacy Service Type code. Claims for pharmacies that are listed as 
retail in the MPF Pharmacy Cost file and also have a pharmacy service 
type on the PDE of either Community/Retail or Managed Care Organization 
(MCO) will be included.
     Round a drug's MPF cost to 2 decimal places for comparison 
to its PDE cost. Post-rounding, the PDE cost must exceed the MPF cost 
by at least one cent ($0.01) in order to be counted towards the 
accuracy score (previously, a PDE cost which exceeded the MPF cost by 
$0.005 was counted). A contract may submit an MPF unit cost up to 5 
digits, but PDE cost is always specified to 2 decimal places.
    Under our proposed update, PDEs priced lower than the MPF display 
pricing will continue to be ignored and will not have an impact on the 
measure score or rating. Only price increases are counted in the 
numerator for this measure. We propose to add this updated measure to 
the 2022 Star Ratings based on the 2020 measurement year with a weight 
of 1.
(3) Plan All-Cause Readmissions (Part C)
    NCQA is modifying the Plan All-Cause Readmissions measure for HEDIS 
2020 (measurement year 2019). The measure assesses the percentage of 
hospital discharges resulting in unplanned readmissions within 30 days 
of discharge. The changes made by NCQA are: Adding observation stays as 
hospital discharges and readmissions in the denominator and the 
numerator; and removing individuals with high frequency 
hospitalizations. These changes were implemented by the measure steward 
(NCQA) based on the rise in observation stays to ensure the measure 
better reflects patient discharge and readmission volumes. Removing 
individuals with high frequency hospitalizations from the measure 
calculation allows the readmissions rates not to be skewed by this 
population. To date, CMS has only included the 65+ age group in the 
Plan All-Cause Readmissions measure. CMS is proposing to combine the 
18-64 and 65+ age groups as the updated measure specifications are 
adopted and to use NCQA's new recommendation of 150 as the minimum 
denominator. Given the substantive nature of the proposed updates for 
this measure, it would be moved to display for the 2021 and 2022 Star 
Ratings under our proposal and Sec.  422.164(d)(2). We propose to 
return this measure as a measure with substantive updates by the 
measure steward (NCQA) to the 2023 Star Ratings using data from the 
2021 measurement year with, as required by Sec.  422.164(d)(2) and 
Sec.  422.166(e)(2), a weight of 1 for the first year and a weight of 3 
thereafter.
(4) Improvement Measures (Parts C and D)
    The process for identifying eligible measures to be included in the 
improvement measure scores is specified as a series of steps at 
Sec. Sec.  422.164(f)(1) and 423.184(f)(1). As part of the first step, 
the measures eligible to be included in the Part C and D improvement 
measures are identified. Only measures that have a numeric score for 
each of the 2 years examined are included. We propose to add an 
additional rule at Sec. Sec.  422.164(f)(1)(iv) and 423.184(f)(1)(iv) 
that would exclude any measure that receives a measure-level Star 
Rating reduction for data integrity concerns for either the current or 
prior year from the improvement measure(s). The proposed new standard 
would ensure that the numeric scores for each of the 2 years are 
unbiased. If a measure's measure-level Star Rating receives a reduction 
for data integrity concerns in either of the 2 years, the measure would 
not be eligible to be included in the improvement measure(s) for that 
contract.

Table 1: Proposed Additions and Updates to Individual Star Rating 
Measures

    The measure descriptions listed in the tables are high-level 
summaries. The Star Ratings measure specifications supporting document, 
Medicare Part C & D Star Ratings Technical Notes, provides detailed 
specifications for each measure. Detailed specifications include, where 
appropriate, the identification of a measure's: (1) Numerator, (2) 
denominator, (3) calculation, (4) time frame, (5) case-mix adjustment, 
and (6) exclusions. The Technical Notes document is updated annually. 
In addition, where appropriate, the Data Source descriptions listed in 
this table reference the technical manuals of the measure stewards. The 
annual Star Ratings are produced in the fall of the prior year to 
assist beneficiaries in choosing their health and drug plan during the 
annual open enrollment. For example, Star Ratings for the year 2022 are 
produced in the fall of 2021.
    1. If a measurement period is listed as `the calendar year 2 years 
prior to the Star Ratings year' and the Star Ratings year is 2022, the 
measurement period is referencing the January 1, 2020 to December 31, 
2020 period.
    2. For CAHPS, HOS, and HEDIS/HOS measures, the measurement period 
is listed as `most recent data submitted for the survey of enrollees.' 
See measure stewards' technical manuals, as referenced in Data Source 
column, for the specific measurement periods of the most recent data 
submitted.
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[[Page 55025]]

(5) Data Integrity
    At Sec. Sec.  422.164(g)(1)(iii) and 423.184(g)(1)(ii), CMS 
codified a policy to make scaled reductions to the Star Ratings for a 
contract's Part C or Part D appeals measures because the relevant 
Independent Review Entity (IRE) data are not complete based on the 
Timeliness Monitoring Project (TMP) or audit information. The reduction 
is applied to the measure-level Star Ratings for the applicable appeals 
measures. We propose adding an additional regulatory provision at 
Sec. Sec.  422.164(g)(1)(iii)(O) and 423.184(g)(1)(ii)(M) that would 
assign a 1-star rating to the applicable appeals measure(s) if a 
contract fails to submit TMP data for CMS's review to ensure the 
completeness of their IRE data. We believe it is appropriate to assume 
that there is an issue related to the performance when the MA 
organization or Part D plan sponsor has refused to provide information 
for the purposes of our oversight of the compliance with the appeals 
requirements. Our proposal to modify measure-specific ratings due to 
data integrity issues is separate from any CMS compliance or 
enforcement actions related to a sponsor's deficiencies; these rating 
reductions are necessary to avoid falsely assigning a high star to a 
contract, especially when the MA organization or Part D sponsor has 
refused to submit data for us to evaluate performance in this area and 
to ensure that the data submitted to the IRE are complete.
(6) Review of Sponsors' Data
    At Sec. Sec.  422.164(h)(1) and 423.184(h)(1), CMS proposes to 
codify a policy regarding the deadlines for an MA organization or Part 
D plan sponsor to request CMS or the IRE to review a contract's appeals 
or CMS to review a contract's Complaints Tracking Module (CTM) data. 
For example, information regarding the Part C and Part D appeals 
process is available to MA organizations and is updated daily on the 
IRE website. Additionally, sponsors can access the Part D Appeals 
Reports under the Performance Metrics pages in HPMS. To allow enough 
time for the IRE to make any necessary changes to ensure the accuracy 
of a contract's measure score, we are proposing that requests for CMS 
or the IRE to review contract data must be received no later than June 
30 of the following year in order to have time to use accurate 
information in the Star Ratings calculations (for example, changes to 
contract year 2018 appeals data must be made by June 30, 2019 for the 
2020 Star Ratings). Reopenings are not taken into account under this 
proposed deadline for corrections to the IRE data. When the decision is 
evaluated for purposes of the appeals measures, if a reopening occurs 
and is decided prior to May 1, the revised determination is used in 
place of the original reconsidered determination. If the revised 
determination occurs on or after May 1, the original reconsidered 
determination is used.
    Similarly, we propose that any requests for adjustments following 
CMS's CTM Standard Operating Procedures for the complaints measures be 
made by June 30 of the following year in order for the changes to be 
reflected in a contract's Star Ratings data (for example, changes to 
contract year 2018 complaints data must be made by June 30, 2019 for 
the 2020 Star Ratings).
e. Extreme and Uncontrollable Circumstances
    Extreme and uncontrollable circumstances such as natural disasters 
can directly affect Medicare beneficiaries and providers, as well as 
the Parts C and D organizations that provide them with important 
medical care and prescription drug coverage. These circumstances may 
negatively affect the underlying operational and clinical systems that 
CMS relies on for accurate performance measurement in the Star Ratings 
program, all without fault on the part of the MA organization or Part D 
plan sponsor. We propose to adjust the Star Ratings to take into 
account the effects of extreme and uncontrollable circumstances that 
occurred during the performance or measurement period. CMS is also 
concerned that certain natural disasters and emergencies may interfere 
in plans' abilities to provide services for their enrollees. In this 
rule, we describe proposed policies for identifying affected contracts 
and adjusting the Star Ratings measures. These policies are largely the 
same as those described in the 2019 final Call Letter, with the 
substantive exception of eliminating the difference-in-differences 
adjustment for survey data. The difference-in-differences adjustment 
showed no consistent, negative impact of extreme and uncontrollable 
circumstances on the 2019 Star Ratings; therefore, we are eliminating 
this adjustment to simplify the methodology for calculating Star 
Ratings in cases of extreme and uncontrollable circumstances. We 
propose to codify a series of special rules for calculation of the Star 
Ratings of certain contracts in certain extreme and uncontrollable 
circumstances in paragraph (i) of Sec. Sec.  422.166 and 423.186.
    We propose that the adjustments be tailored to the specific areas 
experiencing the extreme and uncontrollable circumstance in order to 
avoid over-adjustment or adjustments that are unnecessary. Health and 
drug plans can serve enrollees across large geographic areas, and thus 
they may not be impacted in the same manner as healthcare providers 
such as hospitals or medical centers in specific physical locations. To 
ensure that the Star Ratings adjustments focus on the specific 
geographic areas that experienced the greatest adverse effects from the 
extreme and uncontrollable circumstance and are not applied to areas 
sustaining little or no adverse effects, our proposal is to target the 
adjustments to specific contracts and to further specify and limit the 
adjustments.
(1) Identification of Affected Contracts
    In paragraph (i)(1) of Sec. Sec.  422.166 and 423.186, we propose 
to identify MA and Part D contracts affected by extreme and 
uncontrollable circumstances during the performance or measurement 
period that may have affected their performance on Star Ratings 
measures or their ability to collect the necessary measure-level data. 
These ``affected contracts'' would be the contracts eligible for the 
adjustments specified in this proposed rule to take into account the 
effects of the extreme and uncontrollable circumstances. For an MA or 
Part D contract to be considered an affected contract under our 
proposal, the contract would need to meet all of the following 
criteria:
     The contract's service area is within an ``emergency 
area'' during an ``emergency period'' as defined in Section 1135(g) of 
the Act.
     The contract's service area is within a county, parish, 
U.S. territory or tribal area designated in a major disaster 
declaration under the Stafford Act and the Secretary exercised 
authority under section 1135 of the Act based on the same triggering 
event(s).
     A certain minimum percentage (25 percent for measure star 
adjustments or 60 percent for exclusion from cut point and Reward 
Factor calculations) of the enrollees under the contract must reside in 
a Federal Emergency Management Agency (FEMA)-designated Individual 
Assistance area at the time of the extreme and uncontrollable 
circumstance.
    We propose to identify an area as having experienced extreme and 
uncontrollable circumstances if it is within an ``emergency area'' and 
``emergency period'' as defined in section 1135(g) of the Act, and also 
is

[[Page 55026]]

within a county, parish, U.S. territory or tribal government designated 
in a major disaster declaration under the Stafford Act, and the 
Secretary exercised authority under section 1135 of the Act based on 
the same triggering event(s) (https://www.phe.gov/emergency/news/healthactions/section1135/Pages/default.aspx). Major disaster areas are 
identified and can be located on FEMA's website at https://www.fema.gov/disasters. To ensure the policy is applied to those 
contracts most likely to have experienced the greatest adverse effects, 
we propose to narrow it to apply to contracts with a certain minimum 
percentage of enrollees residing in an area declared as an Individual 
Assistance area because of the disaster declaration. Individual 
Assistance includes assistance to individuals and households, crisis 
counseling, disaster case management, disaster unemployment assistance, 
disaster legal services, and the disaster Supplemental Nutrition 
Assistance Program. We focus on enrollees residing in counties eligible 
for Individual Assistance because of a major disaster, because most 
Star Ratings measures are based on services provided directly to 
beneficiaries in their local area. Health and drug plans can serve 
enrollees across large geographic areas, and thus they may not be 
impacted in the same manner as healthcare providers such as hospitals 
or medical centers in specific physical locations. Therefore, we 
believe adjustments to the Star Ratings are most appropriately targeted 
to contracts serving beneficiaries who were eligible for individual and 
household assistance because of the disaster declaration.
    For adjustments, at least 25 percent or 60 percent of the enrollees 
under the contract must reside in Individual Assistance areas 
identified because of the extreme and uncontrollable circumstances. 
This ensures that the adjustments are limited to contracts that we 
believe may have experienced a real impact from the extreme and 
uncontrollable circumstance in terms of operations or ability to serve 
enrollees. In calculations for the 2019 Star Ratings, we observed that 
contracts tend to have either very few enrollees impacted or most of 
their enrollees impacted due to the nature of contracts either covering 
a broad region or a localized area. If 1 out of 4 enrollees was 
impacted during the period of the year when the disaster hit, we 
believe there is a small chance that scores may have been impacted. The 
selection of the exclusion of numeric measures scores from contracts 
with 60 percent or more enrollees impacted from the determination of 
the cut points is conservative in case scores are impacted in contracts 
where a clear majority or all of the enrollees are impacted. Using the 
Individual Assistance major disaster declaration as a requirement for 
the extreme and uncontrollable event policy also ensures that the 
policy applies only when the event is extreme, meriting the use of 
special adjustments to the Star Ratings.
    We propose that contracts that do not meet the definition of an 
``affected contract'' would not be eligible for any adjustments based 
on the occurrence of the extreme and uncontrollable circumstances. 
However, meeting the criteria to be an affected contract is not 
sufficient for all the adjustments we propose.
(2) CAHPS Adjustments
    For CAHPS, we propose two different types of special rules for 
affected contracts: exemption from having to administer the CAHPS 
survey or adjustments to the Star Ratings on the CAHPS measures if the 
affected contract must administer the CAHPS survey. CAHPS measures are 
based on a survey conducted early in the year in which the Star Ratings 
are released that is, the year before the year to which the Star 
Ratings are applicable. For example, the CAHPS survey in early 2019 
will be used for the 2020 Star Ratings, which are released in late 
2019, before the annual coordinated election period for 2020.
    We propose at Sec. Sec.  422.166(i)(2)(i) and 423.186(i)(2)(i), 
that an MA and Prescription Drug Plan contract, even if it is an 
affected contract, must administer the CAHPS survey unless the contract 
demonstrates to CMS that the required sample for the CAHPS survey 
cannot be contacted because a substantial number of the contract's 
enrollees are displaced due to a FEMA-designated disaster in the prior 
calendar year and requests and receives a CMS approved exception. We 
believe that displacement of a substantial number of the contract's 
enrollees would make it practically impossible to contact the required 
sample for the CAHPS survey. For an affected contract that receives the 
exemption from administering the CAHPS survey, we propose at 
422.166(i)(2)(iii) and 423.186(i)(2)(iii) that the affected contract 
would receive the prior year's CAHPS measure stars (and corresponding 
measure scores).
    For other affected contracts, we propose an adjustment to the CAHPS 
scores and Star Ratings based on the administered survey and the 
percentage of enrollees in the affected contract that reside in FEMA-
designated Individual Assistance areas at the time of the extreme and 
uncontrollable circumstance. We propose that affected contracts with at 
least 25 percent of enrollees residing in Individual Assistance areas 
at the time of the extreme and uncontrollable circumstance would 
receive the higher of the previous year's Star Rating or the current 
year's Star Rating (and corresponding measure score) for each CAHPS 
measure (including the annual flu vaccine measure). For example, for 
the 2022 Star Ratings for affected contracts, we would take the higher 
of the 2021 Star Ratings or the 2022 Star Ratings for each CAHPS 
measure. The affected contract would receive the CAHPS measure score 
for the corresponding Star Rating year chosen. We propose the 25 
percent threshold to avoid including contracts with very few enrollees 
impacted. The measure-level scores for contracts with very few 
enrollees impacted should not be adversely affected by these extreme 
and uncontrollable circumstances. If a small percentage of enrollees 
were impacted by an extreme and uncontrollable circumstance, it should 
not have a significant impact on measure scores.
(3) HOS Adjustments
    For the HOS survey, we propose to follow similar procedures as 
CAHPS but due to the follow-up component of HOS, the adjustment would 
be to the Star Ratings for the year after the completion of the follow-
up HOS survey that is administered 2 years after the baseline HOS 
survey. For example, the 2022 Star Ratings are based on data collected 
from April through June 2020 and reflect experiences over the past 12 
months. The data collected in 2021 will be used for the 2023 Star 
Ratings, so responses may reflect the impact of 2020 extreme and 
uncontrollable circumstances and thus, those circumstances may have an 
impact on the 2023 Star Ratings.
    As described at proposed Sec.  422.166(i)(3)(i), an MA contract, 
even if it is an affected contract, must administer the HOS surveys the 
year after the extreme and uncontrollable circumstance unless the 
contract demonstrates to CMS that the required sample cannot be 
contacted because a substantial number of the contract's enrollees are 
displaced due to a FEMA-designated disaster during the measurement 
period and requests and receives a CMS approved exception. For an 
affected contract that receives the exemption from administering the 
HOS survey, we propose at paragraph (i)(3)(iii) that the affected 
contract would receive the prior year's HOS and

[[Page 55027]]

HEDIS-HOS measure stars (and corresponding measure scores).
    We propose at Sec.  422.166(i)(3)(iv) that the affected contracts 
with at least 25 percent of enrollees residing in Individual Assistance 
areas at the time of the extreme and uncontrollable circumstance would 
receive the higher of the previous year's Star Rating or current year's 
Star Rating for each HOS and HEDIS-HOS measure (and corresponding 
measure score) for the Star Ratings 3 years after the eligible extreme 
and uncontrollable circumstance. As an example, for the 2023 Star 
Ratings for contracts affected by an extreme and uncontrollable 
circumstance in 2020, we would take the higher of the 2022 or 2023 Star 
Ratings and corresponding measure score for each HOS and HEDIS-HOS 
measure.
(4) HEDIS Adjustments
    For HEDIS, we propose that an MA contract, even if an affected 
contract, would be required to report HEDIS data to CMS unless the 
contract demonstrates to CMS an inability to obtain both administrative 
and medical record data required for HEDIS measures due to a FEMA-
designated disaster in the prior calendar year and requests and 
receives a CMS approved exception. All contracts in FEMA-designated 
disaster areas can work with NCQA to request modifications to the 
samples for measures that require medical record review. For affected 
contracts that have service areas with at least 25 percent of enrollees 
in a FEMA-designated Individual Assistance area at the time of the 
extreme and uncontrollable circumstance, we propose to take the higher 
of the previous year's Star Rating or current year's Star Rating (and 
corresponding measure score) for each HEDIS measure. For example, for 
the 2022 Star Ratings for affected contracts we would take the higher 
of the 2021 or 2022 Star Ratings for each HEDIS measure.
(5) New Measure Adjustments
    At proposed Sec. Sec.  422.166(i)(5) and 423.186(i)(3), we propose 
to implement a hold harmless provision for new Star Ratings measures if 
the inclusion of all applicable new measure(s) brings down the summary 
and/or overall rating. That is, for affected contracts with at least 25 
percent of enrollees in a FEMA-designated Individual Assistance area at 
the time of the extreme and uncontrollable circumstance, all the new 
measures would be excluded from the calculation of the summary and/or 
overall rating if their inclusion brings a contract's summary (or in 
the case of MA-PD contracts, the overall) rating down.
(6) Other Star Ratings Measure Adjustments
    For all other measures for affected contracts with at least 25 
percent of enrollees in a FEMA-designated Individual Assistance area at 
the time of the extreme and uncontrollable circumstance (that occurs 
during the measurement or performance period), we propose to take the 
higher of the previous or current year's measure Star Rating (and then 
use the corresponding measure score), as described at proposed 
Sec. Sec.  422.166(i)(6) and 423.186(i)(4). For example, for the 2022 
Star Ratings for affected contracts, we would take the higher of the 
2021 or 2022 Star Ratings. We propose to exclude from this adjustment 
policy the Part C Call Center--Foreign Language Interpreter and TTY 
Availability and Part D Call Center--Foreign Language Interpreter and 
TTY Availability measures, except for extreme and uncontrollable 
circumstances where there are continuing communications issues related 
to loss of electricity and damage to infrastructure during the call 
center study. These measures and the underlying performance are 
completely in the plan's control; we believe therefore that there 
should generally be no impact from the declaration of an extreme and 
uncontrollable circumstance on plan performance in these areas.
(7) Exclusion From Improvement Measures
    Contracts must have data for at least half of the measures \21\ 
used to calculate the Part C or Part D improvement measures to be 
eligible to receive a rating in each improvement measure. For affected 
contracts that revert back to the data underlying the previous year's 
Star Rating for a particular measure, we propose that measure would be 
excluded from both the count of measures (for the determination of 
whether the contract has at least half of the measures needed to 
calculate the relevant improvement measure) and the applicable 
improvement measures for the current and next year's Star Ratings as 
stated at proposed Sec. Sec.  422.166(i)(7) and 423.186(i)(5). That is, 
we would follow our usual rule where to receive a Star Rating in the 
improvement measures, a contract must have measure scores for both 
years in at least half of the required measures used to calculate the 
Part C improvement or Part D improvement measures. The use of the data 
from the previous year's Star Ratings means that there is no measure 
score from the current year's Star Ratings, so the usual rule would 
eliminate the measure from consideration. As an example, for affected 
contracts that revert back to the 2021 Star Ratings data for a 
particular measure for the 2022 Star Ratings, we would exclude that 
measure from the count of measures and applicable improvement measures 
for the 2022 and 2023 Star Ratings.
---------------------------------------------------------------------------

    \21\ See Sec. Sec.  422.164(f) and 423.184(f) for more 
information on Part C and Part D improvement measures.
---------------------------------------------------------------------------

(8) Missing Data
    Except in cases where an exception was granted as described 
earlier, we propose that for all measures eligible for the extreme and 
uncontrollable circumstance adjustment, if an affected contract has 
missing data in either the current or previous year (for example, 
because of a biased rate or the contract is too new or too small), the 
final measure rating would come from the current year as described at 
proposed Sec. Sec.  422.166(i)(8) and 423.186(i)(6). For example, if a 
contract affected by an eligible 2020 extreme and uncontrollable 
circumstance was not granted an exception for data collection and does 
not have sufficient data to receive a measure-level 2022 Star Rating, 
it would not receive a numeric rating for that measure for the 2022 
Star Ratings regardless of whether it received a numeric rating in the 
previous year. Similarly, if an affected contract has missing measure 
data in the previous year but received a numeric rating in the current 
year, it would receive the current year's rating for its final measure 
rating. In both cases, the measure would be excluded from the 
contract's improvement score(s) following our usual rules.
(9) Cut Points for Non-CAHPS Measures
    Currently, the Star Rating for each non-CAHPS measure is determined 
by applying a clustering algorithm to the measures' numeric value 
scores from all contracts required to submit the measure. The cut 
points are derived from this clustering algorithm. At proposed 
Sec. Sec.  422.166(i)(9) and 423.186(i)(7), we propose to exclude from 
this clustering algorithm the numeric values for affected contracts 
with 60 percent or more of their enrollees in the FEMA-designated 
Individual Assistance area at the time of the extreme and 
uncontrollable circumstance. These contracts would be excluded to 
ensure that any impact of the extreme and uncontrollable circumstance 
on their measure-level

[[Page 55028]]

scores would not have an impact on the cut points for other contracts. 
However, these cut points calculated for all other non-affected 
contracts would be used to assess these affected contracts' measure 
Star Ratings. We would compare the affected contract's previous year's 
measure Star Ratings to the current year's measure Star Ratings to 
determine which is higher, and therefore used for the affected 
contract's Star Ratings calculations, as previously discussed. For 
example, for the 2022 Star Ratings we would compare the 2021 and 2022 
measure Star Ratings for affected contracts.
    Reward Factor. Similarly, at proposed Sec. Sec.  422.166(i)(10) and 
423.186(i)(8), we propose that affected contracts with 60 percent or 
more of their enrollees impacted would also be excluded from the 
determination of the performance summary and variance thresholds for 
the Reward Factor. However, these contracts would still be eligible for 
the Reward Factor based on the mean and variance calculations of other 
contracts.
    In conclusion, we are proposing a new set of rules regarding 
adjusting the calculation of Star Ratings for the Parts C and D 
organizations who are impacted by extreme and uncontrollable 
circumstances to be codified at paragraphs Sec. Sec.  422.166(i) and 
423.186(i).
2. Improving Clarity of the Exceptions Timeframes for Part D Drugs 
(Sec. Sec.  423.568, 423.570, and 423.572)
    In this proposed rule we are proposing a change to Part D 
adjudication timeframes related to exception requests in cases where a 
prescribing physician's or other prescriber's supporting statement has 
not been received by the plan sponsor. We are proposing to limit the 
amount of time an exception request can be held open in a pending 
status while the Part D plan sponsor attempts to obtain the prescribing 
physician's or other prescriber's supporting statement. Section 1860D-
4(g)(2) of the Act prescribes that in the case of a drug plan that 
provides for tiered cost-sharing for drugs on a formulary and provides 
for lower cost-sharing for preferred drugs on a formulary, a Part D 
enrollee may request an exception to the tiered cost-sharing. Under 
such an exception, a non-preferred drug could be covered under the 
terms applicable for preferred drugs if the prescribing physician 
determines that the preferred drug for treatment of the same condition 
either would not be as effective for the enrollee or would have adverse 
effects or both. Part D plan sponsors are required to have an 
exceptions process consistent with guidelines established by the 
Secretary. These guidelines are set forth at Sec.  423.578 and permit 
an enrollee to request an exception to a plan's tiered cost-sharing, an 
exception for an off-formulary drug, and an exception to a utilization 
management requirement. Given the language in section 1860D-4(g)(2) of 
the Act referencing the determination of the prescribing physician that 
the preferred drug for treating the enrollee's condition would not be 
as effective, would have adverse effects, or both, the prescriber's 
supporting statement is a key component to the regulations governing 
the exceptions process. A plan sponsor's exceptions criteria must 
include a description of the criteria the plan sponsor uses to evaluate 
the prescribing physician's or other prescriber's statement. Due to the 
importance of the prescriber's supporting statement in the exceptions 
process, the adjudication timeframes for a coverage determination that 
involves an exception request do not begin until the prescribing 
physician's or other prescriber's supporting statement is received by 
the Part D plan. For example, Sec.  423.568(b) states the Part D plan 
sponsor must notify the enrollee (and the prescribing physician or 
other prescriber involved, as appropriate) of its determination as 
expeditiously as the enrollee's health condition requires, but no later 
than 72 hours after receipt of the request, or, for an exception 
request, the physician's or other prescriber's supporting statement. 
Under current guidance, plans are instructed not to keep an exception 
request open indefinitely and are instructed to apply a reasonableness 
standard for holding the request open pending receipt of the 
prescriber's supporting statement. Chapter 18 of the Medicare 
Prescription Drug Manual instructs that if the plan does not receive 
the physician's or other prescriber's supporting statement within a 
reasonable period of time, the plan should make its determination based 
on whatever evidence exists.
    We have received feedback from plan sponsors and other stakeholders 
that there should be more certainty in the timeframe applied to the 
exceptions process. We are seeking to balance the importance of the 
plan receiving the prescriber's supporting statement so that a thorough 
decision may be made on the request and having a standard maximum time 
for notifying an enrollee of an exception request decision. We believe 
greater certainty in the exceptions process will be beneficial to 
enrollees and plans. Establishing a fixed period in which the plan must 
render a decision on an exception request may also have the effect of 
more timely submission of supporting statements by prescribers once 
they become familiar with the fixed timeframe in which plans must issue 
a decision on an exception request. To that end, we are proposing to 
amend Sec. Sec.  423.568(b), 423.570(d)(1) and 423.572(a) to state 
that, for an exception request, the plan must notify the enrollee (and 
the prescribing physician or other prescriber involved, as appropriate) 
of its decision no later than 72 hours (or 24 hours in the case of an 
expedited decision) of receipt of the prescriber's supporting statement 
or 14 calendar days after receipt of the request, whichever occurs 
first. Consistent with existing regulations, the plan sponsor must 
notify the enrollee (and the prescribing physician or other prescriber 
involved, as appropriate) of its decision on an exception request no 
later than 72 hours (or 24 hours in the case of an expedited decision) 
after receiving the prescriber's supporting statement. We are not 
proposing a change to the existing timeframes for issuing decisions, 
except that we are proposing an outside limit to the timeframe to 
address instances in which a prescriber's supporting statement is not 
timely received. The proposed change limits the timeframe for notifying 
the enrollee (and the prescribing physician or other prescriber 
involved, as appropriate) of the decision to no later than 14 calendar 
days following receipt of the request. In other words, in cases where 
the plan does not receive a prescriber supporting statement (or does 
not receive it timely) it must notify the enrollee (and prescriber, as 
appropriate) of its decision no later than 14 calendar days from the 
receipt of the request. For example, if the plan sponsor receives the 
prescriber's supporting statement late in the adjudication time period 
(for example, on the 12th day), the plan sponsor would still be 
required to notify the enrollee of its decision no later than 14 
calendar days from the receipt of the request. We understand that a 
supporting statement that is received late in the adjudication time 
period may mean the plan sponsor has less time to conduct its review, 
but we believe this circumstance is mitigated by the value in having 
greater certainty in the process by establishing a maximum timeframe 
for notifying the enrollee of the plan sponsor's decision. If the plan 
sponsor does not have clinical support to approve the exception 
request, the plan will issue the standardized denial notice and explain 
in specificity the reason for the denial, the documentation needed to 
approve coverage of the

[[Page 55029]]

requested drug, and the enrollee's right to request an appeal. We 
believe this proposed approach affords the plan sponsor a reasonable 
period of time to obtain the prescriber's supporting statement while 
establishing greater certainty in the time period in which the enrollee 
will receive a decision on an exception request. If the enrollee is 
dissatisfied with the decision, the enrollee has the right to request 
an appeal. We invite comments on this proposal.

C. Clarifying Program Integrity Policies

1. Preclusion List Requirements for Prescribers in Part D and 
Individuals and Entities in MA, Cost Plans, and PACE
a. Background
    In the April 2018 final rule, we removed several requirements 
pertaining to MA and Part D provider and prescriber enrollment. One 
requirement, outlined in Sec.  423.120(c)(6), stated that for a 
prescription to be eligible for coverage under the Medicare Part D 
program, the prescriber must have: (1) An approved enrollment record in 
the Medicare fee-for-service program; or (2) a valid opt-out affidavit 
on file with a Part A/Part B Medicare Administrative Contractor (A/B 
MAC). A second requirement, outlined in Sec.  422.222, stated that 
providers that furnish health care items or services to a Medicare 
enrollee who receives his or her Medicare benefit through an MA 
organization must be enrolled in Medicare and be in an approved status 
no later than January 1, 2019. (The removal of these requirements had 
been proposed in a proposed rule that appeared in the Federal Register 
on November 28, 2017, titled ``Medicare Program; Contract Year 2019 
Policy and Technical Changes to the Medicare Advantage, Medicare Cost 
Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit 
Programs, and the PACE Program'' (82 FR 56336) (hereafter referred to 
as the November 2017 proposed rule)).
    The overall purpose of Medicare provider enrollment is to prevent 
fraud, waste, and abuse, and to protect Medicare beneficiaries, by 
allowing CMS to carefully screen all providers and suppliers 
(especially those that potentially pose an elevated risk to Medicare) 
to confirm that they are qualified to furnish, order, certify, refer, 
or prescribe Medicare items, services, or drugs. The previously 
mentioned Part D and MA enrollment provisions would have supplemented 
our longstanding requirements, outlined in 42 CFR part 424, subpart P 
that all providers and suppliers that furnish Part A or B Medicare 
items or services enroll in Medicare.
    During our preparations to implement the Part D and MA enrollment 
provisions by the January 1, 2019 effective date, several provider 
organizations expressed concerns about our forthcoming requirements. 
Regarding Part D, stakeholders expressed concerns that (1) most 
prescribers pose no risk to the Medicare program, (2) certain types of 
physicians and eligible professionals prescribe Part D drugs only very 
infrequently, and (3) the burden to the prescriber community would 
outweigh the program integrity benefits of the Part D enrollment 
requirement. Regarding MA, some stakeholders were concerned about the 
burden of having to enroll in Medicare, particularly considering that 
health care providers in MA organization networks that would have to 
enroll in Medicare must also undergo credentialing by their respective 
health plans. While enrolling such prescribers and providers gives 
Medicare a greater degree of scrutiny in determining a prescriber's or 
provider's qualifications, we noted in the April 2018 final rule that 
the perceived burden associated with this process could cause some 
prescribers and providers not to enroll in Medicare, thus possibly 
leading to access to care issues if such providers left MA networks as 
a result. As of early 2018, approximately 420,000 Part D prescribers 
and 120,000 MA providers remained unenrolled in Medicare.
    Given these concerns, we stated in the April 2018 final rule our 
belief that the best means of reducing the burden of the Part D and MA 
enrollment requirements without compromising our payment safeguard 
objectives would be to focus on prescribers and providers that pose an 
elevated risk to Medicare beneficiaries and the Trust Funds. That is, 
rather than require the enrollment of Part D prescribers and MA 
providers regardless of the level of risk they might pose, we would 
prohibit payment for Part D drugs and MA items or services that are, as 
applicable, prescribed or furnished by demonstrably problematic 
prescribers and providers. Therefore, we established in the April 2018 
final rule a policy under which: (1) Such problematic parties would be 
placed on a ``preclusion list''; and (2) payment for Part D drugs and 
MA services and items prescribed or furnished by these individuals and 
entities would be rejected or denied, as applicable.
    For purposes of this proposed rule, the most pertinent policies we 
finalized in the April 16, 2018 rule included the following:
     In Sec.  423.100 (for Part D) and Sec.  422.2 (for MA), we 
stated that the term ``preclusion list'' means a CMS-compiled list of, 
as applicable, prescribers and providers that:
    ++ Meet all of the following requirements:
    ++ The individual or entity is currently revoked from the Medicare 
program under Sec.  424.535.
    ++ The individual or entity is currently under a reenrollment bar 
under Sec.  424.535(c).
    ++ CMS determines that the underlying conduct that led to the 
revocation is detrimental to the best interests of the Medicare 
program. In making this determination under this paragraph, CMS 
considers the following factors:

--The seriousness of the conduct underlying the individual's or 
entity's revocation.
--The degree to which the individual's or entity's conduct could affect 
the integrity of the Part D or MA program.
--Any other evidence that CMS deems relevant to its determination; or

    ++ Meet both of the following requirements:
    ++ The individual or entity has engaged in behavior for which CMS 
could have revoked the individual or entity to the extent applicable if 
they had been enrolled in Medicare.
    ++ CMS determines that underlying conduct that led to the 
revocation is detrimental to the best interests of the Medicare 
program. In making this determination under this paragraph, CMS 
considers the following factors:

--The seriousness of the conduct underlying the individual's or 
entity's revocation.
--The degree to which the individual's or entity's conduct could affect 
the integrity of the Part D or MA program.
--Any other evidence that CMS deems relevant to its determination.

     We revised and added various provisions in 42 CFR part 
498, subpart A, that permitted individuals and entities to appeal their 
inclusion on the preclusion list. Specifically:
    ++ We added a new paragraph (20) to Sec.  498.3(b) stating that a 
CMS determination to include an individual or entity on the preclusion 
list constitutes an initial determination.
    ++ In Sec.  498.5, we added a new paragraph (n) containing the 
following provisions:

--In paragraph (n)(1), we stated that any individual or entity 
dissatisfied with an initial determination or revised initial 
determination that they are to be included on the preclusion list may 
request a reconsideration in accordance with Sec.  498.22(a).

[[Page 55030]]

--In paragraph (n)(2), we stated that if CMS or the individual or 
entity under paragraph (n)(1) is dissatisfied with a reconsidered 
determination under paragraph (n)(1), or a revised reconsidered 
determination under Sec.  498.30, CMS or the individual or entity is 
entitled to a hearing before an administrative law judge (ALJ).
--In paragraph (n)(3), we stated that if CMS or the individual or 
entity under paragraph (n)(2) is dissatisfied with a hearing decision 
as described in paragraph (n)(2), CMS or the individual or entity may 
request review by the Departmental Appeals Board (DAB) and the 
individual or entity may seek judicial review of the DAB's decision.

     In Sec.  423.120(c)(6)(v) (for Part D) and Sec.  
422.222(a)(2) (for MA), we stated that CMS would send written notice to 
the individual or entity via letter of their inclusion on the 
preclusion list. The notice would contain the reason for said inclusion 
and would inform the individual or entity of their appeal rights. We 
further stated that the affected party could appeal their inclusion on 
the preclusion list in accordance with Part 498.
     We stated in Sec.  423.120(c)(6)(iv)(A) that a Part D 
sponsor or its Pharmacy Benefit Manager (PBM) must not reject a 
pharmacy claim or request for reimbursement for a Part D drug unless 
the sponsor has provided the written notice to the beneficiary 
described in Sec.  423.120(c)(6)(iv)(B). Under paragraph (iv)(B), the 
Part D sponsor or its PBM must:
    ++ Provide an advance written notice to any beneficiary who has 
received a prescription from a prescriber on the preclusion list as 
soon as possible but to ensure that the beneficiary receives the notice 
no later than 30 days after the publication of the most recent 
preclusion list; and
    ++ Ensure that reasonable efforts are made to notify the prescriber 
of a beneficiary who was sent a notice under paragraph (iv)(B).
     We stated in the preamble to the April 2018 final rule 
that individuals and entities would only be placed on the preclusion 
list upon exhausting their first level of appeal.
     In the preamble to the previously mentioned November 2017 
proposed rule (82 FR 56446), we stated that if a beneficiary's access 
to a service, item, or drug is denied because of the application of the 
preclusion list to his or her prescriber or provider, the beneficiary 
would be permitted to appeal alleged errors in applying the preclusion 
list. However, in the April 2018 final rule (83 FR 16660), we stated 
that if payment is denied because the prescriber or provider is on the 
preclusion list, the beneficiary would not have the right to appeal.
     We stated in April 2018 final rule (83 FR 16642) that an 
unenrolled individual or entity would remain on the preclusion list for 
the same length of time as the reenrollment bar that we could have 
imposed on the individual or entity had they been enrolled in Medicare 
and then revoked.
    In addition, we stated that the preclusion list provisions in the 
April 2018 final rule (83 FR 16440) were to become effective on January 
1, 2019.
b. Proposed Changes
    For reasons stated in this section III.C.1.b. of this proposed 
rule, we propose to make changes to several of the preclusion list 
policies outlined in the April 2018 final rule.
(1) Appeals Process for Individuals and Entities on the Preclusion List
    Similar to individuals and entities that are placed on the 
preclusion list, providers and suppliers whose Medicare enrollment is 
revoked for one or more of the revocation reasons described in Sec.  
424.535 (for example, the provider submitted false information to 
Medicare, has engaged in abusive prescribing of Part D drugs, or is 
excluded by the Office of Inspector General (OIG)) may appeal such 
revocation under Sec.  498.5(l). Under Sec.  498.22(b)(3), the provider 
or supplier has 60 days from receipt of the notice of revocation from 
CMS or its contractor to request a reconsideration, which is considered 
the first level of appeal. CMS has 90 days to render its 
reconsideration decision and to notify the provider or supplier 
thereof.
    As already mentioned, under Sec.  423.100 (for Part D) and Sec.  
422.2 (for MA), an individual or entity may be placed on the preclusion 
list if their Medicare enrollment is revoked, the individual or entity 
is currently under a reenrollment bar, and CMS determines that the 
underlying conduct that led to the revocation is detrimental to the 
best interests of the Medicare program. Having stated in the April 2018 
final rule (83 FR 16662) that individuals and entities would only be 
placed on the preclusion list upon exhausting their first level of 
appeal, we are concerned that there could be a very lengthy delay 
before the individual or entity is actually placed on said list. This 
is because the individual or entity, under existing regulations, would 
be able to first appeal their revocation and, if unsuccessful, could 
next appeal their placement on the preclusion list because of the 
revocation. Consider the following example:
     A provider receives a revocation notice on March 1.
     The provider has until April 30 (or 60 days) to file a 
request for reconsideration.
     CMS has until July 29 (or 90 days) to render its 
reconsideration decision.
     CMS sends notice of its denial of the provider's 
reconsideration on July 29, at which point the revoked provider has 
until September 28 (or 60 days from the date of the notice) to now 
request a reconsideration of its inclusion on the preclusion list.
     The provider requests a reconsideration of its inclusion 
on the preclusion list on September 28.
     CMS has until December 27 (or 90 days) to render its 
reconsideration decision.
     CMS sends notice of its denial of the provider's 
reconsideration on December 27.
     With the first level of appeal completed, the provider is 
placed on the preclusion list.
    The end result of this process is that it could take up to nearly 9 
months before a provider is placed on the preclusion list, meaning 
that, for instance, a prescriber who was revoked for a felony 
conviction could continue to prescribe covered Part D drugs for an 
extended period before placement on the preclusion list results in a 
prohibition against payment by a Part C plan, Medicare cost plan, Part 
D plan, or PACE organization to the prescriber (for any health care 
services furnished) for the prescribed drug. This is inconsistent with 
the principal goal of the preclusion list, which is to prevent payment 
for Part D drugs or MA services or items prescribed or furnished, as 
applicable, by problematic parties. Such a lengthy delay could place 
Medicare beneficiaries and the Trust Funds at risk.
    We believe that an appropriate balance can be found between 
preserving a prescriber's or provider's appeal rights and ensuring that 
problematic parties are placed on the preclusion list as soon as 
feasible. To facilitate this objective, we propose several regulatory 
changes that would consolidate the revocation and preclusion list 
appeals processes so that they run concurrently, rather than 
consecutively. This means, in effect, that if a prescriber or provider 
is to be placed on the preclusion list in conjunction with a revocation 
under Sec.  424.535, no more than 5 months would expire before the 
preclusion list inclusion occurs. Though we recognize

[[Page 55031]]

that 5 months is not an inconsiderable length of time, it would be 
preferable to the previously referenced 9-month period while still 
ensuring that affected prescribers and providers have an opportunity to 
be heard.
    The specific regulatory revisions we propose regarding this issue 
are as follows:
     In Sec.  423.120(c)(6)(v), we propose to:
    ++ Consolidate the existing version of paragraph (v) into a revised 
Sec.  423.120(c)(6)(v)(A).
    ++ Establish a new Sec.  423.120(c)(6)(v)(B) stating that in 
situations where the prescriber's inclusion on the preclusion list is 
based on a contemporaneous Medicare revocation under Sec.  424.535:

--The notice described in paragraph (c)(6)(v)(A) must also include 
notice of the revocation, the reason(s) for the revocation, and a 
description of the prescriber's appeal rights concerning the 
revocation.
--The appeals of the prescriber's inclusion on the preclusion list and 
the prescriber's revocation shall be filed jointly by the prescriber 
and, as applicable, considered jointly by CMS under 42 CFR part 498.

     In Sec.  422.222(a)(2), we propose to do the following:
    ++ Move the existing version of this paragraph into a new Sec.  
422.222(a)(2)(i).
    ++ Establish a new Sec.  422.222(a)(2)(ii) stating that in 
situations where the individual's or entity's inclusion on the 
preclusion list is based on a contemporaneous Medicare revocation under 
Sec.  424.535:

--The notice described in paragraph (a)(2)(i) must also include notice 
of the revocation, the reason(s) for the revocation, and a description 
of the individual's or entity's appeal rights concerning the 
revocation.
--The appeals of the individual's or entity's inclusion on the 
preclusion list and the individual's or entity's revocation shall be 
filed jointly by the individual or entity and, as applicable, 
considered jointly by CMS under 42 CFR part 498.

     In Sec.  498.5(n)(1), we propose to do the following:
    ++ Move the existing version of this paragraph to a new Sec.  
498.5(n)(1)(i).
    ++ Establish a new Sec.  498.5(n)(1)(ii)(A) stating that in 
situations where the individual's or entity's inclusion on the 
preclusion list is based on a Medicare revocation under Sec.  424.535 
and the individual or entity receives contemporaneous notice of both 
actions, the individual or entity may request a joint reconsideration 
of both the preclusion list inclusion and the revocation in accordance 
with Sec.  498.22(a).
    ++ Establish a new Sec.  498.5(n)(1)(ii)(B) stating that the 
individual or entity may not submit separate reconsideration requests 
under paragraph (ii)(A) for inclusion on the preclusion list or a 
revocation if the individual or entity received contemporaneous notice 
of both actions.
    We believe these changes would clarify our expectations and the 
program procedures concerning the filing of appeals when a party's 
placement on the preclusion list is based on a Medicare revocation. We 
also stress that our proposed appeals consolidation would not affect 
appeals of OIG exclusions, which are handled through a separate process 
outlined in the applicable OIG regulations.
(2) Timing of Addition to the Preclusion List
    Although, as mentioned previously, we stated in the April 2018 
final rule (83 FR 16662) that prescribers and providers would only be 
placed on the preclusion list upon exhausting their first level of 
appeal, we did not include this language in the regulatory text. We 
propose to do so in this proposed rule to reiterate our position on 
this important issue. We believe that fairness warrants that the 
affected prescriber or provider have an opportunity to be heard before 
being included on the preclusion list. Therefore, we propose in new 
Sec.  423.120(c)(6)(v)(C)(1) (for Part D) and new Sec.  
422.222(a)(3)(i) (for MA) that, respectively, a prescriber or provider 
would only be included on the preclusion list after the expiration of 
either of the following:
     If the prescriber or provider does not file a 
reconsideration request under Sec.  498.5(n)(1), the prescriber or 
provider will be added to the preclusion list upon the expiration of 
the 60-day period in which the prescriber or provider may request a 
reconsideration.
     If the prescriber or provider files a reconsideration 
request under Sec.  498.5(n)(1), the prescriber or provider will be 
added to the preclusion list effective on the date on which CMS, if 
applicable, denies the prescriber's or provider's reconsideration.\22\
---------------------------------------------------------------------------

    \22\ In the April 2018 final rule, we adopted cross-references 
in 42 CFR parts 417 and 460 to Part 422 so that our MA preclusion 
list provisions in that rule would also apply to, respectively, cost 
plans (Part 417) and PACE organizations (Part 460). Consistent with 
said cross-references, our MA preclusion list provisions in this 
proposed rule would similarly apply to cost plans and PACE 
organizations.
---------------------------------------------------------------------------

    However, we also believe that an exception to these proposed 
policies is necessary for preclusion list inclusions that are based on 
an OIG exclusion. This is because section 1862(e) of the Act (42 U.S.C. 
1395y(e)) is clear that no federal health care program payment may be 
made for any items or services furnished by an excluded individual or 
entity, or directed or prescribed by an excluded physician. We believe 
that a failure to add an excluded provider or prescriber to the 
preclusion list until the expiration of the applicable time periods in 
Sec.  423.120(c)(6)(v)(C)(1) (for Part D) and Sec.  422.222(a)(3)(i) 
(for MA) would be inconsistent with section 1862(e) of the Act. 
Accordingly, we propose in new Sec.  423.120(c)(6)(v)(C)(2) (for Part 
D) and Sec.  422.222(a)(3)(ii) (for MA) that an excluded prescriber or 
provider would be added to the preclusion list effective on the date of 
the exclusion.
(3) Effective Date
    We propose that, with one exception, the preclusion list regulatory 
revisions and additions addressed in this proposed rule would become 
applicable to MA organizations (and cost plans and PACE organizations 
by virtue of cross-references in parts 417 and 460 to the MA part 422 
regulation) and Part D plans on January 1, 2020. Considering the need 
to ensure that stakeholders have as much time as possible to prepare 
for these revisions and additions, we believe that a January 1, 2020 
effective date is appropriate. However, we also propose that the 
effective date of our previously mentioned consolidated appeals 
provisions in Sec. Sec.  423.120(c)(6)(v), 422.222(a)(2), and Sec.  
498.5(n)(1) would be 60 days after their publication in a final rule. 
As discussed in section C.1.b.(1) above, it is important that 
problematic providers be placed on the preclusion list as soon as 
possible; for this reason, we believe it would be inconsistent with 
CMS' program integrity objectives to wait until January 1, 2020 to 
implement our consolidated appeals provisions. We also solicit public 
comments on whether some or all of our other proposed preclusion list 
provisions discussed in this section III.C.1. of this proposed rule 
should become effective and applicable beginning 60 days after the 
publication date of this proposed rule.
    We note that the January 1, 2019 preclusion list effective date 
identified in the April 2018 final rule remains in place, and the 
preclusion list provisions finalized in that rule will continue to be 
implemented on January 1, 2019.

[[Page 55032]]

(4) Claim Denials and Beneficiary Notification
    We stated in the April 2018 final rule (83 FR 16440) that, upon 
CMS' publication of the first preclusion list, once a prescriber or 
provider is added to such initial list after the completion of their 
first level of appeal, claims would not be impacted for a 90-day period 
thereafter (82 FR 16667). We explained that this 90-day period would 
include--(1) a 30-day period for the plans and MA organizations to 
intake the preclusion list data; and (2) a 60-day period in which the 
plan or MA organization would (a) notify the beneficiary of the 
prescriber's or provider's preclusion and (b) work to transition the 
beneficiary to a new prescriber or provider. Once this 90-day period 
expires, claim denials would commence.
    The purpose of this policy was to give Part D plans and MA 
organizations additional time immediately following the January 1, 2019 
effective date to accustom themselves to the preclusion list process 
and file layout. We also believed that beneficiaries should be given 
advance notice that, as applicable, certain Part D drugs and MA 
services and items they receive as patients of the precluded prescriber 
or provider would no longer be covered as of the expiration of the 90-
day period. However, we emphasized that all subsequent updates to the 
preclusion list, that is, all updates after the release of the initial 
preclusion list--would not require the expiration of a 90-day period 
before claims were denied. There were two reasons for this. First, we 
did not believe that the plans and MA organizations would need the 
aforementioned 30-day period any longer, for they would have become 
better acclimated to the operational aspects of the preclusion list 
process. Second, since most of the parties included on the initial 
preclusion list would remain on it in subsequent updates and, 
accordingly, affected beneficiaries would already have received notice 
of their prescriber's or provider's appearance on the initial 
preclusion list, we did not believe that repeated, monthly notices to 
beneficiaries thereafter would be warranted. As such, for subsequent 
preclusion list updates, claim denials would begin effective upon the 
date the prescriber or provider was included on the preclusion list, 
which, as indicated previously, would be that specified in revised 
Sec.  423.120(c)(6)(v) and new Sec.  422.222(a)(3).
    Upon further consideration, we are concerned that beneficiaries 
whose prescribers and providers are added to subsequent updates to the 
preclusion list would not receive any notice of those additions nor of 
the consequences of placement of such providers and prescribers on the 
preclusion list. This could greatly impede the ability of enrollees to 
obtain needed services, items, or drugs for an extended period of time; 
indeed, by the time a beneficiary learns of his or her prescriber's or 
provider's inclusion on the preclusion list (through, for instance, 
receipt of a claim denial) and he or she thereafter manages to find a 
new prescriber or provider, many months could elapse. We believe that 
such situations must be avoided and, to that end, that the previously 
mentioned notification requirement and delayed denial of claims for the 
initial preclusion list should apply to each subsequent update as well. 
Accordingly, we propose that claim denials for preclusion list updates, 
beginning in 2020, would occur consistent with the following timeframes 
listed below (although we would recommend that plans implement these 
timeframes for any updates to the preclusion list posted in 2019 
subsequent to the initial preclusion list):
     Upon the posting of the updated preclusion list, the Part 
D sponsor or MA organization would be required to send notice to the 
beneficiary that his or her prescriber or provider has been added to 
preclusion list within 30 days of the posting of the updated preclusion 
list. We believe a 30-day period is necessary to allow the plans to 
carefully review the preclusion list updates to identify new or removed 
prescribers or providers, make any applicable operational adjustments, 
and send notices to beneficiaries whose prescribers or providers are 
now on the preclusion list.
     Beginning 60 days after sending the beneficiary notice(s) 
described in the previous paragraph, the plan sponsor or MA 
organization would deny the prescriber's or provider's prescriptions or 
claims. This 60-day period would give beneficiaries time to locate 
another prescriber or provider from whom they can receive Part D 
prescriptions or MA services and items.
    With these timeframes, therefore, a total period of 60 to 90 days 
(depending chiefly on when the beneficiary notification is sent) would 
elapse between the date on which the preclusion list update is posted 
and the date on which claims denials would begin. We recognize that 
applying this 60- to 90-day period to subsequent updates (rather than 
exclusively to the initially posted list) could result in a precluded 
prescriber or provider being permitted to continue treating Part D and 
MA beneficiaries for several months without their Part D prescriptions 
or MA claims being denied. However, we believe that the prevention of 
potentially serious dangers to the health and safety of Medicare 
beneficiaries that could ensue if they are without crucial medications 
for an extended period must take precedence.
    Although, as already mentioned, we discussed the delayed claim 
denial period in the April 2018 final rule (83 FR 16441), we did not 
incorporate this policy into the regulatory text. Further, while Sec.  
423.120(c)(6) contains certain provisions regarding preclusion list 
beneficiary notification, there are no such concomitant provisions for 
MA in Sec.  422.222. Thus, we propose to make the following revisions 
and additions, as applicable, to Sec.  423.120(c)(6) and Sec.  422.222 
in this proposed rule in order to incorporate our beneficiary 
notification proposals:
     Section 422.222 would be revised as follows:
    ++ Existing paragraph (a)(1) would be moved to a new paragraph 
(a)(1)(i) that would state: ``Except as provided in paragraph 
(a)(1)(ii) of this section, an MA organization must not make payment 
for a health care item or service furnished by an individual or entity 
that is included on the preclusion list, defined in Sec.  422.2.''
    ++ New paragraph (a)(1)(ii) would state: ``With respect to MA 
providers that have been added to an updated preclusion list, the MA 
organization must do all of the following:''
    ++ New paragraph (a)(1)(ii)(A) would state: ``No later than 30 days 
after the posting of this updated preclusion list, must provide an 
advance written notice to any beneficiary who has received an MA 
service or item from the individual or entity added to the preclusion 
list in this update.''
    ++ New paragraph (a)(1)(ii)(B) would state: ``Must ensure that 
reasonable efforts are made to notify the individual or entity 
described in paragraph (a)(1)(ii) of this section of a beneficiary who 
was sent a notice under paragraph (a)(1)(ii)(A) of this section; and''
    ++ New paragraph (a)(1)(ii)(C) would state: ``Must not deny payment 
for a service or item furnished by the newly added individual or 
entity, solely on the ground that they have been included in the 
updated preclusion list, in the 60-day period after the date it sent 
the notice described in paragraph (a)(1)(ii)(A) of this section.''
    Under the MA regulation at 42 CFR 422.224, MA organizations are 
prohibited from paying individuals and entities that are on the CMS 
preclusion

[[Page 55033]]

list. We understand that this language includes both contracted and 
non-contracted parties; therefore, this prohibition against paying 
precluded individuals and entities would include contracted and non-
contracted parties for purposes of the provisions in Sec.  
422.222(a)(1), for we believe it is necessary to ensure that the scope 
of the payment prohibition in the latter section aligns with that 
already established in Sec.  422.224. Further, we believe that applying 
this requirement to both contracted and non-contracted parties better 
safeguards our beneficiaries while also increasing consistency by 
aligning with the OIG exclusion process, which is also applied to both 
contracted and non-contracted parties.
    Consistent with our proposed changes to Sec.  422.222(a)(1), we 
propose to delete the existing structure of Sec.  423.120(c)(6)(iv), 
which we cited previously, and replace it with the following:
    ++ A new opening paragraph of (c)(6)(iv) would state:
    ``With respect to Part D prescribers that have been added to an 
updated preclusion list, the Part D plan sponsor must do all of the 
following:''
    ++ Revised paragraph (c)(6)(iv)(A) would state: ``Subject to all 
other Part D rules and plan coverage requirements, and no later than 30 
days after the posting of this updated preclusion list, must provide an 
advance written notice to any beneficiary who has received a Part D 
drug prescribed by a prescriber added to the preclusion list in this 
update.''
    ++ Revised paragraph (c)(6)(iv)(B) would state: ``Must ensure that 
reasonable efforts are made to notify the prescriber described in 
paragraph (c)(6)(iv) of this section of a beneficiary who was sent a 
notice under paragraph (c)(6)(iv)(A) of this section; and''
    ++ New paragraph (c)(6)(iv)(C) would state: ``Must not reject a 
pharmacy claim or deny beneficiary request for reimbursement for a Part 
D drug prescribed by the prescriber, solely on the ground that they 
have been included in the updated preclusion list, in the 60-day period 
after the date it sent the notice described in paragraph (c)(6)(iv)(A) 
of this section.''
    For providers and prescribers that are both on the preclusion list 
and excluded by the OIG, the aforementioned beneficiary notification 
process would not be intended to replace or supplant any existing OIG 
processes for notifying beneficiaries of excluded providers or 
prescribers.
(5) Beneficiary Appeals
    We mentioned earlier that in the preamble to the April 2018 final 
rule, we stated that if payment is denied because the prescriber or 
provider is on the preclusion list, the affected beneficiary would not 
have the right to appeal that denial. However, we did not include 
accompanying regulatory text in the final rule. To remedy this, we 
propose to add new Sec.  423.120(c)(6)(viii) and Sec.  422.222(a)(4) 
stating that payment denials based upon, respectively, a prescriber's 
or provider's inclusion on the preclusion list are not appealable by 
beneficiaries.
(6) Felony Convictions
    We proposed in the November 2017 proposed rule to keep unenrolled 
prescribers and providers on the preclusion list for the same length of 
time as the reenrollment bar that we could have imposed on the 
prescriber or provider had they been enrolled and then revoked. While 
this policy was finalized in the April 2018 final rule, it was not 
included in the regulatory text. Given this, we propose several 
regulatory revisions.
    First, we propose to revise the definitions of ``preclusion list'' 
in Sec. Sec.  423.100 and 422.2. The current definitions contain two 
general categories of parties that could be included on the preclusion 
list--(1) prescribers and providers that are currently revoked from 
Medicare and are under a reenrollment bar; and (2) prescribers and 
providers that have engaged in behavior for which CMS could have 
revoked the prescriber or provider to the extent applicable had they 
been enrolled in Medicare. Although these two categories encompass 
felony convictions, we believe that the severity of felonious behavior 
warrants the establishment of a third category that is specific to 
felony convictions. Therefore, we propose to remove felony convictions 
from the scope of the first two categories, with the new third category 
covering prescribers and providers--regardless of whether they are or 
were enrolled in Medicare--that have been convicted of a felony under 
federal or state law within the previous 10 years that CMS deems 
detrimental to the best interests of the Medicare program; we note that 
this language is consistent with that in the current version of Sec.  
424.535(a)(3), which permits CMS to revoke a provider's or supplier's 
enrollment based on a federal or state felony conviction within the 
past 10 years. Recognizing, however, that the facts of each case are 
different and must be judged on their own merits, we propose that CMS 
would first consider the following factors before determining whether a 
prescriber's or provider's inclusion on the preclusion list is 
warranted under our new proposed third category for felony convictions: 
(1) The severity of the offense; (2) when the offense occurred; and (3) 
any other information that CMS deems relevant to its determination. We 
also acknowledge that with the expansion of the number of preclusion 
list categories from two to three, we must, and propose to, add an 
``or'' to the regulatory text immediately after the second category in 
the preclusion list definitions. This would clarify that a prescriber 
or provider need only come within the purview of one of the three 
categories to be included on the preclusion list.
    Second, we propose to establish new Sec. Sec.  423.120(c)(6)(vii) 
and 422.222(a)(5) that would codify, clarify, and expand upon the 
previously mentioned policy concerning the length of a prescriber's or 
provider's inclusion on the preclusion list:
     In Sec. Sec.  423.120(c)(6)(vii)(A) and 422.222(a)(5)(i), 
we propose that, except as provided in Sec. Sec.  423.120(c)(6)(vii)(C) 
and (D) and 422.222(a)(5)(iii) and (iv), revoked prescribers and 
providers, respectively, would be included on the preclusion list for 
the same length of time as the prescriber's or provider's reenrollment 
bar. This would be consistent with our intended, though uncodified, 
policy in the April 2018 final rule (83 FR 16441).
     In Sec. Sec.  423.120(c)(6)(vii)(B) and 422.222(a)(5)(ii), 
we propose that, except as provided in Sec. Sec.  423.120(c)(6)(vii)(C) 
and (D) and 422.222(a)(5)(iii) and (iv), unenrolled prescribers and 
providers, respectively, would be included on the preclusion list for 
the same length of time as the reenrollment bar that we could have 
imposed on the prescriber or provider had they been enrolled and then 
revoked. This would codify the previously mentioned policy concerning 
the period of time that unenrolled providers and suppliers would remain 
on the preclusion list.
     In Sec. Sec.  423.120(c)(6)(vii)(C) and 
422.222(a)(5)(iii), we propose that, except as provided in Sec. Sec.  
423.120(c)(6)(vii)(D) and 422.222(a)(5)(iv), prescribers and 
providers--regardless of whether they are or were enrolled in 
Medicare--that are included on the preclusion list because of a felony 
conviction will remain on the preclusion list for a 10-year period, 
beginning on the date of the felony conviction, unless CMS determines 
that a shorter time length of

[[Page 55034]]

time is warranted. Factors that we would consider in making such a 
determination would be: (1) The severity of the offense; (2) when the 
offense occurred; and (3) any other information that CMS deems relevant 
to its determination.
    We believe that the seriousness of certain types of felonious 
behavior could, in some cases, warrant the prescriber's or provider's 
inclusion on the preclusion list for a very lengthy period of time. 
Indeed, we recognized this in a proposed rule published in the Federal 
Register on March 1, 2016 titled ``Medicare, Medicaid, and Children's 
Health Insurance Programs; Program Integrity Enhancements to the 
Provider Enrollment Process'' (81 FR 10720). We proposed in this 
proposed rule to extend the maximum reenrollment bar under Sec.  
424.535(c) from 3 years to 10 years so that the Medicare program, the 
Medicare Trust Funds, and beneficiaries could be protected from 
providers that engaged in especially egregious activities, including 
felonies. To ensure such protections, we believe that a maximum 10-year 
preclusion list period for felony convictions is justified. Conversely, 
because certain felonies may not warrant a 10-year inclusion on the 
preclusion list, we believe that certain factors, as already described, 
should be weighed in determining the applicable timeframe.
    We emphasize that because our proposed preclusion list period for 
felonious prescribers and providers would begin on the date of the 
conviction, such parties may be included on the preclusion list for 
less than 10 years even if CMS imposes the full 10-year period. To 
illustrate, assume that a physician is convicted of a felony on January 
2, 2020. CMS imposes a 10-year preclusion list period, and he is added 
to the preclusion list on June 2, 2020. Because the 10-year period 
commences on the date of the conviction (January 2, 2020), the 
physician would only be on the preclusion list for 9 years and 6 
months.
    The OIG in many cases excludes providers and prescribers for a 
period that is longer than the period permitted for a reenrollment bar 
under Sec.  424.535(c). As discussed previously, section 1862(e) of the 
Act is clear that no federal health care program payment may be made 
for any items or services furnished by an excluded individual or 
entity, or directed or prescribed by an excluded physician. We believe 
that CMS should keep an excluded provider or prescriber on the 
preclusion list at least until the provider or prescriber has been 
reinstated by the OIG in order to be consistent with section 1862(e) of 
the Act. Consequently, we propose in new Sec.  423.120(c)(6)(vii)(D) 
and 422.222(a)(5)(iv) that in cases where a prescriber or provider is 
excluded by the OIG, the prescriber or provider remains on the 
preclusion list until the expiration of the CMS-imposed preclusion list 
period or reinstatement by the OIG, whichever occurs later.
(7) Beneficiary Liability
    During the notice and comment period for the November 2017 proposed 
rule (82 FR 16664), we received a comment recommending that in CMS' 
implementation of the preclusion list, the beneficiary should be held 
harmless unless the beneficiary engaged in fraudulent activity. We 
interpreted this comment to be, in the context of MA, that the 
beneficiary should not be held financially liable if the MA provider 
that furnished to him or her the service or item in question is on the 
preclusion list. We generally agreed with this, noting in our response 
to said comment:
     The contract provisions required between the MA plan and a 
network provider in accordance with Sec.  422.504(g)(1)(iii) are 
binding on providers. Such agreements specify that Qualified Medicare 
Beneficiary (QMB) programs must not be charged cost sharing when the 
state is responsible for paying such amounts under the Medicaid 
program.
     Section 422.504(g) contains broader beneficiary protection 
requirements for MA organizations. This includes a requirement that the 
plan must indemnify the beneficiary from any fees that are the legal 
obligation of the MA organization for services furnished by providers 
that do not contract, or that have not otherwise entered into an 
agreement, with the MA organization, to provide services to the 
organization's enrollees.
    Section 422.504 outlines provisions that a contract between an MA 
organization and CMS must contain. Paragraph (g) thereof outlines 
requirements to which the MA organization must agree; under paragraph 
(g)(1), each MA organization must adopt and maintain arrangements 
satisfactory to CMS to protect its enrollees from incurring liability 
(for example, as a result of an organization's insolvency or other 
financial difficulties) for payment of any fees that are the legal 
obligation of the MA organization. To implement our overall position as 
it pertains to the preclusion list, we believe that a specific addition 
to Sec.  422.504(g)(1) is necessary. Consistent with our existing 
authority under section 1857(e)(1) of the Act, we thus propose to add a 
new paragraph (g)(1)(iv) to Sec.  422.504 under which the MA 
organization agrees that the enrollee must not have any financial 
liability for services or items furnished to the enrollee by an MA 
contracted individual or entity on the preclusion list, as defined in 
Sec.  422.2 and as described in Sec.  422.222. We acknowledge that the 
effect of this provision would be limited to providers under contract 
with the MA organization, for we believe this is consistent with the 
general applicability and scope of Sec.  422.504 and the ability of the 
MA organization to control or impose requirements on the health care 
providers that furnish covered services and items to enrollees. 
Nonetheless, we believe that proposed paragraph (g)(1)(iv) would help 
financially protect beneficiaries from problematic providers as well as 
codify the previously mentioned position we expressed in the preamble 
of the April 2018 final rule (83 FR 16646) but did not address in the 
regulatory text.
(8) Technical Correction Concerning the Term ``Individual'' (Sec.  
423.120(c)(6))
    We also propose to make technical changes to Sec.  
423.120(c)(6)(i), (ii), (iii), and (vi). These paragraphs state as 
follows, respectively:
     Except as provided in paragraph (c)(6)(iv) of this 
section, a Part D sponsor must reject, or must require its PBM to 
reject, a pharmacy claim for a Part D drug if the individual who 
prescribed the drug is included on the preclusion list, defined in 
Sec.  423.100.
     Except as provided in paragraph (c)(6)(iv) of this 
section, a Part D sponsor must deny, or must require its PBM to deny, a 
request for reimbursement from a Medicare beneficiary if the request 
pertains to a Part D drug that was prescribed by an individual who is 
identified by name in the request and who is included on the preclusion 
list, defined in Sec.  423.100.
     A Part D plan sponsor may not submit a prescription drug 
event (PDE) record to CMS unless it includes on the PDE record the 
active and valid individual NPI of the prescriber of the drug, and the 
prescriber is not included on the preclusion list, defined in Sec.  
423.100, for the date of service.
     CMS has the discretion not to include a particular 
individual on (or if warranted, remove the individual from) the 
preclusion list should it determine that exceptional circumstances 
exist regarding beneficiary access to prescriptions.
    Because some states permit pharmacies to prescribe medications, we 
believe that the use of the term ``individual'' in paragraphs (i), 
(ii), (iii), and (vi) is too restrictive. We therefore

[[Page 55035]]

propose in paragraphs (i), (ii), and (vi) to change this term to 
``prescriber'' so as to clarify that the prescriber need not be an 
individual. In a similar vein, we propose:
     In Sec.  423.120(c)(6)(iii) to change the phrase 
``individual NPI of the prescriber'' to ``NPI of the prescriber'', and
     In paragraph (2)(i) of the definition of ``preclusion 
list'' in Sec.  423.100 (and as reflected in our previously discussed 
proposal to revise this paragraph (see section II.C.1.b.6. of this 
proposed rule)) to change the phrase ``he or she'' to ``prescriber.''
(9) Proposed Provisions
    Given the foregoing, we propose the following changes:
     We would revise the definition of ``preclusion list'' in 
Sec.  422.2 as follows:
    ++ Paragraph (1)(i) of the definition would be changed from ``the 
individual or entity is currently revoked from Medicare under Sec.  
424.535'' to ``the individual or entity is currently revoked from 
Medicare for a reason other than that stated in Sec.  424.535(a)(3) of 
this chapter.''
    ++ Paragraph (2)(i) of the definition would be changed from ``the 
individual or entity has engaged in behavior for which CMS could have 
revoked the individual or entity to the extent applicable had they been 
enrolled in Medicare'' to ``the individual or entity has engaged in 
behavior, other than that described in Sec.  424.535(a)(3) of this 
chapter, for which CMS could have revoked the individual or entity to 
the extent applicable had they been enrolled in Medicare.''
    ++ We would add the word ``or'' to the end of paragraph (2)(ii)(C) 
of the definition.
    ++ New paragraph (3) would read as follows: ``The individual or 
entity, regardless of whether they are or were enrolled in Medicare, 
has been convicted of a felony under federal or state law within the 
previous 10 years that CMS deems detrimental to the best interests of 
the Medicare program. Factors that CMS considers in making such a 
determination under this paragraph are: (1) The severity of the 
offense; (2) when the offense occurred; and (3) any other information 
that CMS deems relevant to its determination.''
     We would revise Sec.  422.222 such that it would read as 
follows:
    ++ Existing paragraph (a)(1) would be moved to a new paragraph 
(a)(1)(i) that would state: ``Except as provided in paragraph 
(a)(1)(ii) of this section, an MA organization must not make payment 
for a health care item or service furnished by an individual or entity 
that is included on the preclusion list, defined in Sec.  422.2.''
    ++ New paragraph (a)(1)(ii) would state: ``With respect to MA 
providers that have been added to an updated preclusion list, the MA 
organization must do all of the following:''
    ++ New paragraph (a)(1)(ii)(A) would state: ``No later than 30 days 
after the posting of this updated preclusion list, must provide an 
advance written notice to any beneficiary who has received an MA 
service or item from the individual or entity added to the preclusion 
list in this update;''
    ++ New paragraph (a)(1)(ii)(B) would state: ``Must ensure that 
reasonable efforts are made to notify the individual or entity 
described in paragraph (a)(1)(ii) of this section of a beneficiary who 
was sent a notice under paragraph (a)(1)(ii)(A) of this section; and
    ++ New paragraph (a)(1)(ii)(C) would state: ``Must not deny payment 
for a service or item furnished by the newly added individual or 
entity, solely on the ground that they have been included in the 
updated preclusion list, in the 60-day period after the date it sent 
the notice described in paragraph (a)(1)(ii)(A) of this section.''
    ++ In new Sec.  422.222(a)(2)(i), we propose to incorporate therein 
the current version of Sec.  422.222(a)(2).
    ++ New Sec.  422.222(a)(2)(ii) would state: ``If the individual's 
or entity's inclusion on the preclusion list is based on a 
contemporaneous Medicare revocation under Sec.  424.535 of this 
chapter:''.
    ++ New Sec.  422.222(a)(2)(ii)(A) would state: ``The notice 
described in paragraph (a)(2)(i) of this section must also include 
notice of the revocation, the reason(s) for the revocation, and a 
description of the individual's or entity's appeal rights concerning 
the revocation.''
    ++ New Sec.  422.222(a)(2)(ii)(B) would state: ``The appeals of the 
individual's or entity's inclusion on the preclusion list and the 
individual's or entity's revocation shall be filed jointly by the 
individual or entity and, as applicable, considered jointly by CMS 
under 42 CFR part 498 of this chapter.
    ++ New Sec.  422.222(a)(3)(i) would state: ``Except as provided in 
paragraph (3)(ii), an individual or entity will only be included on the 
preclusion list after the expiration of either of the following:''.
    ++ New Sec.  422.222(a)(3)(i)(A) would state: ``If the individual 
or entity does not file a reconsideration request under Sec.  
498.5(n)(1) of this chapter, the individual or entity will be added to 
the preclusion list upon the expiration of the 60-day period in which 
the individual or entity may request a reconsideration; or''.
    ++ New Sec.  422.222(a)(3)(i)(B) would state: ``If the individual 
or entity files a reconsideration request under Sec.  498.5(n)(1) of 
this chapter, the individual or entity will be added to the preclusion 
list effective on the date on which CMS, if applicable, denies the 
individual's or entity's reconsideration..''
    ++ New Sec.  422.222(a)(3)(ii) would state: ``An OIG excluded 
individual or entity is added to the preclusion list effective on the 
date of the exclusion.
    ++ New Sec.  422.222(a)(4) would state: ``Payment denials based 
upon an individual's or entity's inclusion on the preclusion list are 
not appealable by beneficiaries.''
    ++ New Sec.  422.222(a)(5)(i) would state: ``Except as provided in 
paragraphs (a)(5)(iii) and (iv) of this section, an individual or 
entity that is revoked under Sec.  424.535 of this chapter will be 
included on the preclusion list for the same length of time as the 
individual's or entity's reenrollment bar.''
    ++ New Sec.  422.222(a)(5)(ii) would state: ``Except as provided in 
paragraphs (a)(5)(iii) and (iv) of this section, an individual or 
entity that is not enrolled in Medicare will be included on the 
preclusion list for the same length of time as the reenrollment bar 
that CMS could have imposed on the individual or entity had they been 
enrolled and then revoked.''
    ++ New Sec.  422.222(a)(5)(iii) would state: ``Except as provided 
in paragraph (a)(5)(iv) of this section, an individual or entity, 
regardless of whether they are or were enrolled in Medicare, that is 
included on the preclusion list because of a felony conviction will 
remain on the preclusion list for a 10-year period, beginning on the 
date of the felony conviction, unless CMS determines that a shorter 
time length of time is warranted. Factors that CMS considers in making 
such a determination are: (A) The severity of the offense; (B) when the 
offense occurred; and (C) any other information that CMS deems relevant 
to its determination.''
    ++ New Sec.  422.222(a)(5)(iv) would state: ``In cases where an 
individual or entity is excluded by the OIG, the individual or entity 
shall remain on the preclusion list until the expiration of the CMS-
imposed preclusion list period or reinstatement by the OIG, whichever 
occurs later. ''
     New Sec.  422.504(g)(1)(iv) would state that the MA 
organization agrees that the enrollee shall not have any financial 
liability for services or items furnished to the enrollee by an MA 
contracted individual or entity on the preclusion

[[Page 55036]]

list, as defined in Sec.  422.2 and as described in Sec.  422.222.
     We would revise the definition of ``preclusion list'' in 
Sec.  423.100 as follows:
    ++ Revised paragraph (1)(i) of the definition would state: ``The 
prescriber is currently revoked from Medicare for a reason other than 
that stated in Sec.  424.535(a)(3) of this chapter.''
    ++ Revised paragraph (2)(i) of the definition would state: ``The 
prescriber has engaged in behavior, other than that described in Sec.  
424.535(a)(3) of this chapter, for which CMS could have revoked the 
prescriber to the extent applicable had the prescriber been enrolled in 
Medicare.''
    ++ We would add the word ``or'' to the end of paragraph (2)(ii)(C) 
of the definition.
    ++ New paragraph (3) would state: ``The prescriber, regardless of 
whether the prescriber is or was enrolled in Medicare, has been 
convicted of a felony under federal or state law within the previous 10 
years that CMS deems detrimental to the best interests of the Medicare 
program. Factors that CMS considers in making such a determination 
under this paragraph are: (i) The severity of the offense; (ii) when 
the offense occurred; and (iii) any other information that CMS deems 
relevant to its determination.''
     We would revise Sec.  423.120(c)(6) as follows:
    ++ In paragraphs (c)(6)(i), (ii), and (vi), we would change the 
term ``individual'' to ``prescriber.''
    ++ In paragraph (iii), we would change the phrase ``individual NPI 
of the prescriber'' to ``NPI of the prescriber''.
    ++ A new opening paragraph of (c)(6)(iv) would state: ``With 
respect to Part D prescribers that have been added to an updated 
preclusion list, the Part D plan sponsor must do all of the 
following:''
    ++ Revised paragraph (c)(6)(iv)(A) would state: ``Subject to all 
other Part D rules and plan coverage requirements, and no later than 30 
days after the posting of this updated preclusion list, must provide an 
advance written notice to any beneficiary who has received a Part D 
drug prescribed by a prescriber added to the preclusion list in this 
update;''
    ++ Revised paragraph (c)(6)(iv)(B) would state: ``Must ensure that 
reasonable efforts are made to notify the prescriber described in 
paragraph (c)(6)(iv) of this section of a beneficiary who was sent a 
notice under paragraph (c)(6)(iv)(A) of this section; and''
    ++ New paragraph (c)(6)(iv)(C) would state: ``Must not reject a 
pharmacy claim or deny a beneficiary request for reimbursement for a 
Part D drug prescribed by the prescriber, solely on the ground that 
they have been included in the updated preclusion list, in the 60-day 
period after the date it sent the notice described in paragraph 
(c)(6)(iv)(A) of this section.''
    ++ New Sec.  423.120(c)(6)(v)(A) would state: ``CMS sends written 
notice to the prescriber via letter of their inclusion on the 
preclusion list. The notice must contain the reason for the inclusion 
on the preclusion list and inform the prescriber of their appeal 
rights. A prescriber may appeal their inclusion on the preclusion list 
under this section in accordance with part 498 of this chapter.''
    ++ New Sec.  423.120(c)(6)(v)(B) would state: ``If the prescriber's 
inclusion on the preclusion list is based on a contemporaneous Medicare 
revocation under Sec.  424.535 of this chapter:''.
    ++ New Sec.  423.120(c)(6)(v)(B)(1) would state: ``The notice 
described in paragraph (c)(6)(v)(A) of this section must also include 
notice of the revocation, the reason(s) for the revocation, and a 
description of the prescriber's appeal rights concerning the 
revocation.''
    ++ New Sec.  423.120(c)(6)(v)(B)(2) would state: ``The appeals of 
the prescriber's inclusion on the preclusion list and the prescriber's 
revocation shall be filed jointly by the prescriber and, as applicable, 
considered jointly by CMS under part 498 of this chapter.''
    ++ New Sec.  423.120(c)(6)(v)(C)(1) would state: ``Except as 
provided in paragraph (c)(6)(v)(C)(2), a prescriber will only be 
included on the preclusion list after the expiration of either of the 
following:''.
    ++ New Sec.  423.120(c)(6)(v)(C)(1)(i) would state: ``If the 
prescriber does not file a reconsideration request under Sec.  
498.5(n)(1) of this chapter, the prescriber will be added to the 
preclusion list upon the expiration of the 60-day period in which the 
prescriber may request a reconsideration; or''.
    ++ New Sec.  423.120(c)(6)(v)(C)(1)(ii) would state: ``If the 
prescriber files a reconsideration request under Sec.  498.5(n)(1) of 
this chapter, the prescriber will be added to the preclusion list 
effective on the date on which CMS, if applicable, denies the 
prescriber's reconsideration.
    ++ New Sec.  423.120(c)(6)(v)(C)(2) would state: ``An OIG excluded 
prescriber is added to the preclusion list effective on the date of the 
exclusion.''
    ++ New Sec.  423.120(c)(6)(vii)(A) would state: ``Except as 
provided in paragraphs (c)(6)(vii)(C) and (D) of this section, a 
prescriber who is revoked under Sec.  424.535 of this chapter will be 
included on the preclusion list for the same length of time as the 
prescriber's reenrollment bar.''
    ++ New Sec.  423.120(c)(6)(vii)(B) would state: ``Except as 
provided in paragraphs (c)(6)(vii)(C) and (D) of this section, a 
prescriber who is not enrolled in Medicare will be included on the 
preclusion list for the same length of time as the reenrollment bar 
that CMS could have imposed on the prescriber had the prescriber been 
enrolled and then revoked.''
    ++ Section 423.120(c)(6)(vii)(C) would state: ``Except as provided 
in paragraph (c)(6)(vii)(D) of this section, a prescriber, regardless 
of whether the prescriber is or was enrolled in Medicare, that is 
included on the preclusion list because of a felony conviction will 
remain on the preclusion list for a 10-year period, beginning on the 
date of the felony conviction, unless CMS determines that a shorter 
length of time is warranted. Factors that CMS considers in making such 
a determination are: (1) The severity of the offense; (2) when the 
offense occurred; and (3) any other information that CMS deems relevant 
to its determination.''
    ++ Section 423.120(c)(6)(vii)(D) would state: ``In cases where a 
prescriber is excluded by the OIG, the prescriber shall remain on the 
preclusion list until the expiration of the CMS-imposed preclusion list 
period or reinstatement by the OIG, whichever occurs later.
    ++ New paragraph (c)(6)(viii) would state: ``Payment denials under 
paragraph (c)(6) that are based upon the prescriber's inclusion on the 
preclusion list are not appealable by beneficiaries.''
     We propose to revise 42 CFR part 498 as follows:
    ++ New Sec.  498.5(n)(1)(i) would state: ``Any individual or entity 
that is dissatisfied with an initial determination or revised initial 
determination that they are to be included on the preclusion list (as 
defined in Sec.  422.2 or Sec.  423.100 of this chapter) may request a 
reconsideration in accordance with Sec.  498.22(a).''
    ++ New Sec.  498.5(n)(1)(ii)(A) would state: ``If the individual's 
or entity's inclusion on the preclusion list is based on a Medicare 
revocation under Sec.  424.535 of this chapter and the individual or 
entity receives contemporaneous notice of both actions, the individual 
or entity may request a joint reconsideration of both the preclusion 
list inclusion and the revocation in accordance with Sec.  498.22(a).''

[[Page 55037]]

    ++ New Sec.  498.5(n)(1)(ii)(B) would state: ``The individual or 
entity may not submit separate reconsideration requests under paragraph 
(n)(1)(ii)(A) of this section for inclusion on the preclusion list or a 
revocation if the individual or entity received contemporaneous notice 
of both actions.''
2. Medicare Advantage Risk Adjustment Data Validation Provisions 
(Sec. Sec.  422.300, 422.310(e), and 422.311(a))
a. Background
    Subpart G of the MA regulations at part 422 describes how payment 
is made to MA organizations. These payment principles are based on 
sections 1853, 1854, and 1858 of the Act. Subpart G also sets forth the 
requirements for making payments to MA organizations offering local and 
regional MA plans, including calculation of MA capitation rates.
    Section 1853(a)(3) of the Act requires that we risk adjust our 
payments to MA organizations. Risk adjustment strengthens the Medicare 
program by ensuring that accurate payments are made to MA organizations 
based on the health status plus demographic characteristics of their 
enrolled beneficiaries and ensures that MA organizations are paid 
appropriately for their plan enrollees (that is, less for healthier 
enrollees expected to incur lower health care costs and more for less 
healthy enrollees expected to incur higher health care costs). Accurate 
payments to MA organizations also help ensure that providers are paid 
appropriately for the services they provide to MA beneficiaries. In 
general, the current risk adjustment methodology relies on enrollee 
diagnoses and encounters, as specified by the International 
Classification of Disease, currently the Tenth Revision Clinical 
Modification guidelines (ICD-10-CM), to prospectively adjust capitation 
payments for a given enrollee based on the health status of the 
enrollee. Diagnosis codes determine the risk scores, which in turn 
determine the risk-adjusted payments. As a result, MA organizations and 
providers must focus attention on complete, truthful, and accurate 
diagnosis reporting according to the official ICD-10-CM coding 
guidelines.
    As the ICD-10-CM guidelines emphasize, ``accurate coding cannot be 
achieved'' without ``consistent, complete documentation in the medical 
record.'' Diagnoses submitted for payment by MA organizations must be 
supported by medical record documentation. This requirement has been in 
place since the beginning of the MA program. It has been explained in 
every edition of the Medicare Managed Care Manual, with which MA 
organizations agree to comply as a condition of their participation. 
(See the 2013 Medicare Managed Care Manual, Sec.  40; 2004 Medicare 
Managed Care Manual, Sec.  111.1, Ex. 30 & Sec.  111.4; 2001 Medicare 
Managed Care Manual, Sec.  110.4.) It has also been emphasized in 
numerous trainings provided to MA organizations and their 
subcontractors.
    The diagnosis data submitted by MA organizations must conform to 
all relevant national standards. (See 42 CFR 422.310(d)(1).) As 
discussed earlier, the Clinical Modification of the International 
Classification of Disease, published by the federal government, is the 
chief national standard for diagnosis coding. It is the coding system 
on which MA risk adjustment is run. Medical record documentation is a 
core principle of the ICD-10-CM diagnosis coding system and was equally 
central to the Ninth Revision (ICD-9-CM), which preceded it. A federal 
court of appeals has recognized the requirement of medical record 
documentation for diagnosis codes submitted for payment by MA 
organizations. United States ex rel. Swoben v. United Health Ins. Co., 
848 F.3d 1161, 1168, 1176 (9th Cir. 2016). When MA organizations 
certify that their diagnosis codes are ``accurate'' and ``truthful'' to 
the ``best knowledge, information, and belief'' of the certifying 
individual, the existence of adequate medical record documentation is 
one important standard by which accuracy and truthfulness are measured 
(42 CFR 422.504(l)(1)). As we have previously explained, our ``risk 
adjustment methodology provides that a specific amount be paid if an 
enrollee has a particular condition'' (75 FR 19745). The medical record 
documentation requirement is ``designed to ensure that the enrollee in 
fact has th[e] condition'' for which an MA organization is requesting 
payment under the risk adjustment model (75 FR 19745).
    The current risk adjustment model employed in adjusting MA plan 
payments is known as the CMS Hierarchical Condition Category (CMS-HCC) 
model. It functions by categorizing ICD-10-CM codes into disease groups 
called Hierarchical Condition Categories, or HCCs. Each HCC includes 
diagnosis codes that are related clinically and have similar cost 
implications. The CMS-HCC model is recalibrated approximately every 2 
years to reflect newer treatment and coding patterns in Medicare FFS. 
This recalibration is made through the annual advance notice of 
methodological changes authorized by 42 U.S.C. 1395w-23(b)(2). Since 
2007, when a demographic data-only payment method was completely 
phased-out for MA plans, 100 percent of payment has been risk-adjusted. 
The statute continues to provide us the authority to add to, modify, or 
substitute for risk adjustment factors if the changes will improve the 
determination of actuarial equivalence.
b. Risk Adjustment Data Validation Initiatives
    MA enrollee HCCs are assigned based on data submitted to us by MA 
organizations via the Risk Adjustment Payment System (RAPS) and 
Encounter Data System (EDS). The HCCs contribute to an enrollee's risk 
score, which is used to adjust a base payment rate. Essentially, the 
higher the risk score for an enrollee, the higher the expected health 
care cost for the enrollee. The HCC data that MA organizations submit 
to CMS via the RAPS and EDS systems is self-reported by the MA 
organization and does not go through a validation review before being 
incorporated into a given beneficiary's risk-profile. Since there is an 
incentive for MA organizations to potentially over-report diagnoses so 
that they can increase their payment, the Department audits plan-
submitted diagnosis data a few years later to ensure they are supported 
by medical record documentation.
    Verifiable medical record documentation is key to accurate payment 
and successful data validation. We annually select MA organizations for 
risk adjustment data validation (RADV) audits.\23\ RADV audits are 
intended to confirm the presence of risk adjustment conditions (that 
is, diagnoses that map to HCCs) as reported by MA organizations for 
their enrollees and confirmed via medical record documentation. RADV 
audits occur after the final risk adjustment data submission deadline 
for the MA contract year. The audits validate the HCC data submitted by 
MA organizations by reviewing hospital inpatient, hospital outpatient, 
and physician/practitioner provider medical records. The focus of this 
medical record review activity is on diagnoses related to the 
enrollee's HCC profile. Risk adjustment discrepancies are identified 
when the enrollee's HCCs used for payment (based upon MA organization-
submitted data) differ from the HCCs assigned based on the medical 
record, pursuant to the RADV audit

[[Page 55038]]

process. Risk adjustment discrepancies can be aggregated to determine 
an overall level of payment error. In turn, payment error for a sample 
of contract enrollees can be extrapolated to calculate a contract-level 
payment error estimate. Although we have the authority to extrapolate 
from a statistically valid sample to calculate a contract-level audit 
recovery, we have not yet done so.
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    \23\ Any changes to the CMS-HCC payment model are published in 
the annual payment notice.
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    From 1999 until 2003, our payment validation activity for the MA 
program had both an educational and audit focus and was intended to 
improve the accuracy of the risk adjustment data that was being 
submitted to CMS for payment. Payment adjustments were limited to 
enrollee-level adjustments for those enrollees sampled in the payment 
validation audit. At the time, only 10 percent of the MA payment amount 
was risk adjusted. As a result, payment recovery amounts for the small 
number of plans audited was very small. Since payment year 2004 was the 
first year for which MA payments were based on the current HCC risk 
adjustment model, we considered payment years 2004 through 2006 as 
pilot years for the purpose of RADV and no payment recovery activity 
occurred.
    Payment recovery resumed for payment year 2007, when we audited 37 
MA contracts and recouped $13.7 million. Payment adjustments were again 
limited to enrollee-level adjustments for those enrollees sampled in 
the payment validation audit. (Although we suggested that we would make 
contract-level payment adjustments for the payment year 2007 audits, we 
did not ultimately do so.) In the course of that audit process, as in 
previous years, we reviewed medical record documentation provided by 
each audited MA organization to substantiate conditions reported by the 
organization for beneficiaries in each audit sample. After CMS' 
findings were reported to each MA organization, any organization that 
disagreed with CMS' determinations could challenge them through a 
three-stage administrative process established by regulation in 2010. 
(See 42 CFR 422.311). This dispute and appeals process is currently 
ongoing.
    No payment validation audits were conducted for payment years 2008, 
2009, or 2010. In those years, we were considering the development of a 
methodology for calculating payment adjustments based on statistical 
RADV MA contract-level payment error audit findings. The development of 
contract-level RADV audits would enable us to make contract-level 
payment adjustments rather than simply adjusting payments for specific 
enrollees from an audit sample, as we had done previously.
    On December 20, 2010, we proposed a methodology on the CMS website 
for selecting a statistically-valid sample of enrollees from each 
audited MA contract and extrapolating from the results of that sample 
audit to calculate a contract-level payment adjustment. We invited 
public comment on this proposed methodology, and received more than 500 
comments, which we carefully reviewed. On February 24, 2012, we 
published what we described as the final methodology for RADV contract-
level payment error calculation.\24\ That methodology described 
sampling techniques and the statistical calculation to be used to 
extrapolate from the sample selected. In brief, up to 201 enrollees 
from each audited MA contract would be selected according to certain 
criteria, including their continuous enrollment in the contract for the 
entire data collection year and January of the payment year; their lack 
of end-stage renal disease (ESRD) status and hospice status for that 
entire period; their enrollment in Medicare Part B coverage for the 
entire data collection year; and their submission of at least one 
diagnosis during the data collection year leading to at least one CMS-
HCC assignment in the payment year. The RADV-eligible enrollees would 
be ranked by risk score and then divided into three equal strata. An 
equal number of enrollees would then be randomly selected from each 
stratum (67 enrollees per stratum in the case of an audit of 201 
enrollees). After medical records were reviewed, payment errors would 
be calculated for each selected enrollee based on the number of months 
the person was enrolled in the selected MA contract (and was not in 
ESRD or hospice status) during the payment year. A payment error rate 
for each stratum would be calculated, and then an overall payment error 
rate for the audited contract, computed at a ninety-nine percent 
confidence interval. We stated that this methodology would be applied 
to the next round of RADV audits, which would be conducted on payment 
year 2011. Audits for payment years 2011, 2012, and 2013 have been 
conducted according to this methodology, at a total cost of 
approximately $150 million to the agency, but have not yet been 
finalized. These audits are in addition to RADV and related MA audits 
conducted by the Office of Inspector General, which are conducted 
pursuant to OIG's independent authorities at sections 2(1) and 4(a)(1) 
of the Inspector General Act.
---------------------------------------------------------------------------

    \24\ Notice of Final Payment Error Calculation Methodology for 
Part C Medicare Advantage Risk Adjustment Data Validation Contract-
Level Audits, available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/recovery-audit-program-parts-c-and-d/Other-Content-Types/RADV-Docs/RADV-Methodology.pdf.
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    We also stated in 2012 that, after using this methodology to 
calculate a preliminary payment recovery amount, we would apply a FFS 
Adjuster as an offset before finalizing the audit recovery. The FFS 
Adjuster was intended to account for any effect of erroneous diagnosis 
codes in the data from Medicare Parts A and B (often referred to as 
``Fee-For-Service'' Medicare) that are used to calibrate the MA risk 
adjustment model. We stated that the FFS Adjuster would calculate a 
permissible level of payment error (for example, a percentage of the 
total payments made on an MA contract in a given year) and limit RADV 
audit recovery to payment errors above that level. The FFS Adjuster was 
never intended to set a permissible rate for the submission of 
erroneous diagnosis codes. We stated that the FFS Adjuster would be 
calculated based on a RADV-like review of records submitted to support 
the Medicare Part A and B diagnosis codes. That review is now complete, 
and will be discussed later.
c. Discussion of Proposals
(1) Extrapolation
    The Secretary intends to recover overpayments based on extrapolated 
audit findings through the use of statistically valid random sampling 
techniques. Although we described our February 2012 publication as the 
final methodology to be used to calculate contract-level RADV audit 
recoveries for payment year 2011, it has never been implemented. As we 
stated earlier, audits for payment years 2011, 2012, and 2013 have been 
conducted according to this methodology, but contract-level recoveries 
have not yet been sought. We are now providing additional notice and 
again welcoming public input on the agency's methodology for 
calculating a contract-level payment error in RADV audits, including 
the sample sizes used in these contract-level audits. CMS is not 
required to set forth the methodology for calculating an extrapolated 
payment error through regulatory provisions (it does not do so in Parts 
A and B, where Medicare Administrative Contractors (MACs) may use any 
statistically valid sampling and extrapolation methodology they 
determine to be appropriate), however, in the interest of transparency, 
we are updating

[[Page 55039]]

stakeholders on our plans to use various sampling and extrapolation 
methodologies in RADV audits, as CMS deems appropriate.\25\ All audits 
will be based on statistically valid sampling and extrapolation 
methodologies.
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    \25\ The Office of the Inspector General, which is required by 
law to conduct audits and follow generally accepted government 
auditing standards, does not seek comment on its methodology for 
risk adjustment audit work that may lead to overpayment recoveries 
from MA organizations.
---------------------------------------------------------------------------

    In addition to the contract-level methodology described earlier, we 
have identified other potential methodologies for sampling and 
extrapolation, which would calculate improper payments made on the 
audited MA contract for a particular sub-cohort or sub-cohorts in a 
given payment year, and the agency may also use such a methodology to 
calculate improper payments made to the audited MA contract. For 
example, a sub-cohort could be the enrollees for whom a particular HCC 
or one of a related set of HCCs (such as the three diabetes HCCs) was 
reported. After choosing an MA contract and a sub-cohort or sub-cohorts 
to audit, we would select a statistically significant sample of 
enrollees for the sub-cohort or sub-cohorts. After reviewing the 
medical records of those enrollees, we would use statistical 
extrapolation to calculate and recoup the improper payments made to the 
audited MA contract for covering enrollees for the sub-cohort or sub-
cohorts in that payment year. We would use the same statistical 
calculation for this sub-cohort-level extrapolation as we do for the 
contract-level extrapolation (although we welcome comment as to whether 
to stratify the sample population for the sub-cohort audits, as we 
currently anticipate doing for the contract-level audits).
    We believe that, because any sub-cohort is necessarily a subset of 
the enrollees covered through a particular MA contract, we could often 
use a much smaller sample size to calculate a statistically significant 
extrapolated recovery for a sub-cohort than would be required to 
calculate a contract-level recovery (up to 201 enrollees, according to 
our anticipated contract-level methodology). This smaller sample size 
would allow us to spread our audit resources across a wider range of MA 
contracts, while still generating statistically significant recoveries. 
This sub-cohort-based audit methodology would allow us to focus on 
cohorts of enrollees that appear to raise programmatic concerns.
    We invite comment on both the contract-level audit methodology 
published in February 2012, and our proposal for an extrapolated audit 
methodology based on sub-cohorts of enrollees. We also seek comment on 
whether there are particular situations in which one methodology may be 
preferable to the other, and whether the agency should revise the 
contract-level audits that have been conducted but not finalized for 
payment years 2011, 2012, and 2013. Neither proposed methodology is 
meant to displace our longstanding authority to audit the medical 
records of particular enrollees who we believe may be associated with 
improper payments or to use any statistically valid audit 
methodology.\26\
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    \26\ We may begin to conduct RADV audits for payment years 2014 
and 2015 before this proposal is finalized, pursuant to our 
longstanding authority to review the medical records of any MA 
enrollee and recoup any improper payments identified. Although we 
would design these audits so that the individuals selected would 
form a statistically significant sample that would support an 
extrapolated recovery, we would not seek to recover on an 
extrapolated basis until the rule is final. At the very least, these 
audits would support enrollee-level recoveries.
---------------------------------------------------------------------------

    If we finalize one or more sampling and extrapolation methodologies 
through this rulemaking, we would make any future changes to that 
methodology (or those methodologies) through the Health Plan Management 
System.
    We are also considering whether to explicitly expand the MA 
organizations' RADV appeal rights, particularly in light of the 
upcoming auditing and recoveries in the MA program. One option would be 
to permit appeal of the RADV payment error calculation methodology used 
in a RADV audit similar to practices in the Part A and Part B space of 
Medicare FFS. We invite comments on this matter.
(2) Application to Payment Year 2011 and Subsequent Years
    We intend to apply the finalized RADV payment error methodology or 
methodologies to payment year 2011, and all subsequent years. (However, 
we do not expect to use a sub-cohort-based methodology, if finalized, 
for any payment year before 2014). Section 1871(e)(1)(A) of the Act 
authorizes retroactive application of rules where ``(i) such 
retroactive application is necessary to comply with statutory 
requirements; or (ii) failure to apply the change would be contrary to 
the public interest.'' We are considering whether application of the 
finalized methodology or methodologies to payment year 2011, and all 
subsequent years, would require the exercise of this statutory 
authority to engage in retroactive rulemaking. We invite comment on the 
subject.
    In any case, we believe that failure to apply the finalized RADV 
payment error methodology or methodologies to those payment years would 
be contrary to the public interest. The public has a substantial 
interest in the recoupment of millions of dollars of public money 
improperly paid to private insurers. The public also has a significant 
interest in providing incentives for those insurers to claim only 
proper payments in the future, which would be promoted by the 
recoupment of funds improperly paid in the past. Given the amount of 
improper payments identified under the MA program (estimated to be 
$14.35 billion in FY 2017,\27\ the $650 million in recovered improper 
payments represents, if this policy was finalized, 3 years improper 
payment for 30 plans), the interest in determining an accurate recovery 
amount for each audited MA plan, and the importance of protecting the 
overall integrity of the program, we believe that it is in the public 
interest for CMS to apply the RADV payment error methodology or 
methodologies adopted through this rulemaking to payment year 2011 and 
all subsequent years. In applying this methodology (or these 
methodologies) to those payment years, CMS would be acting in 
compliance with the IPERIA statute \28\ as

[[Page 55040]]

well as its own fiduciary responsibility to recover funds due and owing 
to the Medicare Trust Funds. We note also that our February 2012 
publication put MA organizations on notice that CMS expected to 
calculate a contract-level payment error for payment year 2011 and 
beyond by extrapolating from its review of a statistically valid sample 
of enrollees, and that (as explained earlier) MA organizations have 
never been entitled to receive or retain payments associated with HCCs 
that cannot be validated by medical records. Application of the 
finalized RADV payment error methodology or methodologies to payment 
year 2011 and all subsequent years therefore would not upset any 
settled interest.
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    \27\ CMS has historically reported high levels of payment error 
in the Part C program. The Part C error rate has ranged between 11 
percent and 9 percent between fiscal years (FY) 2011 and 2014, 
respectively. In FY 2017, the reported Part C error rate was 8.31 
percent or $14.35 billion.
    \28\ Improper Payments Elimination and Recovery Improvement Act 
of 2012 (IPERIA, Pub. L. 112-248). The RADV program is a corrective 
audit activity developed by CMS to address provisions included in 
the IPIA of 2002, as amended by the IPERA of 2010, and further 
amended by IPERIA. These statutes require that government agencies 
annually estimate and report improper payments. RADV audits were 
initiated because Part C payment error was out of compliance with 
IPIA. The IPERIA requires the Office of Management and Budget (OMB) 
to annually identify agencies for greater levels of oversight and 
review, and with that agency ``establish annual targets and semi-
annual or quarterly actions for reducing improper payments 
associated with each high-priority program.'' In November 2009, 
Executive Order (E.O.) 13520 was signed in an effort to reduce 
improper payments by increasing transparency in government and 
holding agencies accountable for reducing improper payments. In 
March 2010, OMB issued guidance for agencies regarding the 
implementation of E.O. 13520 entitled Part III to OMB Circular A-
123, Appendix C (Appendix C). Appendix C outlines the 
responsibilities of agencies, determines the programs subject to 
E.O. 13520, defines supplemental measures and targets for high 
priority programs, and establishes reporting requirements under E.O. 
13520 and procedures to identify entities with outstanding payments. 
One of those remedies is payment recapture audits, a requirement 
that any program that expends at least $1 million must implement 
payment recapture audits. A recovery audit, or payment recapture 
audit, is a review process designed to identify erroneous payments. 
Additionally, it is a corrective control activity designed to 
identify and recapture erroneous payments, and, as such, is a 
management function and responsibility.
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    If the finalized contract-level audit methodology differs from the 
one we published in February 2012, we will also consider whether to 
apply the new contract-level payment error methodology to payment years 
2011, 2012, and 2013, or to only apply it to payment year 2014 and 
subsequent years, and to finalize the audits for those earlier payment 
years according to the methodology published in February 2012. We 
invite comment on this subject, as well. In any event, and however 
audits for prior years are ultimately handled, we believe that it is 
vitally important for the health of the MA program to have extrapolated 
recoveries available for future audit years.
(3) Implementation
    This proposal would announce CMS' intention to recover improper 
payments based on extrapolation of payment error from RADV audit 
samples to MA organization specified populations. CMS would calculate 
and recover improper payments based on extrapolation methodologies. MA 
organizations would be required to remit extrapolated recovery amounts 
from audit findings as calculated by CMS through its payment system, 
Medicare Advantage and Prescription Drug system (MARx). MARx is the CMS 
system that makes monthly payments and payment adjustments to the MA 
organizations and Part D sponsors. Overpayment recoveries of all types 
are considered payment adjustments which are done as offsets to the 
plans' monthly payments. RADV recovery amounts are included in this 
category. In the month the plan has been notified that the recovery 
amount will be offset, the MARx system makes an offset to the plans 
monthly payment equal to the amount of the recovery amount. In the 
event the recovery amount exceeds the payment in 1 month, the recovery 
will be spread across adjustments for multiple months until the full 
amount is recovered. CMS may likewise require MA organizations to remit 
such recovery amounts based upon audit findings by OIG.
(4) Recoupment of Improper Payments in Part C
    Improper payments identified by CMS outside of the RADV audit 
process or self-identified by the MA organization that are not returned 
in accordance with Sec. Sec.  422.330, and are identified and/or 
estimated through extrapolation or other estimation methodologies as a 
result of CMS audits will be recovered following CMS audit processes 
including payment offset. We propose that MA organizations be required 
to remit funds that CMS calculates as improper payments through the 
extrapolated RADV audit findings in accordance with Sec. Sec.  
422.310(e). RADV audit results can be appealed by MA organizations 
using the regulatory administrative appeals process outlined in Sec.  
422.311.
(5) FFS Adjuster
    After our 2012 RADV publication, we conducted an extensive study 
regarding the presence and impact of diagnosis error in FFS claims 
data. Our study suggests that errors in FFS claims data do not have any 
systematic effect on the risk scores calculated by the CMS-HCC risk 
adjustment model, and therefore do not have any systematic effect on 
the payments made to MA organizations.\29\
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    \29\ We are aware of the district court's recent ruling in 
United HealthCare Insurance Co. v. Azar, No. 16-cv-157 (D.D.C. 
September 7, 2018), and the government is reviewing that decision 
and considering its response. In any event, that ruling was made on 
the basis of the administrative record before the court, which did 
not include the results of our study.
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    The study began by auditing 8,630 outpatient claims paid through 
Medicare Part B in a given year. We reviewed the medical records 
associated with each claim (a small subset of the medical records 
associated with each beneficiary) to determine whether the diagnosis 
associated with the claim was supported by medical record 
documentation. A discrepancy rate for each CMS-HCC was then calculated. 
For example, the data set contained 484 claims submitted with a 
diagnosis of chronic obstructive pulmonary disease, which is CMS-HCC 
108. Of those diagnoses, 388 were supported by medical record 
documentation, and 96 were not, for a discrepancy rate of 19.8 percent. 
To account for the fact that the data set contained extremely small 
samples of many CMS-HCCs--for example, one diagnosis of extensive third 
degree burns and two diagnoses of severe head injury--we calculated a 
high, low, and baseline discrepancy rate. Each CMS-HCC was assigned one 
of these three mean discrepancy rates depending on its relationship to 
the bassline discrepancy rate: CMS-HCCs with a discrepancy rate 
significantly higher than the baseline were assigned to the high 
category, and those with a discrepancy rate significantly lower than 
the baseline were assigned to the low category. All other CMS-HCCs were 
assigned the baseline discrepancy rate. These rates were 46.2 percent, 
33.8 percent, and 20.9 percent.
    In a given year, multiple claims are submitted for Medicare Part B 
services received by a given beneficiary and associated with a given 
diagnosis. For example, an average beneficiary with metastatic cancer 
or acute leukemia, which is CMS-HCC 7, has seven claims associated with 
that diagnosis. Because we were interested in determining whether a 
given beneficiary had a documented diagnosis in a given year, and not 
whether any particular claim was associated with medical record 
documentation, we used the claim-level discrepancy rates described 
above to calculate beneficiary-level discrepancy rates.\30\
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    \30\ For example, metastatic cancer or acute leukemia was 
assigned the baseline discrepancy rate of 33.8%. We therefore 
reasoned that each of the seven claims associated with the average 
beneficiary for whom such a diagnosis was reported had a 66.2% 
chance of being supported by medical record documentation, and only 
one instance of medical record support was necessary to make the 
diagnosis valid for that year. If each beneficiary with such a 
reported diagnosis has 7 claims associated with that diagnosis, and 
each claim has a 66.2% chance of being supported by medical record 
documentation, then 99.95% of all beneficiaries will have at least 
one instance of medical record support, and only 0.05% of 
beneficiaries will lack any medical record documentation of their 
reported diagnosis.
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    After calculating this beneficiary-level discrepancy rate for each 
HCC, we ran fifty simulations in which we removed diagnoses from a data 
set of more than 1.4 million Medicare Part A and B beneficiaries at the 
beneficiary-level discrepancy rate.\31\ After removing diagnoses at the 
indicated rates, we used each simulated ``corrected'' data set to 
recalibrate the CMS-HCC risk adjustment model, applied the recalibrated 
risk coefficients to a data set of MA beneficiaries, and compared their 
original risk scores to the risk

[[Page 55041]]

scores calculated with the recalibrated model. We found that the 
difference between the risk scores was very small, and that the 
recalibrated risk scores tended to be slightly lower than the original 
risk scores. Therefore, we concluded that diagnosis error in FFS claims 
data does not lead to systematic payment error in the MA program.
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    \31\ For metastatic cancer and acute leukemia, 1 in 2,000 
diagnoses was removed (corresponding to an error rate of 0.05%).
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    An executive summary of the findings and a technical appendix 
describing the data and methodology can be found at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-Risk-Adjustment-Data-Validation-Program/Resources.html. 
Because it appears that diagnosis error in FFS claims data does not 
lead to systematic payment error in the MA program, we propose not to 
include an FFS Adjuster in any final RADV payment error methodology.
    Moreover, even if we had found that diagnosis error in FFS claims 
data led to systematic payment error in the MA program, we no longer 
believe that a RADV-specific payment adjustment would be appropriate. 
RADV audits are used to recover payments based on diagnoses that are 
not supported by medical record documentation, which thus should not 
have been reported to CMS. If a payment has been made to an MA 
organization based on a diagnosis code that is not supported by medical 
record documentation, that entire payment is in error and should be 
recovered in full, because the payment standard has not been met, and 
the MA organization is not entitled to any payment for that diagnosis. 
RADV audits do not address issues with the accuracy of payments based 
on diagnosis codes that are supported by medical record documentation. 
Consequently, an adjustment to RADV recoveries to remedy payment 
accuracy concerns is inappropriate. For this reason, we believe that it 
would not be appropriate to correct any systematic payment error in the 
MA program through a payment adjustment that was only applied to 
audited contracts. Doing so would introduce inequities between audited 
and unaudited plans, by only correcting the payments made to audited 
plans.
    Because our study suggests that diagnosis error in FFS claims data 
does not lead to systematic payment error in the MA program and because 
we believe it would be inequitable to correct any systematic errors in 
the payments made to audited plans only, we would not include an FFS 
Adjuster in any RADV extrapolated audit methodology. We welcome public 
comments on this study.
d. Proposed Changes
    In this section, we discuss the proposed changes to the regulation 
in Parts 422 and 423 governing the MA Program. We are proposing to 
apply extrapolation to plan year audits for payment year 2011 forward.
    The following is a summary of the proposed changes included in this 
proposed revision:
    We propose to revise Sec.  422.300 to include ``collection of 
improper payments.''
    We propose to amend Sec.  422.310(e) Validation of risk adjustment 
data, to apply extrapolation to plan year audits for payment year 2011 
forward.
    We propose to amend Sec.  422.310(e) Validation of risk adjustment 
data, by adding a requirement to set forth the provision for MA 
organizations to remit improper payments based on RADV audits and 
established in accordance with stated methodology, in a manner 
specified by CMS.
    We propose to amend Sec.  422.311, the RADV audit dispute and 
appeal process section, by adding language to clarify that recovery of 
improper payments from MA organizations will be conducted according to 
the Secretary's payment error extrapolation and recovery methodologies 
and that CMS will apply extrapolation to plan year audits for payment 
year 2011 forward.

D. Implementing Other Changes

1. Clarification Regarding Accreditation for Quality Improvement 
Programs
    Section 1852(e) of the Act requires each MA organization to have an 
ongoing quality improvement program to improve the quality of care 
provided to its enrollees and establishes the requirements for the 
quality improvement programs. Section 1852(e) (4) of the Act requires 
the Secretary to deem that an MA Organization has met all of the 
requirements for any one out of the six program areas listed in section 
1852(e)(4)(B) of the Act if the MA Organization is accredited in that 
area by an accrediting organization that has been approved by CMS and 
that uses the same (or stricter) standards than CMS uses to evaluate 
compliance with the applicable requirements. Section 1852(e)(4)(B)(i) 
of the Act references the quality improvement programs in section 
1852(e) of the Act. Thus, an MA Organization could be deemed to meet 
CMS' requirements related to quality improvement programs by a CMS-
approved accrediting organization.
    Section 722(a) of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (the MMA) revised the quality improvement 
program requirements in the Act. Section 1852(e) of the Act was revised 
by adding a new clause ``(2) Chronic Care Improvement Programs'' and 
renumbering the existing clauses accordingly (that is, existing clause 
``(2) Data'' became ``(3) Data''). Section 722(a) of the MMA also 
revised section 1852(e)(4)(B)(i) of the Act. Prior to the MMA, section 
1852(e)(4)(B)(i) of the Act indicated that the requirements in clauses 
(e)(1) (general requirements for quality improvement programs) and 
(e)(2) (the collection, analysis, and reporting of data related to 
quality improvement programs) could be deemed. Consistent with the 
changes made to section 1852(e) of the Act described earlier, section 
722(a) of the MMA amended section 1852(e)(4)(B)(i) of the Act to 
provide, ``(i) Paragraphs (1) through (3) of this subsection (relating 
to quality improvement programs).'' However, the printed and online 
versions of section 1852(e)(4)(B)(i) of the Act continue to cross-
reference clauses (e)(1) and (e)(2) erroneously. Therefore, we are 
clarifying in this proposed rule that the requirements in section 
1852(e)(3) of the Act and the subsections of Sec.  422.152 related to 
section 1852(e)(3) of the Act may be deemed.
2. Delete the Reference to Quality Improvement Projects in Sec.  
422.156(b)(1)
    Section 1852(e) of the Act requires each MAO to have an ongoing 
Quality Improvement (QI) Program for the purpose of improving the 
quality of care provided to its enrollees. Our regulations at Sec.  
422.152 outline the QI Program requirements MA Organizations. Section 
422.152(a)(3) requires each MA Organization to conduct quality 
improvement projects (QIPs) for its enrollees, and Sec.  422.152(d) 
establishes the requirements for the QIPs. Effective January 1, 2019, 
CMS eliminated the requirements for QIPs in Sec. Sec.  422.152(a)(3) 
and 422.152(d) in the April 2018 final rule (83 FR 16440). However, the 
reference to QIPs was not deleted in Sec.  422.156(b)(1), which says 
QIPs are exempt from the process for deeming compliance based on 
accreditation. Therefore, we are proposing a technical correction in 
this rule that would delete the phrase ``the quality improvement 
projects (QIPs) and'' from Sec.  422.156(b)(1).

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), we are required to provide 60-day notice in the Federal Register 
and solicit public comment before a collection of

[[Page 55042]]

information requirement is submitted to the Office of Management and 
Budget (OMB) for review and approval. In order to fairly evaluate 
whether an information collection should be approved by OMB, section 
3506(c)(2)(A) of the PRA requires that we solicit comment on the 
following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    In this proposed rule, we are soliciting public comment on each of 
these issues for the following sections of this rule that contain 
proposed ``collection of information'' requirements as defined under 5 
CFR 1320.3 of the PRA's implementing regulations.

A. Wage Data

    To derive average costs for the private sector, we used data from 
the U.S. Bureau of Labor Statistics' (BLS's) May 2017 National 
Occupational Employment and Wage Estimates for all salary estimates 
(http://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 2 
presents the mean hourly wage, the cost of fringe benefits and overhead 
(calculated at 100 percent of salary), and the adjusted hourly wage.
[GRAPHIC] [TIFF OMITTED] TP01NO18.005

    As indicated, we are adjusting our employee hourly wage estimates 
by a factor of 100 percent. This is necessarily a rough adjustment, 
both because fringe benefits and overhead costs vary significantly from 
employer to employer, and because methods of estimating these costs 
vary widely from study to study. We believe that doubling the hourly 
wage to estimate total cost is a reasonably accurate estimation method.

B. Proposed Information Collection Requirements (ICRs)

1. ICRs Regarding the Requirements for Medicare Advantage Plans 
Offering Additional Telehealth Benefits (Sec. Sec.  422.100, 422.135, 
422.252, 422.254, and 422.264)
    Proposed revisions to the Evidence of Coverage (EOC) model to take 
into account the new type of benefit will be submitted to OMB for 
approval under control number 0938-1051 (CMS-10260).
    As described in section II.A.1. of this proposed rule, section 
50323 of the Bipartisan Budget Act of 2018 allows MA plans to provide 
``additional telehealth benefits'' to enrollees starting in plan year 
2020 and treat them as basic benefits for purposes of bid submission 
and payment by CMS. In this rule, we propose to codify requirements at 
Sec.  422.135, which would authorize and set standards for MA plans to 
offer additional telehealth benefits.
    More specifically, MA plans would be required to advise enrollees 
that they may receive the specified Part B service(s) either through an 
in-person visit or through electronic exchange. This notification would 
appear in the EOC document, which is already required and provided in 
model form by CMS to MA plans. There is a one-time cost for CMS to 
formulate the required template notification language in our EOC model 
for all plans to adopt without edit. Since CMS's burden to revise the 
model is outside the scope of the PRA, the federal cost estimate is 
scored in section IV.C.1. of this proposed rule. The revised template, 
however, is subject to the PRA and will be submitted to OMB for their 
review and approval.
    MA plans would also be required to use their provider directory to 
identify any providers offering services for additional telehealth 
benefits and in-person visits or offering services exclusively for 
additional telehealth benefits. Like the EOC, the provider directory is 
already required and provided in model form by CMS, with MA plans 
obligated to and responsible for populating the document with the 
relevant information about the providers in the MA plan's contracted 
network. It is difficult to assess the additional burden associated 
with this requirement because the provider directory model already 
requires plans whose providers may have restrictions on access to 
include a notation next to the provider's listing indicating such 
restrictions. We are unsure what, if any, additional burden may be 
associated with this new data field and we seek information that may 
inform the burden.
    Finally, MA plans would be required to make information about 
coverage of additional telehealth benefits available to CMS upon 
request. We do not anticipate requesting this information from more 
than 9 MA plans in a given year because historically we have not 
received a large number of complaints about coverage of benefits that 
might warrant us requesting information from many plans. However, we 
would like to reserve the right to ask for this information if 
necessary. Since we estimate fewer than ten respondents, the 
information collection requirement is exempt (5 CFR 1320.3(c)) from the 
requirements of the PRA.
2. ICRs Regarding Integration Requirements for Dual Eligible Special 
Needs Plans (Sec. Sec.  422.2, 422.60, 422.102, 422.107, 422.111, and 
422.752)
    The following proposed requirements and burden will be submitted to 
OMB for approval under control number 0938-0753 (CMS-R-267).
    As described in section II.A.2.a. of this proposed rule, we propose 
to establish new requirements in accordance with amendments to section 
1859(f)(8) of the Act (made by section 50311(b) of the Bipartisan 
Budget Act of 2018), which stipulates that all dual eligible special 
needs plans (D-SNPs) meet certain new minimum criteria for Medicare and 
Medicaid integration for 2021 and subsequent years. We also propose to 
codify the various forms of integrated care provided by D-SNPs that 
have evolved since their establishment nearly 15 years ago.

[[Page 55043]]

    In Sec.  422.107(d), we propose that any D-SNP that is not a fully 
integrated dual eligible special needs plan (FIDE SNP) or a highly 
integrated dual eligible special needs plan (HIDE SNP), as defined in 
proposed Sec.  422.2, would be subject to an additional contracting 
requirement. Under the additional contracting requirement, the D-SNP 
would notify the state Medicaid agency and/or individuals or entities 
designated by the state Medicaid agency of hospital and skilled nursing 
facility (SNF) admissions for at least one group of high-risk full-
benefit dual eligible individuals, as determined by the state Medicaid 
agency.
    We also propose modifications to existing requirements for the 
contract between states and D-SNPs at Sec.  422.107(b) and (c). These 
modifications would include requirements that D-SNPs: Document their 
responsibility to provide, as applicable, or coordinate the delivery of 
Medicaid benefits; specify the categories and criteria for dual 
eligible individuals to be enrolled in the plan; and specify the 
Medicaid benefits covered by the MA organization offering the D-SNP or 
under a risk contract with a Medicaid managed care organization offered 
by the D-SNP's parent organization or another entity that is owned and 
controlled by its parent organization.
    The primary burden arising from the proposals would consist of the 
following:
     Burden to the state to--
    ++ Execute D-SNP contract modifications; and
    ++ Set the terms of the notification, including its method, timing, 
and scope, and for some states, receive a notification from D-SNPs 
about enrollees' hospital and SNF admissions.
     Burden to the D-SNP to--
    ++ Execute a contract modification with the state Medicaid agency;
    ++ Notify the state Medicaid agency or its designee(s) about 
enrollees' hospital and SNF admissions.
a. Burden to States
(1) Contract Modifications With D-SNPs (Sec.  422.107)
    For the initial year, we expect it would take 24 hours at $136.44/
hr for a lawyer to update the state Medicaid agency's contract with 
every D-SNP in its market. Since half of the cost would be offset by 
federal financial participation for Medicaid administrative activities, 
we have adjusted our estimates for state agencies by 50 percent. Given 
the market penetration of D-SNPs in certain states relative to others, 
we recognize that this estimate reflects an average cost across all 
states and territories with D-SNPs. We expect that the state Medicaid 
agency would establish a uniform requirement for all D-SNPs operating 
in their market. As of June 2018, there were 42 states, plus the 
District of Columbia and one territory (Puerto Rico), in which D-SNPs 
were available to MA enrollees. In aggregate, we estimate a one-time 
first year burden of 1,056 hours (44 respondents * 24 hr/response) at a 
cost of $72,040 (1,056 hr * $136.44/hr * 0.50).
    While we recognize that, over time, states could modify this 
contract term, for example, by expanding the population of full-benefit 
dual eligible individuals to whom this notification applies, we do not 
believe that such a contract change would have a material impact on 
time and effort and, therefore, would already be accounted for in the 
burden estimate for the overall contract that the state Medicaid agency 
has with each D-SNP.
    Given the lack of material impact and the uncertainty involved in 
estimating state behavior, we are estimating a minimum of zero burden 
in subsequent years on plans. The maximum burden would be the estimated 
first year cost. However, we believe the maximum estimate is unlikely 
to be accurate since we expect any changes to contracting requirements 
to be iterative compared to the first year update. We solicit public 
comment on our assumptions and whether there are reasonable ways of 
modeling state behavior.
(2) Notification (Sec.  422.107(d))
    To address differences among the states in available 
infrastructure, population sizes, and mix of enrollees, this rule 
proposes broad flexibility identifying the groups for which the state 
Medicaid agency wishes to be notified and how the notification should 
take place. Flexibilities include: (1) Consideration of certain groups 
who experience hospital and SNF admissions; (2) protocols and 
timeframes for the notification; (3) data sharing and automated or 
manual notifications; and (4) use of a stratified approach over several 
years starting at a small scale and increasing to a larger scale. We 
would also allow states to determine whether to receive notifications 
directly from D-SNPs or to require that D-SNPs notify a state designee 
such as a Medicaid managed care organization, section 1915(c) waiver 
case management entity, area agency on aging, or other organization.
    Some states, using a rich infrastructure and a well-developed 
automated system, may fulfill this requirement with minimal burden, 
while states with less developed or no infrastructure or automated 
systems may incur greater burden. Furthermore, the burden, especially 
to those states starting on a small scale, may differ significantly 
from year to year. Because of the flexibilities provided in this 
proposed rule, we expect states to choose strategies that are within 
their budget and best fit their existing or already-planned 
capabilities. We would expect any state choosing to receive 
notification itself of such admissions to claim federal financial 
participation under Medicaid for that administrative activity.
    As of June 2018, there were 42 states, plus the District of 
Columbia and one territory (Puerto Rico), in which D-SNPs were 
available to MA enrollees. We estimate that there are nine states and 
territories with D-SNPs that all are expected to qualify as either FIDE 
SNPs or HIDE SNPs--Arizona, Florida, Hawaii, Idaho, Massachusetts, 
Minnesota, New Jersey, New Mexico, and Puerto Rico. We do not expect 
these states to establish a notification system under this proposal. We 
estimate that nine additional states that primarily use managed care 
for long-term services and supports (LTSS) (Michigan, North Carolina, 
New York, Ohio, Oregon, Pennsylvania, Tennessee, Texas, and Virginia) 
would delegate receipt of this information to their Medicaid managed 
care organizations. We further estimate that approximately half of the 
remaining 26 states--that is, 13 states--would build an automated 
system for receiving notification of hospital and SNF admissions 
consistent with this proposed rule.
    We estimate that, on average, this work could be accomplished in a 
month with one programmer and one business analyst to define 
requirements. Accordingly, we estimate a one-time burden of 2,080 hours 
(13 states * 40 hr per week * 4 weeks) per worker. Since half of the 
cost would be offset by 50 percent federal financial participation for 
Medicaid administrative activities, we estimate a cost of $85,176 
(2,080 hr * $81.90/hr * 0.50) for a programmer and a cost of $71,843 
(2,080 hr * $69.08/hr * 0.50) for a business analyst. In aggregate, we 
estimate a burden of 4,160 hours (2,080 hr for a programmer + 2,080 hr 
for a business analyst) at a cost of $157,019 ($85,176 for a programmer 
+ $71,843 for a business analyst) for the update.
    Because of the possible wide variability in states' approaches in 
implementing this requirement, we solicit comment on and any other 
suggestions for modeling state

[[Page 55044]]

approaches and costs related to this provision. In addition, we believe 
that we have no reasonable way of estimating or illustrating burden in 
later years. The expected behavior among states is unknown relative to 
how often they will modify their notification mechanisms. Given the 
uncertainty involved in estimating state behavior, we are estimating a 
minimum of zero burden in future years on plans. The maximum burden 
would be the estimated first-year cost. However, we believe the maximum 
estimate is unlikely to be accurate since it would involve developing 
an automated notification system from the beginning rather than 
modifying an existing system. We solicit public comment on our 
assumptions.
b. Burden on Plans
(1) Contract Modifications With State Medicaid Agencies (Sec.  422.107)
    For the initial year, we expect it would take 8 hours at $136.44/hr 
for a lawyer to update their plan's contract with the state Medicaid 
agency. Since states are identifying the high-risk populations for 
which they wish to be notified, it is reasonable to project that every 
D-SNP contract would negotiate one contract modification with the state 
Medicaid agency. There are 190 D-SNP contracts as of June 2018, of 
which 37 contracts, or 12.7 percent (about one-eighth), are FIDE 
SNPs.\32\ We do not have a precise count of D-SNPs that will likely 
meet the proposed definition of a HIDE SNP. We assume another 12.7 
percent of the 190 D-SNP contracts would be HIDE SNP contracts. Since 
the notification requirements are only applicable to D-SNPs that are 
not FIDE SNPs or HIDE SNPs, we expect that the number of contracts 
needing modification is 190 D-SNP contracts, less 37 FIDE SNP 
contracts, less 37 HIDE SNP contracts, or 116 D-SNP contracts. In 
aggregate, we estimate a one-time first year burden of 928 hours (116 
D-SNPs * 8 hr) at a cost of $126,616 (928 hr * $136.44/hr).
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    \32\ Centers for Medicare & Medicaid Services (2018, June). SNP 
Comprehensive Report. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data.html.
---------------------------------------------------------------------------

    We believe that we have no reasonable way of estimating or 
illustrating burden in later years. The expected behavior among states 
is unknown relative to how often they will modify their contracts with 
D-SNPs on this particular matter. For example, state Medicaid agencies 
may remain satisfied with the initial year selection of high-risk 
groups and see no reason to modify their contracts in later years. In 
contrast, other state Medicaid agencies may seek to expand the 
notification requirement to encompass additional groups of high-risk 
dually eligible individuals and may therefore modify their contracts on 
this basis.
    Given the uncertainty involved in estimating state behavior, we are 
estimating a minimum of zero burden in subsequent years on plans. The 
maximum burden would be the first year costs. However, we believe this 
estimate is unlikely to be accurate given our expectation that 
contractual changes after the first year would be iterative at most. We 
solicit public comment on our assumptions and whether there are 
reasonable ways of modeling state behavior.
(2) Notifications to State Medicaid Agencies or Their Designees (Sec.  
422.107(d))
    We have noted previously the broad flexibility in notification 
options for states. We also note that MA organizations are already 
required to have systems that are sufficient to organize, implement, 
control, and evaluate financial and marketing activities, the 
furnishing of services, the quality improvement program, and the 
administrative and management aspects of the organization (Sec.  
422.503(b)(4)(ii)). Independent of the state Medicaid agency's 
selection of high-risk populations, protocols, and notification 
schedules, an MA organization's most likely method of sharing this 
notification would be through the use of an automated system that could 
identify enrollees with criteria stipulated by the states and issue 
electronic alerts to specified entities. We do not believe that this 
work is very complex. Therefore, we estimate it could be accomplished 
in a month with one programmer and one business analyst to define 
requirements. The burden would be at the contract, not the plan, level 
and, as noted in section II.A.2.a. of this proposed rule, we estimate 
116 affected D-SNP contracts. Accordingly, we estimate a first year 
burden of 18,560 hours (116 contracts * 40 hr * 4 weeks) per worker. 
The cost for programming would be $1,520,064 (18,560 hr * $81.90/hr) 
for a programmer and $1,282,125 (18,560 hr * $69.08/hr) for a business 
analyst. In aggregate, we estimate a burden of 37,120 hours (18,560 hr 
for a programmer + 18,560 hr for a business analyst) at a cost of 
$2,802,189 ($1,520,064 + $1,282,125).
    Table 3 summarizes the burden of this provision.
    [GRAPHIC] [TIFF OMITTED] TP01NO18.006
    

[[Page 55045]]


    As indicated earlier, depending on each state's capacity, this 
initial year burden may suffice for several years or may change 
annually if states expand and change their criteria annually. 
Consequently, we are only estimating the initial year burden. The 
second and third year burden could therefore range between $0 and the 
full $3.1 million cost estimated for the first year. We are estimating, 
for years 2 and 3, a minimum of zero burden (the lower end of the 
range) because it is our understanding that most states and plans would 
not incur programming or contract related burden in years 2 and 3. We 
acknowledge that some states and plans may incur such burden. However, 
we have no reliable way to estimate the burden currently. We seek 
public input to help us confirm whether our zero burden estimate for 
years 2 and 3 is reasonable.
3. ICRs Regarding Unified Grievance and Appeals Procedures for Dual 
Eligible Special Needs Plans and Medicaid Managed Care Plans at the 
Plan Level (Sec. Sec.  422.560 Through 422.562, 422.566, 422.629 
Through 422.634, 438.210, 438.400, and 438.402)
    As described in section II.A.2.b. of this rule, we propose to 
establish, for inclusion in contracts for applicable integrated plans 
as defined in proposed Sec.  422.2 no later than 2021, procedures 
unifying Medicare and Medicaid grievances and appeals procedures in 
accordance with the newly enacted amendments to section 1859(f) of the 
Act. We also propose to establish new regulations to require all dual 
eligible special needs plans (D-SNPs) to assist beneficiaries with 
Medicaid coverage issues and grievances at Sec.  422.562(a)(5). The 
proposed requirements and burden will be submitted to OMB for approval 
under control number 0938-0753 (CMS-R-267).
    As of June 2018, the CMS website listed 190 D-SNP contracts with 
412 D-SNP plans that have at least 11 members. The universe of D-SNPs 
to which our proposed unified grievance and appeals procedures would 
apply is comprised of D-SNPs that are either fully integrated dual 
eligible special needs plans (FIDE SNPs) or highly integrated dual 
eligible special needs plans (HIDE SNPs) with exclusively aligned 
enrollment--that is, where all of the plan's membership receives 
Medicare and Medicaid benefits from the same organization. Currently, 
exclusively aligned enrollment occurs in only eight states: Florida, 
Idaho, Massachusetts, Minnesota, New Jersey, New York, Tennessee, and 
Wisconsin. Currently, there are only 37 D-SNPs operating under 34 
contracts with 150,000 enrollees that could be classified as FIDE SNPs 
or HIDE SNPs which operate in states with exclusively aligned 
enrollment. The 150,000 enrollment figure for contract year 2018 is 
projected to grow to 172,000 (150,000 * 1.145) \33\ enrollees by 2021, 
the first year that compliance with these provisions would be required. 
While unifying grievance and appeals provisions would necessitate 
states with exclusively aligned enrollment policies to modify their 
Medicaid managed care plan contracts to incorporate the new 
requirements, it would impose this burden on fewer than 10 states and 
would not impose additional burden for plans from a contracting 
standpoint, thereby falling below the threshold for PRA purposes.
---------------------------------------------------------------------------

    \33\ Table IV.C1, ``Private Health Enrollment'' in 2018 Trustee 
Report, accessible at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2018.pdf.
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    We believe that our proposed requirements related to integrated 
organization determinations and integrated grievances should not be 
altogether unfamiliar to applicable integrated plans because, in 
general terms, we have proposed to adopt whichever of the current MA D-
SNP or Medicaid managed care plan contract requirements under parts 422 
and 438, respectively, was more protective of the rights of the 
beneficiary and/or provided the most state flexibility, consistent with 
the statutory requirements of section 1859(f)(8) of the Act. 
Furthermore, we believe that by unifying Medicare and Medicaid 
integrated organization determination and grievance requirements for 
applicable integrated plans (that is, FIDE SNPs and HIDE SNPs with 
exclusively aligned enrollment), we are ultimately reducing the level 
of burden on these organizations.
    The burden associated with the implementation of our proposed 
integrated organization determination and integrated grievance 
procedures is summarized in section IV.B.3.a. of this proposed rule. As 
detailed in IV.B.3.b. of this proposed rule, the PRA exempts the 
information collection activities undertaken to administer our proposed 
unified appeals procedures. As detailed in IV.B.3.c. of this proposed 
rule, we believe the requirements for all D-SNPs to assist enrollees 
with Medicaid coverage issues and grievances in proposed Sec.  
422.562(a)(5) is also exempt from the PRA.
a. Integrated Organization Determinations and Integrated Grievances 
(Sec. Sec.  422.629, 422.630, and 422.631)
    Section 422.631 would require each applicable integrated plan to 
issue one integrated organization determination, so that all requests 
for benefits covered by applicable integrated plans would be subject to 
the same integrated organization determination process. In Sec.  
422.631(d)(1), we would require that an applicable integrated plan send 
an integrated notice when the organization determination is adverse to 
the enrollee. The proposed notice would include information about the 
determination, as well as information about the enrollee's appeal 
rights for both Medicare and Medicaid covered benefits. Though 
integrating information on Medicare and Medicaid appeal rights would be 
a new requirement, we note that requirements for a notice and the 
content of the notice largely align with current requirements in 
Medicaid (Sec.  438.404(b)) and MA (Sec.  422.572(e)). We believe that 
this proposed provision would have minimal impact on plans based on our 
understanding of how plans that would meet the definition of an 
applicable integrated plan under the proposed rule currently handle 
coverage determinations for full-benefit dual eligible individuals 
receiving Medicare and Medicaid services through the plan. Currently if 
such a plan were to deny or only partially cover a Medicaid service 
never covered by Medicare (like a personal care attendant or a clear 
request for Medicaid coverage), it would only issue a Medicaid denial 
(one notice). Under this proposed rule, it would do the same (that is, 
issue one notice). On the other hand, if the plan denied a service that 
is covered under either Medicare or Medicaid, such as home health 
services, we believe that the plan in most, if not all, states would 
issue an integrated determination notice that includes information 
about the application of Medicare and Medicaid coverage criteria to the 
requested service and how to appeal under both Medicare and Medicaid 
(one notice). This proposed rule would codify this practice for 
applicable integrated plans.
    Also under current law, if the plan covered a service such as 
durable medical equipment or home health services under Medicaid, but 
denied the service under Medicare's rules, it would issue a Medicare 
denial even though the service was actually covered by the plan based 
on its Medicaid contract. Under this proposed rule, a plan covering 
both Medicare and Medicaid benefits would no longer need to issue a 
notice in this

[[Page 55046]]

situation. We do not have data to estimate the number of instances in 
which D-SNPs currently issue denial notices related to overlap 
services; therefore, we are unable to estimate the reduction in plan 
burden resulting from our proposed unified appeals requirements. 
However, we solicit feedback on the burden imposed on integrated plans 
by having to send such a Medicare denial notice when the service is 
covered by the plan under Medicaid rules. We are developing an 
integrated denial notice for use by applicable integrated plans. This 
form, and its associated requirements and burden, will be submitted to 
OMB for approval separately from this proposed rule once it is 
developed.
    We estimate negligible impacts on information collection activities 
involved in unifying grievances associated with our proposed provisions 
at Sec.  422.630, as detailed later in this section. Under Sec.  
422.630(b), applicable integrated plans would be required to accept 
grievances filed at any time consistent with the Medicaid standard at 
Sec.  438.402(c)(2)(i). This change would have the net effect of 
permitting enrollees to file a grievance for a Medicare-covered service 
outside of the current 60-day timely filing standard, as measured from 
the date of the event or incident that precipitated the grievance. The 
provision would effectively eliminate the timely filing period for 
Medicare-related grievances. We do not expect this proposal to increase 
the volume of grievances that an applicable integrated plan would be 
responsible for handling since we believe that the timeframes for 
filing Medicare grievances were designed to be consistent with current 
practice and were set in place only to eliminate complaint outliers. 
Furthermore, as detailed later in this section, even a four-fold 
increase in grievance volume would still have a negligible aggregate 
burden because of the small number of contracts in states that 
currently require exclusively aligned enrollment.
    Under Sec.  422.630(c), enrollees of applicable integrated plans 
could file integrated grievances with the plan orally or in writing, in 
alignment with current Medicare and Medicaid requirements, or with the 
state, in states that have existing processes for accepting Medicaid 
grievances in place in accordance with Sec.  438.402(c)(3). Because 
this proposed provision simply extends an existing avenue for filing 
grievances, in states where it exists, for enrollees to file Medicaid 
benefits grievances with the state, we do not expect this proposal to 
increase the volume of grievances that either states or applicable 
plans would be responsible for handling.
    Section 422.630(d) would permit an enrollee to file an expedited 
grievance, which is available under current law for Medicare-covered, 
but not Medicaid-covered, benefits. We estimate that the availability 
of an expedited grievance for Medicaid benefits would have a negligible 
impact on information collection activities because applicable 
integrated plans would already have procedures in place to handle 
expedited grievances for Medicare-covered services, which could be 
leveraged for Medicaid-covered services. Furthermore, the availability 
of the expedited resolution pathway (where under current law there is 
only one resolution pathway for Medicaid-covered services) would have 
no impact on the volume of grievances.
    Section 422.630(e)(1) would require that an applicable integrated 
plan resolve a standard (non-expedited) grievance within 30 days 
consistent with the MA standard; under Medicaid, the timeframe is 
established by the state but may not exceed 90 calendar days from day 
the plan receives the grievance. We estimate that this change in 
timeframe would have a negligible impact on information collection 
activities because applicable integrated plans already have business 
processes in place to comply with a 30-day timeframe under MA.
    Section 422.630(e)(2) would require the applicable integrated plan, 
when extending the grievance resolution timeframe, to make reasonable 
efforts to notify the enrollee orally and send written notice of the 
reasons for the delay within 2 calendar days. We do not believe that 
this provision would have more than a negligible impact on plans since 
this proposal adopts MA requirements for how an applicable integrated 
plan must notify an enrollee of an extension and the Medicaid managed 
care requirement for the timeliness standard. Thus, applicable 
integrated plans would already have business processes in place to 
comply with these requirements.
    Although we do not estimate cost impacts for applicable integrated 
plans related to information collection activities involved in unifying 
grievances associated with our proposed provisions at Sec.  422.630, 
some of the individual provisions in Sec. Sec.  422.630 and 422.631 
would necessitate operational and systems changes on the part of 
applicable integrated plans, and others would result in savings to 
applicable integrated plans. We estimate both the burden and savings 
associated with changes to policies and procedures, record maintenance, 
grievance notice consolidations, and savings for our proposed 
integrated organization determination procedures at Sec.  422.631 and 
integrated grievance procedures at Sec.  422.630.
(1) Updates to Policies and Procedures
    There would be an initial one-time burden for plans to update their 
policies and procedures to reflect the proposed new integrated 
organization determination and grievance procedures. Under Sec. Sec.  
422.630 and 422.631, we estimate it would take 8 hours at $69.08/hr for 
a business operations specialist to revise current policies and 
procedures. In aggregate, we estimate a one-time burden of 272 hours (8 
hr * 34 contracts) at a cost of $18,790 (272 hr * $69.08/hr).
    While there might be some update burden in future years, we 
consider this unlikely and, even if it were to occur, it would not be 
on the same magnitude as in the first year. We are therefore estimating 
a zero burden for years 2 and 3, though we acknowledge the unlikely 
possibility that costs could be as high as in year 1--that is, $18,790.
(2) Record Maintenance
    D-SNPs, like other MA plans, are currently required to maintain 
records for grievances (Sec.  422.504(d)). However, Sec.  422.629(h) 
would require the maintenance of specific data elements, consisting of 
a general description of the reason for the integrated grievance; the 
date of receipt; the date of each review or, if applicable, the review 
meeting; the resolution at each level of the integrated grievance, if 
applicable; the date of resolution at each level, if applicable; and 
the name of the enrollee for whom the integrated grievance was filed.
    There would be an initial one-time burden for plans to revise their 
systems for record-keeping related to integrated grievances. We 
anticipate this task would take a programmer 3 hours at $81.90/hr. 
Three hours is consistent with the per-response time estimated in the 
recent Medicaid Managed Care May 2016 final rule (81 FR 27498). In 
aggregate, we estimate a one-time burden of 102 hours (3 hr * 34 
contracts) at a cost of $8,354 (102 hr * $81.90/hr).
(3) Grievance Notice Consolidation
    Section 422.630(e) would require that applicable integrated plans 
issue a notice upon resolution of the integrated grievance, unless the 
grievance was made orally and the enrollee did not request a written 
response. We assume in our analysis that plans issue two separate 
Medicare and Medicaid

[[Page 55047]]

grievance resolution notices under current practice when a grievance is 
made in writing, whereas under this proposal they would issue one 
consolidated notice. To calculate savings, we must add the cost of 
notification and the cost of grievance review.
(4) Cost of Notification
    To calculate the savings due to Medicare and Medicaid notice 
consolidation, we utilize the following figures: (1) The number of 
enrollees in the exclusively aligned plans in contract year 2021, which 
is 172,000; (2) the time of notification using either a standard notice 
or a copy of the decision prepared by the reviewer (traditionally such 
a routine notification is estimated as 1 minute per notification (1/60 
of an hour)); (3) the hourly wage for a business operations specialist; 
and (4) the percent of total enrollees expected to file a grievance 
(the recent Medicaid Managed Care May 2016 final rule (81 FR 27498) 
estimates a 2 percent filing rate, while the burden under OMB control 
number 0938-0753 (CMS-R-267) estimates 6.8 percent (17 percent of 
enrollees that are dissatisfied * 40 percent of dissatisfied enrollees 
who file a grievance)).
    For purposes of specificity, we assume the average of these two 
estimates, 4.4 percent (\1/2\ * [6.8 percent + 2 percent]) represents 
the percent of enrollees filing a grievance with the integrated plan. 
Therefore, we estimate the annual savings due to notifications as 126 
hours (1 minute * 172,000 enrollees * 0.044) at a cost of $8,704 (126 
hours * $69.08/hr). The aggregate savings for years 2 and 3 are 252 
hours (1 minute x 172,000 enrollees * 0.044 * 2 years) at a cost of 
$17,408 (252 hours * $69.08 * 2 years).
(5) Cost of Grievance Review
    We assume the review will be done by a business operations 
specialist. Based on the Medicaid Managed Care May 2016 final rule (81 
FR 21498), we assume the average grievance takes 30 minutes for a 
business operations specialist to resolve. Thus, the aggregate annual 
savings for review is 3,784 hours (172,000 enrollees * 0.044 * 0.5 hr) 
at a cost of $261,399 (3,784 hr * $69.08/hr). We estimate the aggregate 
savings for years 2 and 3 to be 7,568 hours (172,000 enrollees * 0.044 
x 0.5 hr * 2 years) at a cost of $522,797, (3,784 hr * $69.08/hr * 2 
years).
(6) Storage
    The cost of storage is not expected to change under Sec.  
422.629(h)(3) since D-SNPs are currently required to store records 
(Sec.  422.504(d)), and the provision would not impose any new or 
revised storage requirements or burden.
b. Unified Appeals Procedures (Sec. Sec.  422.629, 422.633, and 
422.634)
    The implementing regulations of the PRA at 5 CFR 1320.4 exclude 
information collection activities during the conduct of a civil action 
to which the United States or any official or agency thereof is a 
party, or during the conduct of an administrative action, 
investigation, or audit involving an agency against specific 
individuals or entities. We conclude that a beneficiary's appeal of an 
adverse integrated coverage determination as proposed in this rule, and 
the subsequent information collection activities necessitated by that 
integrated appeal--for example, acknowledgement of integrated 
reconsiderations at Sec.  422.629(g), recordkeeping related to 
integrated appeals at Sec.  422.629(h), and notification of the 
applicable integrated plan's integrated reconsideration determination 
at Sec.  422.633(f)(4)--are exempt from the PRA on the basis that an 
appeal is submitted in response to an administrative action against a 
specific individual. Therefore, this exemption would cover any 
information collection activities undertaken after the integrated 
organization determination by an applicable integrated plan.
c. Assisting With Medicaid Coverage Issues and Grievances (Sec.  
422.562(a)(5))
    We did not calculate the burden of the requirement for all D-SNPs 
to assist enrollees with the filing of their grievance or appeal as 
required in proposed Sec.  422.562(a)(5), as we are assuming that 
providing assistance is a usual and customary business practice that is 
exempt from the PRA (5 CFR 1320.3(b)(2)).
d. Summary
    The burden associated with the individual components of our 
proposed provisions for unified grievance and appeals procedures for 
applicable integrated plans, as well as aggregate cost, are summarized 
in Table 4A.
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4. ICRs Regarding Proposal for Prescription Drug Plan Sponsors' Access 
to Medicare Parts A and B Claims Data Extracts (Sec.  423.153)
    As described in section II.A.3. of this proposed rule, section 
50354 of the Bipartisan Budget Act of 2018 requires the establishment 
of a process under which the sponsor of a PDP that provides 
prescription drug benefits under Medicare Part D may request, beginning 
in plan year 2020, that the Secretary provide on a periodic basis and 
in an electronic format standardized extracts of Medicare Parts A and B 
claims data about its plan enrollees. In this rule we propose to add a 
new Sec.  423.153(g) to implement the process for requesting this data.
    More specifically, in order to receive this data, PDP plans would 
be required to request the data and complete an attestation. We have 
not finalized the operational aspects of this provision. Therefore, 
this segment of the rule does not constitute a means for notice and 
comment as referenced in 5 CFR 1320.8(d)(3) and CMS will seek a comment 
through separate Federal

[[Page 55048]]

Register notices per the Paperwork Reduction Act.
5. ICRs Regarding Medicare Advantage and Part D Prescription Drug Plan 
Quality Rating System (Sec. Sec.  422.162(a) and 423.182(a), Sec. Sec.  
422.166(a) and 423.186(a), Sec. Sec.  422.164 and 423.184, and 
Sec. Sec.  422.166(i)(1) and 423.186(i)(1))
    As described in section III.B.1. of this proposed rule, we are 
proposing measure updates for the 2022 and 2023 Star Ratings, 
enhancements to the cut point methodology for non-CAHPS measures, and a 
policy for calculating the Part C and D Star Ratings when extreme and 
uncontrollable circumstances occur. The proposed provisions would not 
change any respondent requirements or burden pertaining to any of CMS's 
Star Ratings-related PRA packages, including: OMB control number 0938-
0732 for CAHPS (CMS-R-246), OMB control number 0938-0701 for HOS (CMS-
10203), OMB control number 0938-1028 for HEDIS (CMS-10219), OMB control 
number 0938-1054 for Part C Reporting Requirements (CMS-10261), and OMB 
control number 0938-0992 for Part D Reporting Requirements (CMS-10185). 
Since the proposed provisions would not impose any new or revised 
information collection requirements (that is, reporting recordkeeping, 
or third-party disclosure requirements) or burden, we are not making 
changes under any of the aforementioned control numbers.
6. ICRs Regarding Improving Clarity of the Exceptions Timeframes for 
Part D Drugs (Sec. Sec.  423.568, 423.570, and 423.572)
    The proposed provisions would not impose any new or revised 
information collection requirements (that is, reporting, recordkeeping, 
or third-party disclosure requirements) or burden. Consequently, the 
provisions are not subject to the PRA.
7. ICRs Regarding Preclusion List Requirements for Prescribers in Part 
D and Individuals and Entities in MA, Cost Plans, and PACE (Sec. Sec.  
422.222 and 423.120(c)(6))
    As described in section III.C.1. of this proposed rule, the 
proposed provisions would not involve activities for plan sponsors and 
MA organizations outside of those described in the April 2018 final 
rule. The proposed provisions are, generally speaking, clarifications 
of intended policy and would not impose any new or revised information 
collection requirements (that is, reporting, recordkeeping, or third-
party disclosure requirements) or burden. Consequently, the provisions 
are not subject to the PRA.
8. ICRs Regarding Medicare Advantage Risk Adjustment Data Validation 
Provisions (Sec. Sec.  422.300, 422.310(e), and 422.311(a))
    As described in section III.C.2. of this proposed rule, we are 
proposing that extrapolation may be utilized as a valid part of audit 
authority in Part C, as it has been historically a normal part of 
auditing practice throughout the Medicare program. We are also 
proposing that this extrapolation authority be applied to the payment 
year 2011 RADV contract-level audits and all subsequent audits to 
reduce the Part C improper payment rate. Additionally, we are proposing 
not to apply a FFS Adjuster to audit findings.
    The proposed provisions would not impose any new or revised 
information collection requirements (that is, reporting, recordkeeping, 
or third-party disclosure requirements) or burden since the utilization 
of extrapolation will not affect the existing process for MA 
organizations submitting medical record documentation pursuant to RADV 
audits. Consequently, the provisions are not subject to the PRA.

C. Summary of Proposed Information Collection Requirements and Burden

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D. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to the Office of 
Management and Budget (OMB) for its review of the rule's information 
collection and recordkeeping requirements. These requirements are not 
effective until they have been approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections previously discussed, please visit CMS's 
website at: https://www.cms.gov/Regulations-andGuidance/Legislation/PaperworkReductionActof1995/PRAListing.html, or call the Reports 
Clearance Office at (410) 786-1326.
    We invite public comments on these proposed information collection 
requirements. If you wish to comment, please submit your comments 
electronically as specified in the ADDRESSES section of this proposed 
rule and identify the rule (CMS-4185-P) and where applicable the ICR's 
CFR citation, CMS ID number, and OMB control number.
    See the DATES and ADDRESSES sections of this proposed rule for 
further information.

IV. Regulatory Impact Analysis

A. Statement of Need

    This rule proposes to implement specific provisions of the 
Bipartisan Budget Act of 2018 related to additional telehealth 
benefits, MA dual eligible special needs plans (D-SNPs), and Part D 
sponsors' access to Medicare claims data. The rule also proposes to 
improve quality and accessibility; clarify certain program integrity 
policies; reduce burden on providers, MA organizations, and Part D 
sponsors through providing additional policy clarification; and 
implement other technical changes regarding quality improvement. 
Although satisfaction with the MA and Part D programs remains high, 
these proposals are responsive to input we received from stakeholders 
while administering the programs, as well as through our requests for 
comment. CMS decided to modify the MA and Part D Prescription Drug Plan 
Quality Rating System in response to comments from the proposed rule 
entitled Medicare Program; Contract Year 2019 Policy and Technical 
Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-
for-Service, The Medicare Prescription Drug Benefit Programs, and the 
PACE program (November 28, 2017, 82 FR 56336).
    In this proposed rule, we are proposing policies to continue to 
drive affordable private plan options for Medicare beneficiaries that 
meet their unique healthcare needs, such as through supporting 
innovation in telehealth among MA plans to provide more options and 
additional benefits for MA enrollees. These proposed provisions align 
with the Administration's focus on the interests and needs of 
beneficiaries, providers, MA plans, and Part D sponsors.

B. Overall Impact

    We examined the impact of this proposed rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (RFA) 
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social 
Security Act (the Act), section 202 of the Unfunded Mandates Reform Act 
of 1995 (UMRA) (March 22, 1995; Pub. L. 104-4), Executive Order 13132 
on Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 
804(2)), and Executive Order 13771 on Reducing Regulation and 
Controlling Regulatory Costs (January 30, 2017).
    The RFA, as amended, requires agencies to analyze options for 
regulatory relief of small businesses, if a rule has a significant 
impact on a substantial number of small entities. For purposes of the 
RFA, small entities include small businesses, nonprofit organizations, 
and small governmental jurisdictions.
    This proposed rule affects MA plans and Part D sponsors (NAICS 
category 524114) with a minimum threshold for small business size of 
$38.5 million (http://www.sba.gov/content/small-business-size-standards). This proposed rule additionally affects hospitals (NAICS 
subsector 622) and a variety of provider categories, including 
physicians and specialists (NAICS subsector 621).
    To clarify the flow of payments between these entities and the 
federal government, note that MA organizations submit bids (that is, 
proposed plan designs and projections of the revenue needed to provide 
those benefits, divided into three categories--basic benefits, 
supplemental benefits, and Part D drug benefits) in June 2019 for 
operation in contract year 2020. These bids project payments to 
hospitals, providers, and staff as well as the cost of administration 
and profits. These bids in turn determine the payments from the 
Medicare Trust Fund to the MA organizations that pay providers and 
other stakeholders for their provision of covered benefits to 
enrollees. Consequently, our analysis will focus on MA organizations.
    There are various types of Medicare health plans, including MA 
plans, Part D sponsors, demonstrations, section 1876 cost plans, 
prescription drug plans (PDPs), and Program of All-Inclusive Care for 
the Elderly (PACE) plans. Forty-three percent of all Medicare health 
plan organizations are not-for-profit, and 31 percent of all MA plans 
and Part D sponsors are not-for-profit. (These figures were determined 
by examining records from the most recent year for which we have 
complete data, 2016.)
    There are varieties of ways to assess whether MA organizations meet 
the $38.5 million threshold for small businesses. The assessment can be 
done by examining net worth, net income, cash flow from operations, and 
projected claims as indicated in their bids. Using projected monetary 
requirements and projected enrollment for 2018 from submitted bids, 32 
percent of the MA organizations fell below the $38.5 million threshold 
for small businesses. Additionally, an analysis of 2016 data--the most 
recent year for which we have actual data on MA organization net 
worth--shows that 32 percent of all MA organizations fall below the 
minimum threshold for small businesses.
    If a proposed rule may have a significant impact on a substantial 
number of small entities, the proposed rule must discuss steps taken, 
including alternatives, to minimize burden on small entities. While a 
significant number (more than 5 percent) of not-for-profit 
organizations and small businesses are affected by this proposed rule, 
the impact is not significant. To assess impact, we use the data in 
Tables 18 A and B, which show that the raw (not discounted) net effect 
of this proposed rule over 10 years is $20.8 million. Comparing this 
number to the total monetary amounts projected to be needed just for 
2020, based on plan submitted bids, we find that the impact of this 
rule is significantly below the 3 to 5 percent threshold for 
significant impact. Had we compared the 2020 impact of the proposed 
rule to projected 2020 monetary need, the impact would be still less.
    Consequently, the Secretary has determined that this proposed rule 
will not have a significant economic impact on a substantial number of 
small entities, and we have met the requirements of the RFA. In 
addition, section 1102(b) of the Act requires us to prepare a 
regulatory analysis for any final rule under title XVIII, title XIX, or 
Part B of Title XI of the Act that may have significant impact on the

[[Page 55051]]

operations of a substantial number of small rural hospitals. We are not 
preparing an analysis for section 1102(b) of the Act because the 
Secretary certifies that this proposed rule will not have a significant 
impact on the operations of a substantial number of small rural 
hospitals.
    Section 202 of UMRA also requires that agencies assess anticipated 
costs and benefits before issuing any rule whose mandates require 
spending in any 1 year of $100 million in 1995 dollars, updated 
annually for inflation. In 2018, that threshold is approximately $150 
million. This proposed rule is not anticipated to have an effect on 
state, local, or tribal governments, in the aggregate, or on the 
private sector of $150 million or more.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule that imposes 
substantial direct requirement costs on state and local governments, 
preempts state law, or otherwise has federalism implications. Since 
this proposed rule does not impose any substantial costs on state or 
local governments, the requirements of Executive Order 13132 are not 
applicable.
    If regulations impose administrative costs on reviewers, such as 
the time needed to read and interpret this proposed rule, then we 
should estimate the cost associated with regulatory review. There are 
currently 750 MA contracts (which also includes PDPs), 50 State 
Medicaid Agencies, and 200 Medicaid Managed Care Organizations (1,000 
reviewers total). We assume each entity will have one designated staff 
member who will review the entire rule. Other assumptions are possible 
and will be reviewed after the calculations.
    Using the wage information from the Bureau of Labor Statistics 
(BLS) for medical and health service managers (code 11-9111), we 
estimate that the cost of reviewing this rule is $107.38 per hour, 
including fringe benefits and overhead costs (http://www.bls.gov/oes/current/oes_nat.htm). Assuming an average reading speed, we estimate 
that it will take approximately 12.5 hours for each person to review 
this proposed rule. For each entity that reviews the rule, the 
estimated cost is therefore, $1,342 (12.5 hours * $107.38). Therefore, 
we estimate that the total cost of reviewing this regulation is 
$1,342,000 ($1,342 * 1000 reviewers).
    Note that this analysis assumed one reader per contract. Some 
alternatives include assuming one reader per parent entity. Using 
parent organizations instead of contracts would reduce the number of 
reviewers to approximately 500 (assuming approximately 250 parent 
organizations), and this would cut the total cost of reviewing in half. 
However, we believe it is likely that reviewing will be performed by 
contract. The argument for this is that a parent organization might 
have local reviewers; even if that parent organization has several 
contracts that might have a reader for each distinct geographic region, 
to be on the lookout for effects of provisions specific to that region.
    In accordance with the provisions of Executive Order 12866, this 
rule was reviewed by the Office of Management and Budget (OMB).

C. Anticipated Effects

1. Requirements for Medicare Advantage Plans Offering Additional 
Telehealth Benefits (Sec. Sec.  422.100, 422.135, 422.252, 422.254, and 
422.264)
    As stated in the preamble, section 50323 of the Bipartisan Budget 
Act of 2018 allows MA plans to provide ``additional telehealth 
benefits'' to enrollees starting in plan year 2020 and treat them as 
basic benefits for purposes of bid submission and payment by CMS. We 
propose to codify requirements at Sec.  422.135, which would authorize 
and set standards for MA plans to offer additional telehealth benefits. 
The proposed regulation has the following impacts.
    There are two primary aspects of the proposed additional telehealth 
provision that could affect the cost and utilization of MA basic 
benefits, with a corresponding impact on Medicare program expenditures. 
The most direct effect is the reclassification of certain telehealth 
services covered by MA plans pre-Bipartisan Budget Act of 2018 from 
supplemental benefits to basic benefits. This change will lead to 
higher basic benefit bids, as the cost of additional telehealth 
benefits will be included in the development of the basic benefit bid. 
The impact on the basic benefit bid may be muted due to the exclusion 
of capital and infrastructure costs and investments related to 
additional telehealth benefits from the bid.
    Prior to estimating the impact on the bid, we point out several 
other sources of impact. Many studies have argued that telehealth will 
increase utilization of medical services by making them more 
accessible. However, the increased utilization could lead to increased 
savings or cost. The increased utilization could lead to significant 
savings due to prevention of future illness. Alternatively, the 
increased utilization could lead to increased costs if enrollees start 
seeing doctors for complaints on which they did not traditionally seek 
medical advice. We cite below studies for each possibility. 
Additionally, if there are increased telehealth visits, providers may 
request increased face-to-face visits to protect themselves from 
liability.
    Consequently, there are four potential impacts of this provision, 
which we discuss in more detail later in this section. The four areas 
are as follows:
     Impact on the Medicare Trust Fund
     Savings for Enrollees due to Decreased Travel Time to 
Providers
     Savings from Illness Prevention due to Increased Access to 
Services
     Increased Costs if Unnecessary Medical Visits Increase
    Because of the wide variability in potential impact, we solicit 
comments on best practices in telehealth and the resulting savings.
a. Impact on the Medicare Trust Fund
    Superficially, there appears to be no program change since the 
provision simply reclassifies certain benefits as basic instead of 
supplemental. Thus, the same benefits are provided. However, a closer 
look at the language and assumptions of the provision show that, while 
collectively additional telehealth benefits will yield a negligible 
change in program spending, there is a small transfer of costs (0.002 
percent of the MA baseline) from enrollees to the Medicare Trust Fund, 
associated with reclassifying these benefits from supplemental to basic 
benefits. Supplemental benefits are generally paid with rebates while 
basic benefits are paid by a capitation rate, calculated with reference 
to the bid. For the plans to provide benefits through rebates requires 
additional funding since the amount of rebates provided by the Medicare 
Trust Fund averages only $0.66 on the dollar. Thus, the effect of this 
provision is that either the enrollee pays a lower supplemental premium 
or receives richer supplemental benefits. In either case, the enrollee 
saves and the Medicare Trust Fund incurs a cost. It follows that this 
provision creates a transfer from enrollees to the Medicare Trust Fund. 
After accounting for infrastructure costs, and backing out the Part B 
premium, the extra cost to the Medicare Trust Fund is projected to be 
$80 million over 10 years. The calculations for the first 10 annual 
estimates are presented in Table 6 of this rule and discussed in the 
narrative.
    In order to estimate the 10-year impact (2020 through 2029) of the 
proposed additional telehealth benefits provision on the Medicare Trust 
Fund, we considered the following six factors.

[[Page 55052]]

     We first estimated the costs of additional telehealth 
benefits that are to be transferred from supplemental benefits to basic 
benefits. Using the 2019 submitted bid information, we estimated that 
$0.09 per member per month (pmpm) would be transferred. We computed 
$0.09 by examining and averaging the largest organizations' telehealth 
benefits, particularly under the category ``Web and Phone Based 
Technology.'' The reason for basing estimates on the largest 
organizations is that only the largest organizations included the 
category ``Web and Phone Based Technology'' as a separate line item in 
their bids. The other organizations had multiple, non-telehealth 
benefits, in the same line as the telehealth benefits, and so we were 
not able to distinguish the costs between telehealth and non-telehealth 
for the smaller organizations. Information from the 2018 Medicare 
Trustees Report \34\ shows that the applicable medical-inflation trend 
that should be applied to the $0.09 pmpm is 5.2 percent per year; the 
average trend can be derived from information in Table IV.C3 of this 
report.
---------------------------------------------------------------------------

    \34\ https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2018.pdf.
---------------------------------------------------------------------------

     We applied the pmpm amounts to the projected MA enrollment 
for the years 2020 through 2029. The source of the projected MA 
enrollment is Table IV.C1 of the 2018 Medicare Trustees Report.
     We assumed that 15 percent of the additional telehealth 
benefits would be considered capital and infrastructure expenses. As 
discussed in the preamble, these expenses are excluded from the 
Medicare Trust Fund payments for additional telehealth benefits. We 
obtained the 15 percent assumption by subtracting the 85 percent 
required Medical Loss Ratio (MLR) from 100 percent. We used the MLR as 
a proxy for the medical share of provider payments.
     We applied the average rebate percentage of 66 percent, 
which is based on the expected submitted bid information, including 
expected enrollment and expected average Star Ratings.
     We applied a factor of 86 percent to the calculation, 
which represents the exclusion or the backing out of the Part B 
premium.
     However, per OMB guidance, ordinary inflation should be 
carved out of estimates, while medical inflation, which outpaces 
ordinary inflation (as well as enrollment growth), may be retained. The 
source of the ordinary inflation is Table IV.D1 of the 2018 Medicare 
Trustees Report. It is 2.6 percent per year for each of the years 2020 
through 2029.
    Combining these six factors, we calculated the net costs to the 
Medicare Trust Fund to be $6.1 million in 2020, $6.5 million in 2021, 
$6.9 million in 2022, $7.3 million in 2023, and $7.7 million in 2024. 
We calculated the net costs to the Medicare Trust Fund for years 2025 
through 2029 to be $8.2 million, $8.5 million, $9.0 million, $9.5 
million, and $9.9 million, respectively. The calculations of impact for 
2020 through 2029 are summarized in Table 6. The total cost for all 10 
years is found in the right-most column of Table 6, titled ``Net 
Costs.''
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b. Savings for Enrollees Due to Decreased Travel Time to Providers
    Additional telehealth benefits will save enrollees the cost of 
traveling to providers. Currently, original Medicare telehealth 
benefits are used to bring healthcare services to MA enrollees, 
including those in rural locations. Stakeholders have informed CMS that 
MA enrollees like the use of telehealth services to reduce travel times 
and have greater access to providers that may not otherwise be 
available.
    The analysis assumes a replacement of some face-to-face provider 
visits with telehealth visits and no additional increase in overall 
provider visits. Although, as discussed later in this section, there 
are studies suggesting the possibility of increased provider visits due 
to ease of access of telehealth, these studies are mainly theoretical 
and furthermore suggest methods to curb the unwanted increase in 
visits; it might therefore, be very reasonable to assume that there is 
no increase. Another important point to bear in mind is that increased 
telemonitoring does not cost the enrollee extra time. Once a system is 
set up to electronically transfer medical measurements, the enrollee 
does not have to spend extra time for this transmission. A provider 
will only intervene if a medical measurement indicates the possibility 
of an adverse medical event. However, in such a case, the expected 
adverse medical event might be resolvable with a phone call or 
medication adjustment and is less costly time-wise than an actual face-
to-face provider visit.
    An additional concern with this estimation is that it does not take 
into account that the current MA program already has certain telehealth 
benefits, such as phone hotlines and telemonitoring. Therefore, it is 
not accurate to estimate the effect of telehealth in general without 
differentiating the former allowance of telehealth and the new 
allowances afforded by this provision.
    We believe that the primary driver of telehealth savings is not the 
authority under the law to use it, but rather, increased availability 
of telehealth technology and implementation. For example, although 
current MA guidelines allow some telehealth services as supplemental 
benefits, only the largest plans have provided specific, line item data 
on it in their bid submissions.
    Another example, illustrating that availability, not authority 
under the law, is the primary driver of telehealth savings, is found in 
national usage of telehealth. Although telehealth has always been 
allowed by commercial plans, it is rapidly increasing now because of 
increased availability and ease of implementation. Studies continually 
point to the growth potential for using telehealth; these studies 
emphasize that telehealth is not being used where it could be and that 
the issues are feasibility and availability.\35\
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    \35\ See https://www.ncbi.nlm.nih.gov/pubmed/23406075. Also see 
Harry Wang, Director Health and Mobile Product Research, Parks 
Associates ``Virtual Health Care will revolutionize the Industry If 
we let it'', Forbes, 2014, accessible at https://www.forbes.com/sites/ciocentral/2014/04/03/virtual-health-care-visits-will-revolutionize-the-industry-if-we-let-it/#4ee9a9e97c25.
---------------------------------------------------------------------------

    Thus, allowing plans to offer additional telehealth benefits, or 
reclassify their current supplemental telehealth benefits as basic 
benefits, would not, by itself, increase telehealth usage. Rather, the 
increased telehealth usage comes when telehealth technologies are 
readily available and easy to implement. The goal of this provision is 
to foster an atmosphere where both commercial and MA plans will be 
equally interested in the increasingly accessible technology and seek 
to incorporate it in their offerings.
    In summary, we acknowledge the possibility that the estimates 
below, assuming no increase in provider visits and not taking into 
account current telehealth practices, may have elements of 
overestimation. Because of our uncertainties, we invite industry 
comments on our analysis.
    To estimate the impact on enrollee travel time, we need four 
estimates:
     Average travel time and average travel distance per visit: 
While it is difficult to estimate the savings in reduced travel time 
quantitatively, since distances from enrollees to providers vary 
significantly, to estimate the travel time to providers we use a former 
CMS standard that providers should be located within 30 minutes or 30 
miles of each enrollee. While this standard has since been replaced by 
a more sophisticated measurement of access, we can use it as a proxy. 
The former CMS standard was used because it is formulated simply in 
terms of time (one-half hour) and miles (30 miles) and does not 
differentiate among provider types. The current standards for access 
involve sophisticated algorithms, which involve more than two 
parameters (time and mileage), and additionally differ by geographic 
location and provider types. Therefore, the current standards were not 
suitable. We therefore assume that the midpoint, 15 minutes or 0.25 
hour, represents the typical travel time to providers per enrollee 
visit.\36\ We similarly believe that 15 miles (one-half of 30 miles) is 
the average travel distance per provider visit. We note the group of 
individual respondents varies widely from working and nonworking 
individuals and by respondent age, location, years of employment, and 
educational attainment. CMS estimates cost per hour for enrollees using 
the occupational title ``All Occupations'' (occupation code 00-0000) 
from the BLS, with a mean wage of $24.34/hour. Thus, the net savings 
per enrollee per telehealth visit to providers would be $17.57 ($24.34 
hourly wage * 0.25 minutes travel time * 2 (round trip) + 15 miles * 2 
(round trip) * 18 cents a mile (cost of gasoline for medical 
transportation \37\)). This is summarized in Table 7.
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    \36\ This would result in 30 minutes (2 * 15 minutes) roundtrip. 
The following article using independent sources estimates 37 
minutes, which is close to our estimate: https://www.healthaffairs.org/doi/10.1377/hlthaff.2016.1130.
    \37\ https://www.irs.gov/newsroom/standard-mileage-rates-for-2018-up-from-rates-for-2017.
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     Average number of visits per enrollee: The Center for 
Disease Control (CDC) estimates that in 2014, 65-year-olds and older 
average 5.89 visits per person.\38\
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    \38\ https://www.cdc.gov/nchs/products/databriefs/db292.htm.
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     Number of MA enrollees: Table IV.C1 of the 2018 Medicare 
Trustees Report provides the projected MA enrollment.
     Percent, per year, of provider visits that are telehealth: 
Ideally, we would like an estimate on the number of total visits and 
telehealth visits for 65-year-olds. However, these data are not 
available. Therefore, we use the best available proportions. We proceed 
as follows.
    The CDC website cited above estimates 885 million provider visits 
in 2014. This is an aggregate number over all age groups; the 885 
million was not broken out further by age group.
    Absent information on the proportion of telehealth visits among 
total visits by 65-year-olds to providers, we use general averages 
(across all age groups) with the understanding that some accuracy is 
lost. The Statista website suggests 22 million telehealth visits in 
2014.\39\ This implies that 2.49 percent (22/885) of all physician 
visits were for telehealth.
---------------------------------------------------------------------------

    \39\ https://www.statista.com/statistics/820756/number-of-telehealth-visits-in-us/.
---------------------------------------------------------------------------

    Inferring growth rates from the numbers on the Statista website, 
the projected low and high growth rate for telehealth services is 1.089 
percent and 1.22 percent respectively. Other

[[Page 55055]]

websites give similar ranges. For example, in three places Becker gives 
three estimates for telehealth growth rates of 14.3 percent, 16.5 
percent, and 27.5 percent.\40\ Because of this variability, we use the 
lower estimate for projected telehealth growth, which is about 1.089 
percent. These numbers can be used to estimate the proportion of 
provider visits that will be telehealth in future years. For example, 
in 2015, we assume 1.089 (growth rate) * 2.49 percent (proportion of 
provider visits that are telehealth in 2014) = 2.71 percent of provider 
visits will be telehealth visits.
---------------------------------------------------------------------------

    \40\ See https://www.beckershospitalreview.com/healthcare-information-technology/telemedicine-to-attract-7m-patient-users-by-2018-12-statistics-on-the-thriving-market.html; https://www.beckershospitalreview.com/telehealth/global-telemedicine-market-to-experience-16-5-annual-growth-rate-through-2023.html; https://www.beckershospitalreview.com/healthcare-information-technology/the-growth-of-telehealth-20-things-to-know.html.
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    Multiplying these four numbers together--average savings per visit 
($17.57) * visits per enrollee (5.89) * number of MA enrollees * 
percent of provider visits that are telehealth (2.49 percent * 1.089 
per year)--we arrive at a conservative estimate of $60 million, growing 
to $100 million in 2024, and $170 million in 2029. Had we used the 
higher projected visits, we would have obtained $60 million, growing to 
$540 million. The results are summarized in Table 8.
    We emphasize that these results have a tendency toward 
underestimation for the following reasons:
     We have only estimated the impact on physician visits and 
have not taken into account telehealth surgery and telemonitoring.
     We have assumed an 8.9 percent growth rate.
     We have applied the growth rate in telehealth for all age 
groups to the 65 and older population.
    On the other hand, we have not carved out current MA telehealth 
utilization (an overestimating effect). However, we believe this is a 
good starting point for estimation of savings to enrollees. In other 
words, the use of the 2.49 percent estimate, above, would be reasonable 
if MA enrollees currently have negligible access to telehealth and 
then, as a result of this proposed rule, begin using telehealth at a 
rate similar to the national average. However, there is presently some 
telehealth coverage in MA, so the preceding method most likely yields a 
substantial overestimate of the impact of the telehealth provision, and 
thus the results are used for illustrative purposes only. As such, we 
welcome comments, especially from groups that have data relevant to 65-
year-olds, on the rule-induced incremental use of telehealth.
    These illustrative estimates do not reflect the possible effect of 
increased unnecessary medical visits, that is, medical visits made 
because of the ease of access of telehealth in situations when 
enrollees normally would not seek medical care. We discuss our 
rationale in section IV.C.1.d. of this proposed rule.

BILLING CODE 4120-01-P

[[Page 55056]]

[GRAPHIC] [TIFF OMITTED] TP01NO18.010

BILLING CODE 4120-01-C
c. Savings From Illness Prevention Due to Increased Access to Services
    Telehealth savings due to increased prevention may arise from 
easier access to services. The additional telehealth benefits to be 
included in the MA basic benefit bid stem from the Bipartisan Budget 
Act of 2018 amendment of section 1852 of the Act. These services will 
likely represent a mix of replacement of pre-Bipartisan Budget Act of 
2018 face-to-face encounters and additional services. We believe that 
increased coverage of the additional telehealth benefits will generally 
result in an aggregate reduction in use of emergency room visits and 
inpatient admissions because the relative increased ease of receiving 
healthcare services should improve health outcomes and reduce avoidable 
utilization that results from untreated conditions exacerbating 
illness. Several studies predict that telehealth can significantly 
reduce illness through prevention. We mention four areas: (1) 
Healthcare management; (2) medication therapy management (MTM); (3) 
transitional care programs; and (4) post-hours telemonitoring.
(1) Healthcare Management
    Telehealth has been shown to increase efficiency through better 
healthcare management.\41\ MA enrollees who choose telehealth are 
better able to manage their conditions through the use of technology 
for treatment plan management and medication management. Treatment 
often involves changes to the patient's lifestyle, such as weight 
management, smoking cessation, and dietary changes. Using technology to 
conduct lifestyle counseling remotely makes it more likely that the 
provider and patient will work collaboratively on the treatment plan.
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    \41\ Armaignac, Donna Lee, Saxena, Anshul, Rubens, Muni, Valle, 
Carlos, Williams, Lisa-Mae, Veledar, Emir, and Gidel, Louis (2018). 
``Impact of Telemedicine on Mortality, Length of Stay, and Cost 
Among Patients in Progressive Care Units: Experience From a Large 
Healthcare System.'' Critical Care Medicine, 46(5): 728-735.
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(2) Medication Therapy Management (MTM) \42\
---------------------------------------------------------------------------

    \42\ Our current MA program allows telemonitoring, hospital 
readmission prevention programs, and post-discharge in home 
medication reconciliation.
---------------------------------------------------------------------------

    Additionally, telehealth can help significantly with patients who 
need multiple medications. Remote medication management can reduce the 
multiple patient visits often necessary to get the appropriate mix of 
medications. One recent meta-study on MTM summarizes seven studies, 
showing that using comprehensive medication reviews (the principle 
driver of MTM savings) reduced hospitalizations, readmissions, drugs, 
and mortality.\43\
---------------------------------------------------------------------------

    \43\ Evan A. DeZeeuw, PharmD; Ashley M. Coleman, PharmD; and 
Milap C. Nahata, PharmD, MS, ``Impact of Telephonic Comprehensive 
Medication Reviews on Patient Outcomes,'' Am J Manag Care. 
2018;24(2):e54-e58.

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[[Page 55057]]

(3) Transitional Care Programs
    Telehealth has been used to provide transitional care for 
discharged hospital patients. One study found a savings of $1,333 per 
beneficiary, half of which was due to reduced inpatient follow-up 
care.\44\
---------------------------------------------------------------------------

    \44\ Keith Kranker, Ph.D.; Linda M. Barterian, MPP; Rumin 
Sarwar, MS; G. Greg Peterson, Ph.D.; Boyd Gilman, Ph.D.; Laura Blue, 
Ph.D.; Kate Allison Stewart, Ph.D.; Sheila D. Hoag, MA; Timothy J. 
Day, MSHP; and Lorenzo Moreno, Ph.D. ``Rural Hospital Transitional 
Care Program Reduces Medicare Spending,'' Am J Manag Care. 
2018;24(5):256-260.
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(4) Post-Hours Telemonitoring
    A study reviewing after-hours telemedicine (in which a nurse would 
transmit data about patients with a change in condition) reported 
savings of $4,000 per skilled nursing facility bed, which translates 
into savings of $5 million against a cost of $1 million for 
implementing the program.\45\
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    \45\ David Chess, MD; John J. Whitman, MBA; Diane Croll, DNP; 
and Richard Stefanacci, DO ``Impact of After-Hours Telemedicine on 
Hospitalizations in a Skilled Nursing Facility,'' The Amer. J. of 
Manage Care, 24(8), 2018, e54-e56.
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d. Increased Costs if Unnecessary Medical Visits Increase
    There are two primary concerns regarding telehealth savings.\46\ 
The first concern is that the direct-to-consumer telehealth visits are 
more likely to result in follow-up appointments, testing, or 
prescriptions. Compared to similar visits to other settings, direct-to-
consumer telehealth could increase spending (by MA plans, providers, 
the government, and/or patients). For example, given liability 
concerns, direct-to-consumer telehealth physicians may be more likely 
to recommend that patients have a subsequent in-person visit with a 
provider. Therefore, although the telehealth visit is less costly, the 
per-episode cost of a direct-to-consumer telehealth visit could be 
greater than that of a visit in other settings.
---------------------------------------------------------------------------

    \46\ J. Scott Ashwood, Ateev Mehrotra, David Cowling, and Lori 
Uscher-Pines, ``Direct-To-Consumer Telehealth May Increase Access To 
Care But Does Not Decrease Spending,'' Health Affairs, Vol. 36, No. 
3: Delivery System Innovation, accessible at https://www.healthaffairs.org/doi/10.1377/hlthaff.2016.1130.
---------------------------------------------------------------------------

    The second concern is that the convenience of direct-to-consumer 
telehealth may drive many patients to seek care for an illness when 
they would not have sought care if telehealth had not been available. 
Instead of saving money by substitution (that is, replacing more 
expensive visits to physician offices or emergency departments), 
direct-to-consumer telehealth may increase spending by new utilization 
(that is, increasing the total number of patient visits).
    To document these concerns, the Health Affairs article cited above 
presents a study on commercial health plan enrollees with specific 
illnesses. The study showed an increase of $45 per year per telehealth 
user. The authors acknowledge that a key attraction of telehealth for 
commercial health plans and employers is the potential savings involved 
in replacing physician office and emergency department visits with less 
expensive virtual visits; however, increased convenience may tap into 
unmet demand for health care, and new utilization may increase overall 
healthcare spending.
    The article acknowledges various limitations of the study: (1) It 
applies to commercial health plan enrollees; (2) only one telehealth 
company in California was used; (3) the users had a low telehealth 
usage, and study results could differ if telehealth becomes more 
popular; and (4) only one medical condition was studied (which is 
frequently dealt with by telehealth).
    The article also mentions various approaches that could be used to 
reduce extra costs, for example, increasing cost sharing to prevent 
indiscriminate use of telehealth on conditions that one would not 
ordinarily see a provider.
    In conclusion, although telehealth has a significant potential to 
produce savings, this potential is counterbalanced by several factors, 
which might reduce these savings or produce increased costs for MA 
plans, providers, the government, and/or patients (such as increased 
in-person visits and increased utilization patterns). Additionally, 
several telehealth services--telemonitoring and remote access 
technologies (including web/phone based hotlines)--are allowed under 
current guidelines; many MA plans already offer these services as 
supplemental benefits.
    As regards to the illustrative calculation of a $6 to $10 million 
transfer from enrollee to government and a savings to enrollees of $60 
to $100 million per year, arising from reduced travel times, we now 
summarize the simplifying assumptions below.
    First, the transfer from enrollee to government reflects an 
assumption that the same number of services will occur, but their 
classification will change from supplemental to basic. This simplifying 
assumption is certainly contradicted by the expected growth rate in 
telemonitoring. However, we have argued above that increased use of 
telemonitoring will result in significant healthcare savings due to 
prevention of future illnesses. Therefore, a $6 to $10 million estimate 
of cost per year may be outweighed by healthcare savings.
    Second, the savings of $60 to $100 million per year arising from 
reduced travel time to providers reflects several simplifying 
assumptions such as applying proportions of telehealth services of 
provider visits in the general population to the aged population and 
ignoring the current extent of telehealth services in MA plans.
    Thirdly, we have disregarded the possible cost impact of telehealth 
arising from enrollees indiscriminately using telehealth for provider 
services in situations where provider assistance was not previously 
sought. As noted previously, this negative effect was found in one 
commercial provider on a population with a very low telehealth usage. 
Furthermore, there are possible methods to prevent indiscriminate use 
of telehealth services. The majority of the articles we cited and 
reviewed previously were very positive about health savings and did not 
mention increased costs. Therefore, we determined the best approach is 
to assume the increased costs from telehealth will not arise.
    Fourth, we ignore the current usage of telehealth by MA plans who 
may furnish telehealth as a supplemental benefit. Our primary reason 
for ignoring this is the lack of adequate data. Other reasons for 
ignoring this are that only large plans have listed supplemental 
telehealth as a line-item in their bid documentation, and articles 
generally show that even where allowed (such as in commercial plans) 
telehealth is not used to its full potential.
    In light of the information provided previously, all our estimates 
of impact should be seen as reasonable first attempts at estimation 
with the intent to solicit comments from the industry on their 
experiences and whether such assumptions are warranted or should lead 
to modifications in our estimates.
    There is one additional negligible cost, mentioned in section 
III.B.1. of this proposed rule, which arises from the proposed 
provision at Sec.  422.135(c)(2) requiring that MA plans advise 
enrollees that they may receive the specified Part B service(s) either 
through an in-person visit or through electronic exchange. This 
notification would appear in the Evidence of Coverage (EOC) document, 
which is already required and provided in model form by CMS to MA 
plans. There is a one-time cost for CMS staff to formulate the required 
template notification language in our EOC model for all plans to adopt 
without edit.
    We estimate it would take a CMS Central Office staff person 1 hour 
to

[[Page 55058]]

produce language for such a model. The typical Central Office employee 
is at the GS-13 level. The 2018 wages for the Baltimore area, available 
at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2018/AK_h.pdf, indicate an approximate hourly wage of 
$50 (with the Step 3 hourly wage being slightly below and the Step 4 
hourly wage being slightly above). We further allow 100 percent for 
fringe benefits and overhead costs. Thus, the expected burden to the 
federal government is a negligible cost of $100 (1 hour * $50 wage per 
hour * 2).
2. Integration Requirements for Dual Eligible Special Needs Plans 
(Sec. Sec.  422.2, 422.60, 422.102, 422.107, 422.111, and 422.752)
    As stated in the preamble, starting in 2021, section 50311(b) of 
the Bipartisan Budget Act of 2018 establishes new Medicare and Medicaid 
integration standards for MA organizations seeking to offer D-SNPs and 
enrollment sanctions for those MA organizations that fail to comply 
with the new standards. We propose to add a revised definition for ``D-
SNP'' at Sec.  422.2 and establish at Sec.  422.107 revisions to the 
existing minimum state Medicaid agency contracting requirement for D-
SNPs other than FIDE SNPs and HIDE SNPs, which are also defined at 
Sec.  422.2.
    As noted in the preamble, many of the changes we are proposing 
would unify and streamline existing requirements, which should reduce 
burden and are therefore not expected to have impact. For example:
     Passive enrollment: The reference to the proposed 
definition of a HIDE SNP at Sec.  422.2 would not materially change the 
plan types that are eligible for passive enrollment; rather, the 
existing rule simply refers to them as the D-SNPs that meet a high 
standard of integration under the supplemental benefit authority at 
Sec.  422.102(e).
     Enhanced Supplemental Benefits: We also propose clarifying 
at Sec.  422.102(e) that not only are HIDE SNPs that meet minimum 
quality and performance standards eligible to offer supplemental 
benefits, but FIDE SNPs that similarly meet minimum quality and 
performance standards may do so as well. While this amendment does not 
change what has occurred in practice, we believe it clarifies the types 
of plans that are eligible to offer enhanced supplemental benefits.
    Additional costs were presented in the Collection of Information 
(COI) section of this proposed rule. However, the COI made an 
assumption which must be modified for purposes of this Regulatory 
Impact Analysis (RIA) section: The cost to State Medicaid agencies for 
updating their contracts was reduced by 50 percent reflecting the 
Federal administrative matching rate for state Medicaid agency 
expenditures. This is correct for the COI since federal costs are never 
listed in the COI. However, for the purposes of the RIA section they 
should be listed. More specifically, the total cost should be listed as 
a true cost (that is payment for services and goods) to the state 
agencies, half of which is transferred to the federal government. The 
simplest way to describe the impact of this provision is simply to redo 
the summarizing table in the COI section. The assumptions and sources 
underlying the numbers in this table have been presented in the COI 
section. This is presented in Table 9.
    Table 9 notes which numbers are true savings or costs and which 
numbers or parts of estimates are transfers. Since the impacts are for 
services such as updating manuals or updating software, the cost and 
savings impact are true costs or savings (which in some cases reflect a 
transfer to the federal government). Table 9 also notes who bears the 
cost (states or MA plans). As can be seen, the aggregate cost of this 
provision is a first year cost of $3.4 million, $0.2 million of which 
are transfers between the Federal government and states. As noted in 
the section, although additional updates may be necessary in future 
years, we are scoring this as $0 as a best estimate given uncertainty 
regarding the need for additional changes by states and plans after the 
first year.
[GRAPHIC] [TIFF OMITTED] TP01NO18.011


[[Page 55059]]


3. Unified Grievance and Appeals Procedures for Dual Eligible Special 
Needs Plans and Medicaid Managed Care Plans at the Plan Level 
(Sec. Sec.  422.560-562, 422.566, 422.629-634, 438.210, 438.400, and 
438.402)
    Proposed changes to the appeals and grievances provisions at 
Sec. Sec.  422.629 through 422.634 focus on creating MA and Medicaid 
appeal and grievances processes that are unified for D-SNPs that also 
have comprehensive Medicaid managed care contracts (or are the 
subsidiary of a parent organization or share a parent organization with 
the entity with a comprehensive Medicaid managed care contract). The 
proposal addresses appeals at the plan level. Currently, Medicaid and 
MA appeals and grievance processes differ in several key ways. These 
differences hinder a streamlined grievance and appeals process across 
Medicare and Medicaid managed care sectors and create unnecessary 
administrative complexity for plans that cover dual eligible 
individuals for both Medicare and Medicaid services. Our proposed 
revisions would allow enrollees in a D-SNP that is also a Medicaid 
managed care plan through which the enrollees get Medicaid coverage to 
better understand the grievance and appeals processes and generally 
receive a resolution of their grievances and appeals more quickly.
    There are six areas where this provision will have an impact.
     Certain Medicare Parts A and B benefits that the D-SNP has 
tried to terminate would be provided during the pendency of the 
integrated appeal at the plan level. This is estimated in detail below. 
The cost to the Medicare Trust Fund and beneficiaries (in the form of 
cost sharing) is $0.4 million in 2021 and $0.5 million in 2022-2024, 
growing modestly due to expected enrollment growth, to $0.6 or $0.7 
million in the next few years.
     Applicable integrated plans' grievance policies and 
procedures and grievance notices would be updated. As discussed in the 
Collection of Information section, there would be a one-time first year 
cost of $18,790 for updates of applicable integrated plans' policies 
and procedures on grievances and an annual savings of $270,103 
reflecting savings from Medicare and Medicaid grievance consolidation). 
Thus, there would be an annual savings of $0.3 million.
     Notice templates for the unified appeals for use by 
applicable integrated plans would be created by CMS, which is estimated 
to be a one-time negligible cost of about $1,000 for the work of 
Federal employees.
     Subregulatory guidance on integrated grievance and appeals 
would be developed by CMS staff, which is estimated to be a one-time 
negligible cost of about $2,000.
     Applicable integrated plans' appeals policies and 
procedures and appeals notices would be updated to comply with the 
unified appeals requirements, which is estimated to be a one-time 
negligible cost of $9,395 (4 hours per contract * 34 contracts * 
$69.08, the hourly wage of a business operations specialist).
     Enrollees of applicable integrated plans who wish to 
receive a copy of their appeal case file would request that plans send 
it to them at plan expense, which we estimate to cost about $38,637 
annually.
    The aggregate cost of this provision is $0.2 million a year. 
Industry would save $0.3 million each year in reduced services because 
grievances in Medicare and Medicaid are unified. However, this $0.3 
million savings would be offset by an increase in cost of $0.5 million 
reflecting increased services. The $0.5 million cost (as well as the 
0.3 million savings) are ultimately borne by the Medicare Trust Fund in 
the form of payments and beneficiaries in the form of increased cost-
sharing.
    We present details on these six areas in the sections that follow.
a. Furnishing Medicare Parts A and B Services During the Pendency Of 
Appeals
    One of the provisions related to appeals integration may marginally 
impact the ways MA sponsors bid for their D-SNPs, which could 
marginally impact Medicare spending. We propose that the existing 
standards for continuation of benefits at Sec.  438.420 apply to 
applicable integrated plans for Medicare benefits under Parts A and B 
and Medicaid benefits in our proposed integrated appeals requirements 
at Sec.  422.632. Under our proposal, and as is applicable to Medicaid 
managed care plans currently, if an applicable integrated plan decides 
to stop or reduce a benefit that the enrollee is currently authorized 
to receive, the enrollee could request that the benefit continue to be 
provided at the currently authorized level while the enrollee's appeal 
is pending through the integrated reconsideration. Currently, MA plans 
in general are not required to provide benefits pending appeal, whereas 
in Medicaid it has been a long-standing feature.
    It is our expectation that the new integrated appeals provisions 
will result in an increase in expenditures by applicable integrated 
plans for Medicare covered services because they will be required to 
continue coverage for services during the pendency of the 
reconsideration request, or first-level appeal under our proposal.
    The estimate of impact of this continuation is based on calendar 
year (CY) 2016 appeal metrics, which are then trended to CY 2021.
    The assumptions, sources and calculations are summarized in Tables 
G5 and G6 in this rule and further clarified as follows.
    The first step in this estimation is to determine the number of 
applicable reconsiderations per 1,000 beneficiaries enrolled in 
integrated plans affected by this provision. Given the similarity of 
population characteristics, the reconsideration experience for the 
Medicare-Medicaid Plans (MMPs) participating in the Financial Alignment 
Initiative was used as a proxy for the applicable integrated plans. In 
2016, MMP enrollees were impacted by 1,232 reconsiderations for 
services which were resolved adversely or partially favorably to the 
beneficiary. The corresponding MMP enrollment in 2016 was 368,841, 
which implies a rate of 3.3 applicable reconsiderations per 1,000 in 
2016.
    Then we projected D-SNP enrollment impacted by the unified 
procedures to grow from 150,000 in 2018 to 172,000 (150,000 * 1.145) in 
2021 based on the estimated enrollment growth for all D-SNPs during the 
period of 14.5 percent. Applying the MMP appeal rate of 3.3 per 1,000 
to the projected 2021 enrollment in applicable integrated plans of 
172,000 results in an estimated 568 (172,000 * 3.3/1,000) service 
reconsiderations for the applicable integrated plans in 2020.
    The next step is to determine the average level of benefit subject 
to the appeals. Table 1 in the report Medicare Part C QIC 
Reconsideration Data for 2016 \47\ contains data on the number and 
benefit amounts by service category for the second level appeals filed 
in 2016. Analysis of these data resulted in an estimated per-appeal 
benefit value of $737 for 2016. The determination of this value took 
into account that some services would not be subject to the regulatory 
extension of coverage due to the existence of immediate review rights 
(inpatient hospital, skilled nursing facility, and home health), other 
benefits would likely have been rendered already (emergency room, and 
ambulance), and other services are not

[[Page 55060]]

covered as a D-SNP basic benefit (hospice and non-Medicare benefits). 
Accounting for 19.5 percent inflation in per-capita Medicare spending 
between 2016 and 2021, and carving out the 13.38 percent consumer price 
index inflation in years 2016--2020 inclusive, results in an estimated 
per-appeal benefit value of $774 (that is, $737 * 1.195/1.1338) for 
2021.
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    \47\ https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/IRE.html.
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    Taking the product of the number of applicable integrated plan 
service reconsiderations in 2021 (568) and average benefit value in 
2021 ($774) yields an estimated cost in 2021 of $439,632 (that is, 568 
* $774) due to an increase in Medicare expenditures stemming from the 
unified appeals procedures for applicable integrated plans. We believe 
that this figure represents an upper bound of the cost given that not 
all applicable services will be rendered during the extended period of 
benefit continuation being proposed in this regulation. These 
calculations are summarized in Table 10.
    Using the 2021 estimates as a basis, estimates for 2021 through 
2029 are presented in Table 11. The following assumptions were used in 
creating Table 11:
     As described earlier in this section, the numbers in the 
row for 2021 come from Table 10.
     The projected FIDE SNP enrollment for 2022 through 2029 
was obtained by multiplying the estimated 2021 FIDE SNP enrollment of 
172,000, using SNP enrollment growth factors inferred from Table IV.C1 
in the 2018 Trustees Report.
     The projected cost per appeal for 2022 through 2029 was 
obtained by first multiplying the estimated 2021 cost per appeal of 
$774 by FFS per capita growth rates obtained from internal 
documentation for the Table of FFS USPCC, non-ESRD estimates in 
attachment II of the 2019 Rate Announcement and Call Letter (https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf).
    The results are summarized in Table 11. As can be seen, there is an 
estimated true cost (reflecting purchase of goods and services) of $0.4 
million in 2021 and $0.5 million in 2022 through 2024. Eighty-six 
percent of this cost is transferred from the plans to the Medicare 
Trust Fund. The remainder of this cost is born by beneficiary cost 
sharing. The cost of appeals between 2025 and 2029 is $0.5 to 0.6 
million for the Medicare Trust Fund and $0.1 million for beneficiaries.

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[[Page 55061]]

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[[Page 55062]]


[GRAPHIC] [TIFF OMITTED] TP01NO18.013

b. Updating Plan Grievance Policies and Procedures and Consolidation of 
Plan Notifications
    As detailed in the Collection of Information section of this 
proposed rule, there are only 34 contracts representing 37 D-SNPs that 
we currently believe would be classified as a HIDE SNP or FIDE SNP and 
operate in states that have policies requiring exclusively aligned 
enrollment across MA and Medicaid managed care plans. The analysis 
presented in the Collection of Information section for unified 
grievance and appeals estimates initial one-time cost of $18,790 and 
$8,374 and annual savings, due to reduction of notifications, of 
$270,103. Thus, the annual savings is $0.2 million in the first year 
and $0.3 million annually thereafter.
c. Creation of New Grievance and Appeal Notice Templates
    When MA plans send out notifications to enrollees, they usually 
have the option to use templates created by CMS. To address the 
proposed new unified grievance and appeal procedures, CMS Central 
Office staff must create new notice templates. We estimate that three 
new notice templates must be created. We estimate each new template 
will require 3 hours of work by a GS level 13, step 5 (GS-13-5), 
employee. The 2018 hourly wages for a GS-13-5 Federal employee is 
$52.66.\48\ We allow 100 percent for Fringe Benefits and overtime. Thus 
the expected one-time negligible initial cost is $1,000 (actually, $948 
= 3 templates * 3 hours per template * $52.66 hourly wage * 2 for 
overtime and fringe benefits).
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    \48\ https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2018/DCB_h.pdf.
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d. Subregulatory Guidance in CMS Manuals on the New Grievance and 
Appeals Procedures
    The CMS manuals present comprehensive sub-regulatory guidance on 
regulatory matters. Since these unified grievance and appeals 
procedures are new, we estimate it would require 20 hours to develop 
subregulatory guidance to be published in the CMS Medicare managed care 
manual. Thus we expect a negligible one-time cost of $2,000 (actually 
$2,106 = 20 hours of work * $52.66, hourly wage for a GS-13-5 * 2 for 
overtime and fringe benefits).
e. Updating Applicable Integrated Plan Appeals Policies and Procedures
    Applicable integrated plans' internal appeals policies and 
procedures must be updated to comply with the unified appeals 
requirements. In terms of updates, we see no reason to differentiate 
between the work required for grievances and appeals. Using our 
estimate for grievance procedures, we estimate for appeals an initial 
one-time negligible cost of $9,395 (that is, 4 hours per contract * 34 
contracts * $69.08, the hourly wage of a business operations specialist 
including 100 percent for fringe benefits and overhead).
f. Sending Appeal Files to Enrollees Who Request Them
    Medicaid managed care regulations currently require plans to send, 
for free, appeal case files to enrollees who appeal while, in contrast, 
MA regulations require sending such files at a reasonable cost. Our 
proposal would require the applicable integrated plans to send such 
files for free. To estimate this cost, we must first estimate the cost 
of sending such a file.
    Livanta,\49\ a Quality Improvement Organization, estimates the cost 
per case file as $40-$100. This can be justified independently with a 
stricter range as follows: Assuming a typical case file has 100 pages, 
it would weigh about 1 pound at 6 pages per ounce. The cost of mailing 
a 1-pound case file by FedEx (to assure security) is $10. The cost of 
photocopying 100 pages at a minimum rate of $0.05 per page is $5. The 
$0.05 per page is likely to be an overestimate for plans that own their 
own photocopying equipment. Thus, the total cost of photocopying and 
mailing would be about $15. We assume a correspondence clerk, BLS 
occupation code 43-4021,\50\ would take 1 hour of work, at $36.64 per 
hour (including 100 percent for overtime and fringe benefits) to 
retrieve the file, photocopy it, and prepare it for mailing. Thus we 
estimate the total cost at $36.64 + $10 + $5 = $51.64.
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    \49\ https://bfccqioareal.com/recordrequests.html.
    \50\ https://www.bls.gov/oes/current/oes_nat.htm.
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    We need further estimates to complete the calculation. We assume 
43.5 total appeals (favorable and unfavorable) per 1000.\51\ Based on 
our experience, we assume that 10 percent of all appeals would require 
a file sent. Finally, as indicated in the Collection of Information 
section, there are 37 D-SNPS in 34 contracts with 150,000 enrollees in 
2018 projected to grow to 172,000 enrollees in 2021. Thus we estimate 
the total annual cost of mailing files to enrollees as $38,637 (that 
is, 172,000 enrollees * 4.35 percent appeals

[[Page 55063]]

* 10 percent requesting files * $51.64 cost).
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    \51\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/PartCDDataValidation.html.
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    In conclusion, the primary driver of costs of this provision are 
the effects on the Medicare Trust Fund and beneficiary cost sharing 
presented in Tables G5 and G6. These costs are offset by annual savings 
of $0.3 million due to unification of grievance procedures. Other costs 
are considered negligible (below a $50,000 threshold for E.O. 13773 
accounting). A summary by year is presented in Table 12.
[GRAPHIC] [TIFF OMITTED] TP01NO18.014

    We note that these costs and savings are true costs and savings 
since they reflect payment for additional or fewer economic resources 
(reduced notifications and increased appeals). The increased appeals 
costs are a cost to MA plans, which transfer this cost to enrollees and 
the Medicare Trust Fund (the government).
4. Proposal for Prescription Drug Plan Sponsors' Access to Medicare 
Parts A and B Claims Data Extracts (Sec.  423.153)
    As described in section II.A.3. of this proposed rule, section 
50354 of the Bipartisan Budget Act of 2018 requires the establishment 
of a process under which the sponsor of a PDP that provides 
prescription drug benefits under Medicare Part D may request, beginning 
in plan year 2020, that the Secretary provide on a periodic basis and 
in an electronic format standardized extracts of Medicare claims data 
about its plan enrollees. In this rule we propose to add a new Sec.  
423.153(g) to implement the process for requesting these data.
    To estimate the impact we require a model of operationalizing this 
provision, without however committing to a particular operationalizing 
process. We outline a process which--
     Meets all regulatory requirements; and
     Requires as little burden as possible to make and grant 
requests.

We solicit comments from stakeholders on this proposed 
operationalization.
    Electronic request and transfer are superior (have less burden) 
than paper processes. We could therefore add functionalities to the CMS 
HPMS system (or other CMS systems) which would allow the following 
functions:
     Request of claims data for the current and future quarters 
for enrollees of the PDP requesting the data.
     Request to no longer receive data.
     Attestation that all regulatory requirements will be 
complied with. The attestation would be in the form of a screen listing 
all regulatory requirements; the authorized PDP HPMS user would have to 
electronically attest by clicking a button.

Such a process would combine request and attestation. The receipt of 
the submission would verify completeness of request. Furthermore, there 
would be no burden in request (under 1 minute of work).
    The HPMS contractors estimate that this would be a one-time update 
costing approximately $200,000.
    Besides requesting the data, data must be transmitted to the 
requesting sponsor. Ideally, data would be transmitted electronically 
but we do not yet have such an API. Instead, we would treat requested 
data like data requested for research. Typically, such data is 
downloaded onto hard drives and mailed to requestors.
    The data could come from the Chronic Condition Warehouse (CCW). We 
asked our contractors the cost of downloading quarterly such data and 
sending it out. The cost varies by sponsor size. Currently, based on 
CMS public data, there are 63 PDP sponsors. Their size and the 
quarterly cost per sponsor of providing them with data, should they 
request it, is summarized in Table 13.

[[Page 55064]]

[GRAPHIC] [TIFF OMITTED] TP01NO18.015

    To complete the annual impact analysis we need an estimate of 
proportions for each plan size that would request data. For example, we 
are certain that the 1 PDP sponsor with over 5 million enrollees will 
request data. Thus the annual burden for that plan size is 1 * 4 
quarters X $26,500 per quarter = $106,000. Similarly, if we assume that 
all six PDP sponsors with enrollments between 1 and 5 million would 
request data then the annual burden is 6 sponsors * 4 quarters * 
$17,500 per quarter per sponsor = $420,000. If we assume that only 
three-quarters of these six sponsors request data then the annual 
burden would be 0.75 * $420,000 = $315,000. In the absence of any other 
basis for the decision, it is reasonable to assume that the proportion 
goes down as the size goes down. In the absence of data, we could use a 
descent of simple fractions (1, three-fourths, one-half, one-fourth). 
Note, that 50 percent of plans with under 100,000 enrollees have under 
10,000 enrollees. It is very unlikely that such plans would have the 
resources to use the data. Thus an assumption that only 50 percent of 
plans under 100,000 request data is reasonable. However, we consider 
multiple scenarios. Table 14 presents for a variety of scenarios of 
proportions and their total impact. The average of the five scenarios 
is $1.5 million while the median is $1.3 million. The range of impacts 
is $0.8 million-$2.9 million. For purposes of E.O. 13771 accounting we 
are listing the impact as $1.5 million annually, with a $0.2 million 
one-time cost in the first year. We do not trend this estimate by year 
since the number of PDP sponsors has remained at 63 since 2015.
[GRAPHIC] [TIFF OMITTED] TP01NO18.016

BILLING CODE 4120-01-C
    We do not anticipate any further burden. It is most likely that the 
PDP sponsor would exclusively use the data. In the event that 
downstream entities are shared any data they are already bound in their 
contracts by all Medicare regulations including the regulations of this 
provision. Even if there would be a need to modify contracts to address 
the regulatory requirements of using such data, it would require at 
most one hour of work of a GS-12 or GS-13 staff member and one hour of 
review by a GS-15. A total of 2 hours of work by Federal employees 
would have a burden significantly less than $1,000. Hence, we are not 
further scoring this negligible impact.
5. Medicare Advantage and Part D Prescription Drug Plan Quality Rating 
System (Sec. Sec.  422.162(a) and 423.182(a), Sec. Sec.  422.166(a) and 
423.186(a), Sec. Sec.  422.164 and 423.184, and Sec. Sec.  
422.166(i)(1) and 423.186(i)(1))
    We are proposing some measure specification updates. These type of 
changes are routine and do not have an impact on the highest ratings of 
contracts (that is, overall rating for MA-PDs, Part C summary rating 
for MA-only contracts, and Part D summary rating for stand-alone 
prescription drug plans). Hence, there will be no, or negligible, 
impact on the Medicare Trust Fund.
    We are also proposing some adjustments for disasters. The proposed 
policy would make adjustments to take into account the potential impact 
on contracts when there are extreme and uncontrollable circumstances 
affecting them. This policy is in response to the multiple disasters in 
2017 and 2018, including several hurricanes and wildfires. We are 
proposing a policy to permit an adjustment to Star Ratings when extreme 
and uncontrollable circumstances occur during the performance period or 
measurement period for MA and Part D plans.
    We are also proposing enhancements to the current methodology to 
set Star Ratings cut points. The intent of the changes is to increase 
the stability and predictability of cut points from year to year. This 
proposal is consistent with the CMS goal to increase transparency. We 
believe this provision would also have minimal impact on the highest 
ratings of contracts. Specifically, simulations of the proposal using 
the 2018 Star Ratings show that the QBP

[[Page 55065]]

ratings overall would increase for less than 1 percent of MA enrollees.
6. Improving Clarity of the Exceptions Timeframes for Part D Drugs 
(Sec. Sec.  423.568, 423.570, and 423.572)
    We are proposing to limit the amount of time an exception request 
can be held open to 14 calendar days, meaning that there will be an 
outside limit to how long the request is in a pending status while the 
Part D plan sponsor attempts to obtain the prescribing physician's or 
other prescriber's supporting statement. Under current manual guidance, 
plan sponsors are instructed that an exception request should only be 
held open for a reasonable period of time if a supporting statement is 
needed. We believe that no more than 14 calendar days is a reasonable 
period of time to have an exception request open and this proposal 
seeks to codify that standard. We do not expect this proposal to have 
any new impact on the number of pending appeals or pose a potential 
burden to plan sponsors, as we expect plans are already making and 
notifying enrollees of decisions on exception requests under a similar 
reasonable timeframe. Based on findings from plan sponsor audits, this 
proposed timeframe is generally consistent with how plans sponsors have 
operationalized the current standard that cases only be held open for a 
reasonable period of time pending receipt of a prescriber's supporting 
statement. Therefore, we do not expect that plan sponsors would need to 
hire more staff or adjust their operations in a manner that would 
affect costs. Consequently, we expect the impact of this proposed 
requirement to be negligible.
7. Preclusion List Requirements for Prescribers in Part D and 
Individuals and Entities in MA, Cost Plans, and PACE (Sec. Sec.  
422.222 and 423.120(c)(6))
    We do not anticipate any additional cost or savings associated with 
our proposed preclusion list provisions. As we indicated in section 
III. of this proposed rule, the proposed provisions would not involve 
activities for plan sponsors and MA organizations outside of those 
described in the April 2018 final rule. Our proposed provisions are, 
generally speaking, clarifications of our intended policy and do not 
constitute new requirements. Hence, the expected impact is negligible.
8. Medicare Advantage Risk Adjustment Data Validation Provisions 
(Sec. Sec.  422.300, 422.310(e), and 422.311(a))
a. Proposals
    This proposed rule would create regulations to govern the 
collection of extrapolated audit findings. As CMS develops its approach 
to statistical sampling and extrapolation, it is taking account of the 
recommendations of the 2016 General Accounting Office (GAO) report on 
CMS audit practices.\52\ For example, CMS has been randomly selecting 
30 plans for audit based on factors unrelated to payment error. In 
recent years, only half of those audited plans have had findings; the 
other half have had no net findings of improper payments. The GAO has 
recommended that CMS select plans that historically have high error 
rates either from the National audits as published in the Report of the 
Chief Financial Officer or from prior CMS audits. This recommendation 
would probably increase the number of findings, and hence the amount 
collected through the audits. CMS has accepted all GAO findings and 
intends to develop its sampling and extrapolation methodology 
consistent with them.
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    \52\ https://www.gao.gov/products/GAO-16-76.
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    To clarify in more detail how the proposed rules would impact the 
recovery audit process we note the following facts:
     RADV recovery for payment years 2011, 2012, and 2013 
included 30 MA contracts per payment year. For each contract, 200 
enrollees have been selected. The aggregate cost to the government for 
each audit is $54 million.
     National audits are for the purpose of payment error 
measurement in the Part C program. A nationally representative sample 
of 600 enrollees are selected from approximately 200 plans. Each plan 
contributes between 1 to 15 enrollees with many plans contributing 
under 10 enrollees. The annual cost to the government of a national 
audit is between $6 to 10 million. No recovery is made through the 
national audits.
     Findings from the national and contract-level audits will 
be used to predict beneficiaries at most risk for improper payment. CMS 
will use these estimates to target plans at most risk for improper 
payment for RADV audit.
     By better targeting audits to improper payment, CMS 
expects any sentinel effect of RADV to continue to reduce the 
historical Part C error rate.
b. Expected Impact of These Provisions
    While we cannot fully estimate the quantitative impact of this 
provision, we can clearly identify certain components of impact. We 
start with some basic facts mentioned in the preceding narrative.
     With extrapolated audit findings, we would realize a 
positive ROI. The cost per year for a RADV audit is $54 million. Non-
extrapolated recoveries would result in a $10 to 15 million collection 
per audit.
     Extrapolating audit findings does not increase the cost 
burden on the plan. The cost to the plan of complying with a RADV audit 
is neither the subject of nor affected by this provision. This 
provision addresses recovering extrapolated or non-extrapolated audit 
findings. While extrapolation does increase the level of the audit 
recovery, because returning improper payments is not a cost, the 
decision to extrapolate does not impact the cost to the plan.
     The audits for payment years 2011, 2012, and 2013 suggest 
that audited MA contracts received $650 million in of improper payments 
in those 3 years.
     This $650 million would be a transfer from the government 
to insurers since money paid for human coding error which CMS paid the 
contracts to pay their providers is no longer being done, meaning that 
the contracts must take responsibility for the improper provider 
payments.
     These audits cover 3 years, with 30 contracts audited each 
year.
     Roughly half the contracts each year had no net findings 
of improper payments.
    Using these data we can conclude as follows:
     The audits for payment years 2011, 2012, and 2013 suggest 
that audited MA contracts were responsible for $650 million of improper 
payments in those 3 years.
     $650 million divided by 3 audit years is $217 million per 
audit year.
     $217 million per audit year divided by 15 contracts with 
audit findings per year is $14.5 million per contract with audit 
findings per year.
     If GAO recommendations are adopted which would facilitate 
focusing on contracts with expected findings, and the level of audit 
findings holds constant, then $14.5 million per contract with audit 
findings per year times 30 contract with audit findings per year would 
produce $435 million in audit collections per year.
     This level of recovery would produce $381 million in 
aggregate savings per year (that is, $435 million - $54 million, since 
the cost of audits would remain at $54 million).
    This numerical bulleted argument is summarized in Table 15.
    It might seem natural to trend the $381 million based on non-
inflation factors. The following considerations argue against trending. 
Therefore, we are leaving the estimate of dollar savings

[[Page 55066]]

to the Medicare Trust Fund at $381 million per year at each year for 
the next 10 years with an additional $650 million the first year. A 10-
year table is presented in Table 16. The arguments against trending are 
the following:
     The error rate of improper payments per year, as indicated 
in the reports of the Chief Financial Officer have been declining and 
are likely to continue to decline. Importantly, although we have about 
10 years of data we have insufficient data to extrapolate since 
performance error is rarely linear. Thus trending would involve non-
linear functions and would require more data.
     The aggregate amount paid to contracts is increasing due 
to enrollment growth. The Office of the Actuary at CMS annually 
publishes a Trustee Report which contains projected enrollment.\53\
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    \53\ https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html.
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     The $381 million is based on current error rates and 
enrollment growth. But we have already indicated that 50 percent of 
contracts audited had no net audit findings. We have already indicated 
that acceptance of GAO recommendations would facilitate targeting 
contracts with higher rates and have therefore assumed there would be 
findings in all 30 contracts audited.
    For these reasons, we are leaving the annual estimate as a dollar 
savings to the Medicare Trust Fund of $381 million for 2021 and future 
years, and a dollar savings of $1.03 billion to the Medicare Trust Fund 
in 2020 ($381 million savings per year plus an estimated $650 million 
in audit recoveries for payment years 2011 through 2013). All other 
things being equal, the increase in enrollment will cause the nominal 
dollars in error to increase. The historical decline in the error rate 
may or may not offset the increase due to increasing enrollment making 
a projection difficult. For this reason we hold the estimate of $381 
million constant in the projection.
    A table of collection for 10 years is summarized in Table 16.

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[[Page 55067]]

[GRAPHIC] [TIFF OMITTED] TP01NO18.017

BILLING CODE 4120-01-C
    The estimated 10-year dollar savings to the Medicare Trust Fund 
could be $4.5 billion ($381 million per year * 10 years + initial $650 
million recovery).
    The savings come from recovered inaccurate payments of $381 million 
a year by the Medicare Trust Fund to plans. This money is a reduction 
in spending of the Medicare Trust Fund (to the plans); there will be no 
money transferred to enrollees. We expect that ultimately this 
provision could incentivize plans to submit more accurate risk-
adjustment data.
    The intent of this rule is to continue the sentinel effect on the 
reduction of the Part C error rate. The decline in the Part C error 
rate has correlated with the announcement of the agencies intent to use 
extrapolated recoveries on payment years 2011 through 2013. We believe 
that forgoing the extrapolation on those audits would diminish the 
agency's credibility going forward and consequently reduce the sentinel 
effect. The dollar savings to the Medicare Trust Fund are presented in 
Table 16. In any case, RADV audits will still continue.

[[Page 55068]]

D. Alternatives Considered

1. Requirements for Medicare Advantage Plans Offering Additional 
Telehealth Benefits (Sec. Sec.  422.100, 422.135, 422.252, 422.254, and 
422.264)
    Section 1852(m)(2)(A)(i) of the Act, as added by the Bipartisan 
Budget Act of 2018, defines additional telehealth benefits as services 
that are identified for the applicable year as clinically appropriate 
to furnish using electronic information and telecommunications 
technology when a physician (as defined in section 1861(r) of the Act) 
or practitioner (described in section 1842(b)(18)(C) of the Act) 
providing the service is not at the same location as the plan enrollee 
(which we refer to as ``through electronic exchange''). We considered 
various alternative definitions of ``clinically appropriate'' but 
decided not to propose specific regulation text defining the term. We 
are proposing to implement the statutory requirement for additional 
telehealth benefits to be provided only when ``clinically appropriate'' 
to align with existing CMS rules for contract provisions at Sec.  
422.504(a)(3)(iii), which requires each MA organization to agree to 
provide all benefits covered by Medicare ``in a manner consistent with 
professionally recognized standards of health care.''
    The statute does not specify who or what entity identifies the 
services for the year. We considered various alternatives, including 
retaining the authority as an agency to specify what services are 
clinically appropriate to furnish each year. MA plans could have been 
required to comply with an annual list of clinically appropriate 
services identified by CMS. However, we rejected this alternative as 
too restrictive; we believe MA plans are in the best position and it is 
in their own interest to stay abreast of professional standards 
necessary to determine which services are clinically appropriate. Thus, 
we are proposing to interpret this provision broadly by not specifying 
the Part B services that an MA plan may offer as additional telehealth 
benefits for the applicable year, but instead allowing MA plans to 
independently determine which services each year are clinically 
appropriate to furnish in this manner. Our proposed definition of 
additional telehealth benefits at Sec.  422.135(a) provides that it is 
the MA plan (not CMS) that identifies the appropriate services for the 
applicable year.
    We also considered alternatives to implement how telehealth 
benefits are provided through ``electronic exchange.'' CMS considered 
defining the specific means of ``electronic exchange.'' However, we 
decided to define ``electronic exchange'' at Sec.  422.135(a) as 
``electronic information and telecommunications technology,'' as the 
former is a concise term for the latter, which is the statutory 
description of the means used to provide the additional telehealth 
benefits. We are not proposing specific regulation text that defines or 
provides examples of electronic information and telecommunications 
technology. We considered providing a complete list of means of 
providing electronic information and telecommunications technology. 
Although we provided examples of electronic information and 
telecommunications technology in the preamble, we did not provide a 
comprehensive list because the technology needed and used to provide 
additional telehealth benefits will vary based on the service being 
offered. We believe this broad approach will avoid tying the authority 
in the proposed new regulation to specific information formats or 
technologies that permit non-face-to-face interactions for furnishing 
clinically appropriate services.
2. Integration Requirements for Dual Eligible Special Needs Plans 
(Sec. Sec.  422.2, 422.60, 422.102, 422.107, 422.111, and 422.752)
    We propose to require D-SNPs that--(1) do not meet the HIDE SNP or 
FIDE SNP integration standard; and (2) do not have a parent 
organization assuming clinical and financial responsibility for 
Medicare and Medicaid benefits to notify the state Medicaid agency or 
its designee when a high-risk full-benefit dual eligible enrollee has a 
hospital or skilled nursing facility admission. We considered several 
alternatives to this proposal, as explained in section II.A.2.a.(2). of 
this rule, including examples provided in the Bipartisan Budget Act of 
2018: Notifying the state in a timely manner of enrollees' emergency 
room visits and hospital or nursing Home discharges; assigning each 
enrollee a primary care provider; and data sharing that benefits the 
coordination of items and services under Medicare and Medicaid. 
However, we believe our proposal is preferable to the alternatives when 
considering the degree to which it meets our criteria of--(1) 
meaningfully improving care coordination and care transitions and 
health outcomes for dually eligible beneficiaries; (2) minimizing 
burden on plans and states relative to the improvements in care 
coordination and transitions; (3) providing flexibility to state 
Medicaid agencies; (4) enabling CMS to assess compliance with minimal 
burden on CMS, plans, and providers; and (5) adhering to the letter and 
spirit of the Bipartisan Budget Act of 2018. However, we soliciting 
comment on these alternatives.
3. Unified Grievance and Appeals Procedures for Dual Eligible Special 
Needs Plans and Medicaid Managed Care Plans at the Plan Level 
(Sec. Sec.  422.560, 422.562, 422.566, 422.629 through 422.634, 
438.210, 438.400, and 438.402)
    We propose to create unified grievance and appeals procedures for 
certain D-SNPs (FIDE SNPs and HIDE SNPs) with exclusively aligned 
enrollment, which we propose defining as occurring when such a D-SNP 
limits enrollment to full-benefit dual eligible individuals whose 
Medicaid benefits are covered by the D-SNP itself, or by a Medicaid 
managed care organization that is the same organization, the D-SNP's 
parent organization, or another entity that is owned and controlled by 
the D-SNP's parent organization. Because most D-SNP enrollees are not 
enrolled in D-SNPs with exclusively aligned enrollment, we considered 
the feasibility of broadening the scope of these unified procedures to 
apply to more D-SNPs--that is, to D-SNPs without exclusively aligned 
enrollment. However, in most states, the majority of D-SNP enrollees 
have Medicaid coverage either through a different organization's 
Medicaid MCO, in a prepaid ambulatory or inpatient health plan (PAHP or 
PIHP), or through a state's Medicaid fee-for-service system. In these 
circumstances, the D-SNP has no control over the Medicaid grievance and 
appeals process. Even a D-SNP that has a Medicaid managed care 
organization operated by such plan's parent organization available to 
its enrollees, but whose members may instead enroll in other Medicaid 
plans, can only unify the procedures for Medicaid appeals and 
grievances of those enrollees who are also simultaneously enrolled in 
the Medicaid managed care organization controlled by such plan's parent 
organization. Therefore, we do not believe that it is feasible at this 
time to implement fully unified grievance and appeals systems for D-
SNPs and Medicaid managed care plans that do not have the same 
enrollees or where the organizations offering the D-SNPs and Medicaid 
plans are unaffiliated or even competitors.

E. Accounting Statement and Table

    The following table summarizes costs, savings, and transfers by 
provision.
    As required by OMB Circular A-4 (available at https://

[[Page 55069]]

obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Table 17, we 
have prepared an accounting statement showing the savings and transfers 
associated with the provisions of this proposed rule for calendar years 
2020 through 2029. Table 17 is based on Tables 18A and B which lists 
savings, costs, and transfers by provision.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP01NO18.018

    The following Table 18 summarizes savings, costs, and transfers by 
provision and formed a basis for the accounting table. For reasons of 
space, Table 18 is broken into Table 18A (2020 through 2024) and Table 
18B (2025 through 2029). In these tables savings are indicated as 
negative numbers in columns marked savings while costs are indicated as 
positive numbers in columns marked costs. Transfers may be negative or 
positive with negative numbers indicating savings to the Medicare Trust 
Fund and positive numbers indicating costs to the Medicare Trust Fund. 
All numbers are in millions. The row ``aggregate total by year'' gives 
the total of costs and savings for that year but does not include 
transfers. Tables 18A and B form the basis for Table 16 and for the 
calculation to the infinite horizon discounted to 2016 and mentioned in 
the conclusion.

[[Page 55070]]

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[[Page 55071]]


[GRAPHIC] [TIFF OMITTED] TP01NO18.020

BILLING CODE 4120-01-C

[[Page 55072]]

F. Conclusion

    As indicated in Table 17, we estimate that this proposed rule 
generates net annualized cost of approximately $2 million per year over 
2020 through 2029. As discussed in the narrative of this Regulatory 
Impact Section, the Medicare Trust Fund is expected, over the next 10 
years, to have an aggregate reduction in dollars spent of $4.5 billion 
arising from recovery of incorrect payments to plans.

G. Reducing Regulation and Controlling Regulatory Costs

    The Department believes that this proposed rule, if finalized, is 
considered a deregulatory action under Executive Order 13771. The 
Department estimates that this rule generates $1.5 million in 
annualized costs at a 7-percent discount rate, discounted relative to 
2016, over a perpetualtime horizon.

List of Subjects

42 CFR Part 422

    Administrative practice and procedure, Health facilities, Health 
maintenance organizations (HMO), Medicare, Penalties, Privacy, and 
Reporting and recordkeeping requirements.

42 CFR Part 423

    Administrative practice and procedure, Emergency medical services, 
Health facilities, Health maintenance organizations (HMO), Health 
professionals, Medicare, Penalties, Privacy, and Reporting and 
recordkeeping requirements.

42 CFR Part 438

    Grant programs--health, Medicaid, Reporting and recordkeeping 
requirements.

42 CFR Part 498

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, and Reporting and recordkeeping requirements.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend CFR chapter IV as set forth 
below:

PART 422--MEDICARE ADVANTAGE PROGRAM

0
1. The authority citation for part 422 is revised to read as follows:

    Authority: 42 U.S.C. 1302 and 1395hh.

0
2. Section 422.2 is amended--
0
a. By adding definitions of ``Aligned enrollment'' and ``Dual eligible 
special needs plan'' in alphabetical order;
0
b. By revising the definition of ``Fully integrated dual eligible 
special needs plan'';
0
c. By adding the definition of ``Highly integrated dual eligible 
special needs plan'' in alphabetical order; and
0
d. In the definition of ``Preclusion list'' by revising the 
introductory text and paragraphs (1)(i), (2)(i), (2)(ii)(C) and adding 
paragraph (3).
    The additions and revisions read as follows:


Sec.  422.2   Definitions.

* * * * *
    Aligned enrollment refers to the enrollment in a dual eligible 
special needs plan of full-benefit dual eligible individuals whose 
Medicaid benefits are covered by such plan or by a Medicaid managed 
care organization, as defined in section 1903(m) of the Act, that is 
the same organization, its parent organization, or another entity that 
is owned and controlled by its parent organization. When State policy 
limits a dual eligible special needs plan's membership to individuals 
with aligned enrollment, this condition is referred to as exclusively 
aligned enrollment.
* * * * *
    Dual eligible special needs plan or D-SNP means a specialized MA 
plan for special needs individuals who are entitled to medical 
assistance under a State plan under XIX of the Act that provides, as 
applicable, and coordinates the delivery of Medicare and Medicaid 
services, including long-term services and supports and behavioral 
health services, for individuals who are eligible for such services. 
Such a plan must have a contract with the State Medicaid agency 
consistent with Sec.  422.107 that meets the minimum requirements in 
Sec.  422.107(c); and, beginning January 1, 2021, must satisfy one or 
more of the following criteria for the integration of Medicare and 
Medicaid benefits:
    (1) Meets the additional requirement specified in Sec.  422.107(d) 
in its contract with the State Medicaid agency;
    (2) Is a highly integrated dual eligible special needs plan; or
    (3) Is a fully integrated dual eligible special needs plan.
* * * * *
    Fully integrated dual eligible special needs plan means a dual 
eligible special needs plan--
    (1) That provides dual eligible individuals access to Medicare and 
Medicaid benefits under a single entity that holds both an MA contract 
with CMS and a Medicaid managed care organization contract under 
section 1903(m) of the Act with the applicable State;
    (2) Whose capitated contract with the State Medicaid agency 
includes coverage of specified primary care, acute care, behavioral 
health, and long-term services and supports, consistent with State 
policy, and provides coverage of nursing facility services for a period 
of at least 180 days during the plan year;
    (3) That coordinates the delivery of covered Medicare and Medicaid 
services using aligned care management and specialty care network 
methods for high-risk beneficiaries; and
    (4) That employs policies and procedures approved by CMS and the 
State to coordinate or integrate beneficiary communication materials, 
enrollment, communications, grievance and appeals, and quality 
improvement.
* * * * *
    Highly integrated dual eligible special needs plan means a dual 
eligible special needs plan offered by an MA organization that also 
has, or whose parent organization or another entity that is owned and 
controlled by its parent organization has, a capitated contract with 
the Medicaid agency in the State in which the dual eligible special 
needs plan operates that includes coverage of long-term services and 
supports, behavioral health services, or both, consistent with State 
policy.
* * * * *
    Preclusion list means a CMS compiled list of individuals and 
entities that--
    (1) * * *
    (i) The individual or entity is currently revoked from Medicare for 
a reason other than that stated in Sec.  424.535(a)(3) of this chapter.
* * * * *
    (2) * * *
    (i) The individual or entity has engaged in behavior, other than 
that described in Sec.  424.535(a)(3) of this chapter, for which CMS 
could have revoked the individual or entity to the extent applicable 
had they been enrolled in Medicare.
    (ii) * * *
    (C) Any other evidence that CMS deems relevant to its 
determination; or
    (3) The individual or entity, regardless of whether they are or 
were enrolled in Medicare, has been convicted of a felony under federal 
or state law within the previous 10 years that CMS deems detrimental to 
the best interests of the Medicare program. Factors that CMS considers 
in making such a determination under this paragraph (3) are:
    (i) The severity of the offense;
    (ii) When the offense occurred; and
    (iii) Any other information that CMS deems relevant to its 
determination.
* * * * *

[[Page 55073]]

0
3. Section 422.60 is amended by revising paragraph (g)(2)(i) to read as 
follows:


Sec.  422.60   Election process.

* * * * *
    (g) * * *
    (2) * * *
    (i) Operate as a fully integrated dual eligible special needs plan 
or highly integrated dual eligible special needs plan.
* * * * *
0
4. Section 422.100 is amended by revising paragraphs (a) and (c)(1) to 
read as follows:


Sec.  422.100   General requirements.

    (a) Basic rule. Subject to the conditions and limitations set forth 
in this subpart, an MA organization offering an MA plan must provide 
enrollees in that plan with coverage of the basic benefits described in 
paragraph (c)(1) of this section (except that additional telehealth 
benefits may be, but are not required to be, offered by the MA plan) 
and, to the extent applicable, supplemental benefits as described in 
paragraph (c)(2) of this section, by furnishing the benefits directly 
or through arrangements, or by paying for the benefits. CMS reviews 
these benefits subject to the requirements of this section and the 
requirements in subpart G of this part.
* * * * *
    (c) * * *
    (1) Basic benefits are all items and services (other than hospice 
care or coverage for organ acquisitions for kidney transplants) for 
which benefits are available under parts A and B of Medicare, including 
additional telehealth benefits offered consistent with the requirements 
at Sec.  422.135.
* * * * *
0
5. Section 422.102 is amended by revising paragraph (e) introductory 
text to read as follows:


Sec.  422.102   Supplemental benefits.

* * * * *
    (e) Supplemental benefits for certain dual eligible special needs 
plans. Subject to CMS approval, fully integrated dual eligible special 
needs plans and highly integrated dual eligible special needs plans 
that meet minimum performance and quality-based standards may offer 
additional supplemental benefits, consistent with the requirements of 
this part, where CMS finds that the offering of such benefits could 
better integrate care for the dual eligible population provided that 
the special needs plan--
* * * * *
0
6. Section 422.107 is amended by--
0
a. Revising the section heading;
0
b. In paragraph (a) by removing the term ``dual-eligible'' and adding 
in its place the term ``dual eligible'';
0
c. By revising paragraphs (b) and (c)(1), (2), and (3);
0
d. By redesignating paragraph (d) as paragraph (e);
0
e. By adding a new paragraph (d); and
0
f. By adding paragraph (e)(2).
    The revisions and additions read as follows:


Sec.  422.107   Special needs plans and dual eligibles: Contract with 
State Medicaid Agency.

* * * * *
    (b) General rule. MA organizations seeking to offer a dual eligible 
special needs plan must have a contract consistent with this section 
with the State Medicaid agency.
    (c) * * *
    (1) The MA organization's responsibility to provide, as applicable, 
and coordinate the delivery of Medicaid benefits, including long-term 
services and supports and behavioral health services, for individuals 
who are eligible for such services.
    (2) The category(ies) and criteria for eligibility for dual 
eligible individuals to be enrolled under the SNP, including as 
described in the Act at sections 1902(a), 1902(f), 1902(p), and 1905.
    (3) The Medicaid benefits covered by the MA organization offering 
the SNP under a capitated contract with the State Medicaid agency or 
covered for the SNP's enrollees under a risk contract as defined in 
Sec.  438.2 of this chapter with a Medicaid managed care organization, 
as defined in section 1903(m) of the Act, offered by the SNP's parent 
organization or another entity that is owned and controlled by its 
parent organization.
* * * * *
    (d) Additional minimum contract requirement. For any dual eligible 
special needs plan that is not a fully integrated or highly integrated 
dual eligible special needs plan, the contract must also stipulate 
that, for the purpose of coordinating Medicare and Medicaid-covered 
services between settings of care, the SNP will notify or authorize 
another entity or entities to notify the State Medicaid agency and/or 
individuals or entities designated by the State Medicaid agency of 
hospital and skilled nursing facility admissions for at least one group 
of high-risk full-benefit dual eligible individuals, identified by the 
State Medicaid agency. The State Medicaid agency must establish the 
timeframe(s) and method(s) by which notice is provided. In the event 
that a SNP authorizes another entity or entities to perform this 
notification, the SNP must retain responsibility for complying with 
this requirement.
    (e) * * *
    (2) MA organizations offering a dual eligible SNP must comply with 
paragraph (d) of this section beginning January 1, 2021.
* * * * *
0
7. Section 422.111 is amended by revising paragraph (b)(2)(iii) to read 
as follows:


Sec.  422.111   Disclosure requirements.

* * * * *
    (b) * * *
    (2) * * *
    (iii) By a dual eligible special needs plan, prior to enrollment, 
for each prospective enrollee, a comprehensive written statement 
describing cost sharing protections and benefits that the individual is 
entitled to under title XVIII and the State Medicaid program under 
title XIX.
* * * * *
0
8. Section 422.135 is added to subpart C to read as follows:


Sec.  422.135   Additional telehealth benefits.

    (a) Definitions. For purposes of this section, the following 
definitions apply:
    Additional telehealth benefits means services that meet the 
following:
    (1) Are furnished by an MA plan for which benefits are available 
under Medicare Part B but which are not payable under section 1834(m) 
of the Act; and
    (2) Have been identified by the MA plan for the applicable year as 
clinically appropriate to furnish through electronic exchange.
    Electronic exchange means electronic information and 
telecommunications technology.
    (b) General rule. An MA plan may treat additional telehealth 
benefits as basic benefits covered under the original Medicare fee-for-
service program for purposes of this part 422 provided that the 
requirements of this section are met. If the MA plan fails to comply 
with the requirements of this section, then the MA plan may not treat 
the benefits provided through electronic exchange as additional 
telehealth benefits, but may treat them as supplemental benefits as 
described in Sec.  422.102, subject to CMS approval.
    (c) Requirements. An MA plan furnishing additional telehealth 
benefits must:
    (1) Furnish in-person access to the specified Part B service(s) at 
the election of the enrollee.
    (2) Advise each enrollee, at a minimum in the MA plan's Evidence of 
Coverage required at Sec.  422.111(b), that

[[Page 55074]]

the enrollee may receive the specified Part B service(s) through an in-
person visit or through electronic exchange.
    (3) Identify, in the MA plan's provider directory required at Sec.  
422.111(b)(3)(i), any providers offering services for additional 
telehealth benefits and in-person visits or offering services 
exclusively for additional telehealth benefits.
    (4) Comply with the provider selection and credentialing 
requirements provided in Sec.  422.204, and, when providing additional 
telehealth benefits, ensure through its contract with the provider that 
the provider meet and comply with applicable state licensing 
requirements and other applicable laws for the state in which the 
enrollee is located and receiving the service.
    (5) Make information about coverage of additional telehealth 
benefits available to CMS upon request. Information may include, but is 
not limited to, statistics on use or cost, manner(s) or method of 
electronic exchange, evaluations of effectiveness, and demonstration of 
compliance with the requirements of this section.
    (d) Requirement to use contracted providers. An MA plan furnishing 
additional telehealth benefits may only do so using contracted 
providers. Coverage of benefits furnished by a non-contracted provider 
through electronic exchange may only be covered as a supplemental 
benefit.
    (e) Bidding. An MA plan that fully complies with this section may 
include additional telehealth benefits in its bid for basic benefits in 
accordance with Sec.  422.254.
    (f) Cost sharing. MA plans offering additional telehealth benefits 
may maintain different cost sharing for the specified Part B service(s) 
furnished through an in-person visit and the specified Part B 
service(s) furnished through electronic exchange.


Sec.  422.156   [Amended]

0
9. Section 422.156 is amended in paragraph (b)(1) by removing the 
phrase ``the quality improvement projects (QIPs) and''.
0
10. Section 422.162 is amended in paragraph (a) by adding the 
definitions of ``Absolute percentage cap'', ``Cut point cap'', 
``Guardrail'', ``Mean resampling'', ``Restricted range'', and 
``Restricted range cap'' in alphabetical order to read as follows:


Sec.  422.162   Medicare Advantage Quality Rating System.

    (a) * * *
    Absolute percentage cap is a cap applied to non-CAHPS measures that 
are on a 0 to 100 scale that restricts movement of the current year's 
measure-threshold-specific cut point to no more than the stated 
percentage as compared to the prior year's cut point.
* * * * *
    Cut point cap is a restriction on the change in the amount of 
movement a measure-threshold-specific cut point can make as compared to 
the prior year's measure-threshold-specific cut point. A cut point cap 
can restrict upward movement, downward movement, or both.
* * * * *
    Guardrail is a bidirectional cap that restricts both upward and 
downward movement of a measure-threshold-specific cut point for the 
current year's measure-level Star Ratings as compared to the prior 
year's measure-threshold-specific cut point.
* * * * *
    Mean resampling refers to a technique where measure-specific scores 
for the current year's Star Ratings are randomly separated into 10 
equal-sized groups. The hierarchal clustering algorithm is done 10 
times, each time leaving one of the 10 groups out. The method results 
in 10 sets of measure-specific cut points. The mean cut point for each 
threshold per measure is calculated using the 10 values.
* * * * *
    Restricted range is the difference between the maximum and minimum 
measure score values using the prior year measure scores excluding 
outer fence outliers (first quartile -3*Interquartile Range (IQR) and 
third quartile + 3*IQR).
    Restricted range cap is a cap applied to non-CAHPS measures that 
restricts movement of the current year's measure-threshold-specific cut 
point to no more than the stated percentage of the restricted range of 
a measure calculated using the prior year's measure score distribution.
* * * * *
0
11. Section 422.164 is amended by adding paragraphs (f)(1)(v), 
(g)(1)(iii)(O), and (h) to read as follows:


Sec.  422.164  Adding, updating, and removing measures.

* * * * *
    (f) * * *
    (1) * * *
    (v) CMS will exclude any measure that receives a measure-level Star 
Rating reduction for data integrity concerns for either the current or 
prior year from the improvement measure(s).
* * * * *
    (g) * * *
    (1) * * *
    (iii) * * *
    (O) CMS will reduce a measure rating to 1 star for the applicable 
appeals measure(s) if a contract fails to submit Timeliness Monitoring 
Project data for CMS's review to ensure the completeness of the 
contract's IRE data.
* * * * *
    (h) Review of sponsors' data. (1) A request for CMS or the IRE to 
review a contract's appeals data must be received no later than June 30 
of the following year.
    (2) A request for CMS to review a contract's Complaints Tracking 
Module (CTM) data must be received no later than June 30 of the 
following year.
0
12. Section 422.166 is amended by revising paragraph (a)(2)(i) and 
adding paragraph (i) to read as follows:


Sec.  422.166   Calculation of Star Ratings.

    (a) * * *
    (2) * * *
    (i) The method maximizes differences across the star categories and 
minimizes the differences within star categories using mean resampling 
with the hierarchal clustering of the current year's data, and a 
guardrail so that the measure-threshold-specific cut points for non-
CAHPS measures do not increase or decrease more than the value of the 
cap from one year to the next. The cap is equal to 5 percentage points 
for measures having a 0 to 100 scale (absolute percentage cap) or 5 
percent of the restricted range for measures not having a 0 to 100 
scale (restricted range cap). New measures that have been in the Part C 
and D Star Rating program for three years or less use the hierarchal 
clustering methodology with mean resampling with no guardrail for the 
first three years in the program.
* * * * *
    (i) Extreme and uncontrollable circumstances. In the event of 
extreme and uncontrollable circumstances that may negatively impact 
operational and clinical systems and contracts' abilities to conduct 
surveys needed for accurate performance measurement, CMS will calculate 
the Star Ratings as specified in paragraphs (i)(2) through (10) of this 
section for each contract that is an affected contract during the 
performance period for the applicable measures.
    (1) Identification of affected contracts. A contract that meets all 
of the following criteria is an affected contract:
    (i) The contract's service area is within an ``emergency area'' 
during an ``emergency period'' as defined in section 1135(g) of the 
Act.
    (ii) The contract's service area is within a county, parish, U.S. 
territory or

[[Page 55075]]

tribal area designated in a major disaster declaration under the 
Stafford Act and the Secretary exercised authority under section 1135 
of the Act based on the same triggering event(s).
    (iii) As specified in paragraphs (i)(2) through (10) of this 
section, a certain minimum percentage (25 percent or 60 percent) of the 
enrollees under the contract must reside in a Federal Emergency 
Management Agency (FEMA)-designated Individual Assistance area at the 
time of the extreme and uncontrollable circumstance.
    (2) CAHPS adjustments. (i) A contract, even if an affected 
contract, must administer the CAHPS survey unless exempt under 
paragraph (i)(2)(ii) of this section.
    (ii) An affected contract will be exempt from administering the 
CAHPS survey if the contract completes both of the following:
    (A) Demonstrates to CMS that the required sample for the survey 
cannot be contacted because a substantial number of the contract's 
enrollees are displaced due to the FEMA-designated disaster identified 
in paragraph (i)(1)(iii) of this section in the prior calendar year.
    (B) Requests and receives a CMS approved exception.
    (iii) An affected contract with an exception defined in paragraph 
(i)(2)(ii) of this section will receive the contract's CAHPS measure 
stars and corresponding measure scores from the prior year.
    (iv) For an affected contract with at least 25 percent of enrollees 
in FEMA-designated Individual Assistance areas at the time of the 
extreme and uncontrollable circumstance, the contract will receive the 
higher of the previous year's Star Rating or the current year's Star 
Rating (and corresponding measure score) for each CAHPS measure.
    (3) HOS adjustments. (i) An affected contract must administer the 
HOS survey unless exempt under paragraph (i)(3)(ii) of this section.
    (ii) An affected contract will be exempt from administering the HOS 
survey if the contract completes the following:
    (A) Demonstrates to CMS that the required sample for the survey 
cannot be contacted because a substantial number of the contract's 
enrollees are displaced due to the FEMA-designated disaster identified 
in (i)(1)(iii) of this section during the measurement period.
    (B) Requests and receives a CMS approved exception.
    (iii) Affected contracts with an exception defined in paragraph 
(i)(3)(ii) of this section will receive the prior year's HOS and 
Healthcare Effectiveness Data and Information Set (HEDIS)-HOS measure 
stars and corresponding measure scores.
    (iv) For an affected contract with at least 25 percent of enrollees 
in FEMA-designated Individual Assistance areas at the time of the 
extreme and uncontrollable circumstance, the affected contract will 
receive the higher of the previous year's Star Rating or the current 
year's Star Rating (and corresponding measure score) for each HOS and 
HEDIS-HOS measure.
    (4) HEDIS adjustments. (i) An affected contract must report HEDIS 
data unless exempted under paragraph (i)(4)(ii) of this section.
    (ii) An affected contract will be exempt from reporting HEDIS data 
if the contract completes the following:
    (A) Demonstrates an inability to obtain both administrative and 
medical record data that are required for reporting HEDIS measures due 
to a FEMA-designated disaster in the prior calendar year.
    (B) Requests and receives a CMS approved exception.
    (iii) Affected contracts with an exception defined in paragraph 
(i)(4)(ii) of this section will receive the prior year's HEDIS measure 
stars and corresponding measure scores.
    (iv) Affected contracts that do not have an exception defined in 
paragraph (i)(4)(ii) of this section may contact National Committee for 
Quality Assurance (NCQA) to request modifications to the samples for 
measures that require medical record review.
    (v) For an affected contract with at least 25 percent of enrollees 
in FEMA-designated Individual Assistance areas at the time of the 
extreme and uncontrollable circumstance, the affected contract will 
receive the higher of the previous year's Star Rating or the current 
year's Star Rating (and corresponding measure score) for each HEDIS 
measure.
    (5) New measure adjustments. For affected contracts with at least 
25 percent of enrollees in a FEMA-designated Individual Assistance area 
at the time of the extreme and uncontrollable circumstance, CMS will 
apply a hold harmless provision by comparing the result of the 
contract's summary and/or overall rating with and without including all 
of the applicable new measures. If the ``with'' result is lower than 
the ``without'' result, then CMS will use the ``without'' result as the 
final rating.
    (6) Other Star Ratings measure adjustments. (i) For all other 
measures except those measures identified in this paragraph (i)(6)(ii) 
of this section, affected contracts with at least 25 percent of 
enrollees in a FEMA-designated Individual Assistance area at the time 
of the extreme and uncontrollable circumstance will receive the higher 
of the previous or current year's measure Star Rating and then use the 
corresponding measure score.
    (ii) CMS will not adjust the scores or Star Ratings for the 
following measures, unless the exception in paragraph (i)(6)(iii) of 
this section applies.
    (A) Part C Call Center--Foreign Language Interpreter and TTY 
Availability.
    (B) Part D Call Center--Foreign Language Interpreter and TTY 
Availability.
    (iii) CMS will adjust the measures listed in paragraph (i)(6)(ii) 
of this section using the adjustments listed in paragraph (i)(6)(i) of 
this section for contracts affected by extreme and uncontrollable 
circumstances where there are continuing communications issues related 
to loss of electricity and damage to infrastructure during the call 
center study.
    (7) Exclusion from improvement measures. Any measure that reverts 
back to the data underlying the previous year's Star Rating due to the 
adjustments made in paragraph (i) of this section will be excluded from 
both the count of measures and the applicable improvement measures for 
the current and next year's Star Ratings for the affected contract.
    (8) Missing data. For an affected contract that has missing data in 
the current or previous year, the final measure rating will come from 
the current year unless any of the exceptions described in paragraphs 
(i)(2)(ii), (i)(3)(ii), and (i)(4)(ii) of this section apply.
    (9) Cut points for non-CAHPS measures. (i) CMS will exclude the 
numeric values for affected contracts with 60 percent or more of their 
enrollees in the FEMA-designated Individual Assistance area at the time 
of the extreme and uncontrollable circumstance from the clustering 
algorithms described in paragraph (a)(2) of this section.
    (ii) The cut points calculated as described in paragraph (i)(9)(i) 
of this section will be used to assess all affected contracts' measure 
Star Ratings.
    (10) Reward Factor. (i) CMS will exclude the numeric values for 
affected contracts with 60 percent or more of their enrollees in the 
FEMA-designated Individual Assistance area at the time of the extreme 
and uncontrollable circumstance from the determination of

[[Page 55076]]

the performance summary and variance thresholds for the Reward Factor 
described in paragraph (f)(1) of this section.
    (ii) All affected contracts will be eligible for the Reward Factor 
based on the calculations described in paragraph (i)(10)(i) of this 
section.
0
13. Section 422.222 is amended by revising paragraph (a) to read as 
follows:


Sec.  422.222   Preclusion list.

    (a)(1)(i) Except as provided in paragraph (a)(1)(ii) of this 
section, an MA organization must not make payment for a health care 
item or service furnished by an individual or entity that is included 
on the preclusion list, defined in Sec.  422.2.
    (ii) With respect to MA providers that have been added to an 
updated preclusion list, the MA organization must do all of the 
following:
    (A) No later than 30 days after the posting of this updated 
preclusion list, must provide an advance written notice to any 
beneficiary who has received an MA service or item from the individual 
or entity added to the preclusion list in this update;
    (B) Must ensure that reasonable efforts are made to notify the 
individual or entity described in paragraph (a)(1)(ii) of this section 
of a beneficiary who was sent a notice under paragraph (a)(1)(ii)(A) of 
this section; and
    (C) Must not deny payment for a service or item furnished by the 
newly added individual or entity, solely on the ground that they have 
been included in the updated preclusion list, in the 60-day period 
after the date it sent the notice described in paragraph (a)(1)(ii)(A) 
of this section.
    (2)(i) CMS sends written notice to the individual or entity via 
letter of their inclusion on the preclusion list. The notice must 
contain the reason for the inclusion and inform the individual or 
entity of their appeal rights. An individual or entity may appeal their 
inclusion on the preclusion list, defined in Sec.  422.2, in accordance 
with part 498 of this chapter.
    (ii) If the individual's or entity's inclusion on the preclusion 
list is based on a contemporaneous Medicare revocation under Sec.  
424.535 of this chapter:
    (A) The notice described in paragraph (a)(2)(i) of this section 
must also include notice of the revocation, the reason(s) for the 
revocation, and a description of the individual's or entity's appeal 
rights concerning the revocation.
    (B) The appeals of the individual's or entity's inclusion on the 
preclusion list and the individual's or entity's revocation shall be 
filed jointly by the individual or entity and, as applicable, 
considered jointly by CMS under part 498 of this chapter.
    (3)(i) Except as provided in paragraph (a)(3)(ii) of this section, 
an individual or entity will only be included on the preclusion list 
after the expiration of either of the following:
    (A) If the individual or entity does not file a reconsideration 
request under Sec.  498.5(n)(1) of this chapter, the individual or 
entity will be added to the preclusion list upon the expiration of the 
60-day period in which the individual or entity may request a 
reconsideration; or
    (B) If the individual or entity files a reconsideration request 
under Sec.  498.5(n)(1) of this chapter, the individual or entity will 
be added to the preclusion list effective on the date on which CMS, if 
applicable, denies the individual's or entity's reconsideration.
    (ii) An OIG excluded individual or entity is added to the 
preclusion list effective on the date of the exclusion.
    (4) Payment denials based upon an individual's or entity's 
inclusion on the preclusion list are not appealable by beneficiaries.
    (5)(i) Except as provided in paragraphs (a)(5)(iii) and (iv) of 
this section, an individual or entity that is revoked under Sec.  
424.535 of this chapter will be included on the preclusion list for the 
same length of time as the individual's or entity's reenrollment bar.
    (ii) Except as provided in paragraphs (a)(5)(iii) and (iv) of this 
section, an individual or entity that is not enrolled in Medicare will 
be included on the preclusion list for the same length of time as the 
reenrollment bar that CMS could have imposed on the individual or 
entity had they been enrolled and then revoked.
    (iii) Except as provided in paragraph (a)(5)(iv) of this section, 
an individual or entity, regardless of whether they are or were 
enrolled in Medicare, that is included on the preclusion list because 
of a felony conviction will remain on the preclusion list for a 10-year 
period, beginning on the date of the felony conviction, unless CMS 
determines that a shorter length of time is warranted. Factors that CMS 
considers in making such a determination are:
    (A) The severity of the offense.
    (B) When the offense occurred.
    (C) Any other information that CMS deems relevant to its 
determination.
    (iv) In cases where an individual or entity is excluded by the OIG, 
the individual or entity shall remain on the preclusion list until the 
expiration of the CMS-imposed preclusion list period or reinstatement 
by the OIG, whichever occurs later.
* * * * *
0
14. Section 422.252 is amended by revising the definition of ``MA 
monthly basic beneficiary premium'', ``MA monthly MSA premium'', 
``Monthly aggregate bid amount'', ``Plan basic cost sharing'', and 
``Unadjusted MA statutory non-drug monthly bid amount'' to read as 
follows:


Sec.  422.252   Terminology.

* * * * *
    MA monthly basic beneficiary premium means the premium amount (if 
any) an MA plan (except an MSA plan) charges an enrollee for basic 
benefits as defined in Sec.  422.100(c)(1), and is calculated as 
described at Sec.  422.262.
    MA monthly MSA premium means the amount of the plan premium for 
coverage of basic benefits as defined in Sec.  422.100(c)(1) through an 
MSA plan, as set forth at Sec.  422.254(e).
* * * * *
    Monthly aggregate bid amount means the total monthly plan bid 
amount for coverage of an MA eligible beneficiary with a nationally 
average risk profile for the factors described in Sec.  422.308(c), and 
this amount is comprised of the following:
    (1) The unadjusted MA statutory non-drug monthly bid amount for 
coverage of basic benefits as defined in Sec.  422.100(c)(1);
    (2) The amount for coverage of basic prescription drug benefits 
under Part D (if any); and
    (3) The amount for provision of supplemental health care benefits 
(if any).
* * * * *
    Plan basic cost sharing means cost sharing that would be charged by 
a plan for basic benefits as defined in Sec.  422.100(c)(1) before any 
reductions resulting from mandatory supplemental benefits.
* * * * *
    Unadjusted MA statutory non-drug monthly bid amount means a plan's 
estimate of its average monthly required revenue to provide coverage of 
basic benefits as defined in Sec.  422.100(c)(1) to an MA eligible 
beneficiary with a nationally average risk profile for the risk factors 
CMS applies to payment calculations as set forth at Sec.  422.308(c).
0
15. Section 422.254 is amended by--
0
a. Revising paragraph (b)(1)(i);
0
b. Adding paragraph (b)(3)(i);
0
c. Reserving paragraph (b)(3)(ii); and
0
d. Revising paragraphs (b)(4), (c)(3)(i), and (e)(2).
    The revisions and addition read as follows:

[[Page 55077]]

Sec.  422.254   Submission of bids.

* * * * *
    (b) * * *
    (1) * * *
    (i) The unadjusted MA statutory non-drug monthly bid amount, which 
is the MA plan's estimated average monthly required revenue for 
providing basic benefits as defined in Sec.  422.100(c)(1).
* * * * *
    (3) * * *
    (i) MA plans offering additional telehealth benefits as defined in 
Sec.  422.135(a) must exclude any capital and infrastructure costs and 
investments relating to such benefits from their bid submission.
    (ii) [Reserved]
    (4) The bid amount is for plan payments only but must be based on 
plan assumptions about the amount of revenue required from enrollee 
cost-sharing. The estimate of plan cost-sharing for the unadjusted MA 
statutory non-drug monthly bid amount for coverage of basic benefits as 
defined in Sec.  422.100(c)(1) must reflect the requirement that the 
level of cost sharing MA plans charge to enrollees must be actuarially 
equivalent to the level of cost sharing (deductible, copayments, or 
coinsurance) charged to beneficiaries under the original Medicare fee-
for-service program option. The actuarially equivalent level of cost 
sharing reflected in a regional plan's unadjusted MA statutory non-drug 
monthly bid amount does not include cost sharing for out-of-network 
Medicare benefits, as described at Sec.  422.101(d).
* * * * *
    (c) * * *
    (3) * * *
    (i) The provision of basic benefits as defined in Sec.  
422.100(c)(1);
* * * * *
    (e) * * *
    (2) The amount of the MA monthly MSA premium for basic benefits (as 
defined in Sec.  422.252);
* * * * *
0
16. Section 422.264 is amended by revising paragraph (a) to read as 
follows:


Sec.  422.264   Calculation of savings.

    (a) Computation of risk adjusted bids and benchmarks--(1) The risk 
adjusted MA statutory non-drug monthly bid amount is the unadjusted MA 
statutory non-drug monthly bid amount (defined at Sec.  
422.254(b)(1)(i)), adjusted using the factors described in paragraph 
(c) of this section for local plans and paragraph (e) of this section 
for regional plans.
    (2) The risk adjusted MA area-specific non-drug monthly benchmark 
amount is the unadjusted benchmark amount for coverage of basic 
benefits defined in Sec.  422.100(c)(1) by a local MA plan, adjusted 
using the factors described in paragraph (c) of this section.
    (3) The risk adjusted MA region-specific non-drug monthly benchmark 
amount is the unadjusted benchmark amount for coverage of basic 
benefits defined in Sec.  422.100(c)(1) by a regional MA plan, adjusted 
using the factors described in paragraph (e) of this section.
* * * * *
0
17. Section 422.300 is revised to read as follows:


Sec.  422.300   Basis and scope.

    This subpart is based on 42 U.S.C. 1106, 1128j(d), 1852, 1853, 
1854, and 1858. It sets forth the rules for making payments to MA 
organizations offering local and regional MA policies, including 
calculation of MA capitation rates and benchmarks, conditions under 
which payment is based on plan bids, adjustments to capitation rates 
(including risk adjustment), collection of risk adjustment data, 
conditions for use and disclosure of risk adjustment data, collection 
of improper payments and other payment rules. See Sec.  422.458 for 
rules on risk sharing payments to MA regional organizations.
0
18. Section 422.310 is amended by revising paragraph (e) to read as 
follows:


Sec.  422.310   Risk adjustment data.

* * * * *
    (e) Validation of risk adjustment data. MA organizations and their 
providers and practitioners will be required to submit a sample of 
medical records for the validation of risk adjustment data, as required 
by CMS. There may be penalties for submission of false data. MA 
organizations must remit improper payments based on RADV audits and 
established in accordance with stated methodology, in a manner 
specified by CMS. For RADV audits, CMS may extrapolate RADV Contract-
Level audit findings to Payment Year 2011 forward.
* * * * *
0
19. Section 422.311 is amended by revising paragraph (a) to read as 
follows:


Sec.  422.311  RADV audit dispute and appeal processes.

    (a) Risk adjustment data validation (RADV) audits. In accordance 
with Sec. Sec.  422.2 and 422.310(e), the Secretary annually conducts 
RADV audits to ensure risk adjusted payment integrity and accuracy. 
Recovery of improper payments from MA organizations will be conducted 
according to the Secretary's payment error extrapolation and recovery 
methodologies. CMS will apply extrapolation to plan year audits for 
payment year 2011 forward.
* * * * *
0
20. Section 422.504 is amended by adding paragraph (g)(1)(iv) to read 
as follows:


Sec.  422.504   Contract provisions.

* * * * *
    (g) * * *
    (1) * * *
    (iv) The enrollee shall not have any financial liability for 
services or items furnished to the enrollee by an MA contracted 
individual or entity on the preclusion list, as defined in Sec.  422.2 
and as described in Sec.  422.222.
* * * * *
0
21. Section 422.560 is amended by adding paragraphs (a)(4) and (b)(5) 
to read as follows:


Sec.  422.560   Basis and scope.

    (a) * * *
    (4) Section 1859(f)(8) of the Act provides for, to the extent 
feasible, unifying grievances and appeals procedures under sections 
1852(f), 1852(g), 1902(a)(3), 1902(a)(5), and 1932(b)(4) of the Act for 
Medicare and Medicaid covered items and services provided by 
specialized MA plans for special needs individuals described in 
subsection 1859(b)(6)(B)(ii) of the Act for individuals who are 
eligible under titles XVIII and XIX. Procedures established under 
section 1859(f)(8) of the Act apply in place of otherwise applicable 
grievances and appeals procedures with respect to Medicare and Medicaid 
covered items and services provided by applicable integrated plans.
    (b) * * *
    (5) Requirements for applicable integrated plans with respect to 
procedures for integrated grievances, integrated organization 
determinations, and integrated reconsiderations.
* * * * *
0
22. Section 422.561 is amended by adding definitions of ``Applicable 
integrated plans'', ``Integrated appeal'', ``Integrated grievance'', 
``Integrated organization determination'', and ``Integrated 
reconsideration'' in alphabetical order to read as follows:


Sec.  422.561   Definitions.

* * * * *
    Applicable integrated plan means:
    (1) A fully integrated dual eligible special needs plan with 
exclusively aligned enrollment or a highly integrated dual eligible 
special needs plan with exclusively aligned enrollment, and
    (2) The Medicaid managed care organization, as defined in section

[[Page 55078]]

1903(m) of the Act, through which such dual eligible special needs 
plan, its parent organization, or another entity that is owned and 
controlled by its parent organization covers Medicaid services for 
dually eligible individuals enrolled in such dual eligible special 
needs plan and such Medicaid managed care organization.
* * * * *
    Integrated appeal means any of the procedures that deal with, or 
result from, adverse integrated organization determinations by an 
applicable integrated plan on the health care services the enrollee 
believes he or she is entitled to receive, including delay in 
providing, arranging for, or approving the health care services (such 
that a delay would adversely affect the health of the enrollee), or on 
any amounts the enrollee must pay for a service. Integrated appeals 
cover procedures that would otherwise be defined and covered, for non-
applicable integrated plans, as an appeal defined in Sec.  422.561 or 
the procedures required for appeals pursuant to Sec. Sec.  438.400 
through 438.424 of this chapter. Such procedures include integrated 
reconsiderations.
    Integrated grievance means a dispute or compliant that would be 
defined and covered, for grievances filed by an enrollee in non-
applicable integrated plans, under Sec.  422.564 or Sec. Sec.  438.400 
through 438.416 of this chapter. Integrated grievances do not include 
appeals procedures and QIO complaints, as described in Sec.  422.564(b) 
and (c). An integrated grievance made by an enrollee in an applicable 
integrated plan is subject to the integrated grievance procedures in 
Sec. Sec.  422.629 and 422.630.
    Integrated organization determination means an organization 
determination that would otherwise be defined and covered, for a non-
applicable integrated plan, as organizational determinations under 
Sec.  422.566 and an adverse benefit determination under Sec.  
438.400(b) and Sec.  431.201 (definition of action) of this chapter. An 
integrated organization determination is made by an applicable 
integrated plan and is subject to the integrated organization 
determination procedures in Sec. Sec.  422.629, 422.631, and 422.634.
    Integrated reconsideration means a reconsideration that would 
otherwise be defined and covered, for a non-applicable integrated plan, 
as a reconsideration under Sec.  422.580 and appeal under Sec.  
438.400(b) of this chapter. An integrated reconsideration is made by an 
applicable integrated plan and is subject to the integrated 
reconsideration procedures in Sec. Sec.  422.629 and 422.632 through 
422.634.
* * * * *
0
23. Section 422.562 is amended by--
0
a. Revising paragraph (a)(1)(i);
0
b. By adding paragraph (a)(5); and
0
c. By revising paragraph (b).
    The revisions and addition read as follows:


Sec.  422.562   General provisions.

    (a) * * *
    (1) * * *
    (i) A grievance procedure as described in Sec.  422.564 or Sec.  
422.630 as applicable, for addressing issues that do not involve 
organization determinations;
* * * * *
    (5) An MA organization that offers a dual eligible special needs 
plan has the following additional responsibilities--
    (i) The dual eligible special needs plan must offer to assist an 
enrollee in that dual eligible special needs plan with obtaining 
Medicaid covered services and resolving grievances, including 
requesting authorization of Medicaid services, as applicable, and 
navigating Medicaid appeals and grievances in connection with the 
enrollee's own Medicaid coverage, regardless of whether such coverage 
is in Medicaid fee-for-service or a Medicaid managed care plan, such as 
a Medicaid MCO, PIHP, or PAHP as defined in Sec.  438.2 of this 
chapter. If the enrollee accepts the offer of assistance, the plan must 
provide the assistance. Examples of such assistance include:
    (A) Explaining to an enrollee how to make a request for Medicaid 
authorization of a service and how to file appeal following an adverse 
benefit determination, such as:
    (1) Assisting the enrollee in identifying the enrollee's specific 
Medicaid managed care plan or fee-for-service point of contact;
    (2) Providing specific instructions for contacting the appropriate 
agency in a fee-for-service setting or for contacting the enrollee's 
Medicaid managed care plan, regardless of whether the Medicaid managed 
care plan is affiliated with the enrollee's dual eligible special needs 
plan; and
    (3) Assisting the enrollee in making contact with the enrollee's 
fee-for-service contact or Medicaid managed care plan.
    (B) Assisting a beneficiary in filing a Medicaid grievance or a 
Medicaid appeal.
    (C) Assisting an enrollee in obtaining documentation to support a 
request for authorization of Medicaid services or a Medicaid appeal.
    (ii) The dual eligible special needs plan must offer to provide the 
assistance described in paragraph (a)(5)(i) of this section whenever it 
becomes aware of an enrollee's need for a Medicaid-covered service. 
Offering such assistance is not dependent on an enrollee's specific 
request.
    (iii) The dual eligible special needs plan must offer to provide 
and actually provide assistance as required by paragraph (a)(5)(i) of 
this section using multiple methods.
    (A) When an enrollee accepts the offer of assistance described in 
paragraph (a)(5)(i) of this section, the dual eligible special needs 
plan may coach the enrollee on how to self-advocate.
    (B) The dual eligible special needs plan must also provide an 
enrollee reasonable assistance in completing forms and taking 
procedural steps related to grievances and appeals, including when 
assisting with Medicaid appeals.
    (iv) The dual eligible special needs plan must, upon request from 
CMS, provide documentation demonstrating its compliance with this 
paragraph (a)(5).
    (v) The obligation to provide assistance under paragraph (a)(5)(i) 
of this section does not create an obligation for a dual eligible 
special needs plan to represent an enrollee in a Medicaid appeal.
    (b) Rights of MA enrollees. In accordance with the provisions of 
this subpart, enrollees have the following rights:
    (1) The right to have grievances between the enrollee and the MA 
organization heard and resolved, as described in Sec. Sec.  422.564 or 
422.630, as applicable.
    (2) The right to a timely organization determination, as provided 
under Sec. Sec.  422.566 or 422.631, as applicable.
    (3) The right to request an expedited organization determination, 
as provided under Sec. Sec.  422.570 or 422.631(e), as applicable.
    (4) If dissatisfied with any part of an organization determination, 
the following appeal rights:
    (i) The right to a reconsideration of the adverse organization 
determination by the MA organization, as provided under Sec. Sec.  
422.578 or 422.633, as applicable.
    (ii) The right to request an expedited reconsideration, as provided 
under Sec. Sec.  422.584 or 422.633(f), as applicable.
    (iii) If, as a result of a reconsideration, an MA organization 
affirms, in whole or in part, its adverse organization determination, 
the right to an automatic reconsidered determination made by an 
independent, outside entity contracted by CMS, as provided in Sec.  
422.592.
* * * * *

[[Page 55079]]

0
24. Section 422.566 is amended by revising paragraph (a) to read as 
follows:


Sec.  422.566   Organization determinations.

    (a) Responsibilities of the MA organization. Each MA organization 
must have a procedure for making timely organization determinations (in 
accordance with the requirements of this subpart) regarding the 
benefits an enrollee is entitled to receive under an MA plan, including 
basic benefits as described under Sec.  422.100(c)(1) and mandatory and 
optional supplemental benefits as described under Sec.  422.102, and 
the amount, if any, that the enrollee is required to pay for a health 
service. The MA organization must have a standard procedure for making 
determinations, in accordance with Sec.  422.568, and an expedited 
procedure for situations in which applying the standard procedure could 
seriously jeopardize the enrollee's life, health, or ability to regain 
maximum function, in accordance with Sec. Sec.  422.570 and 422.572; 
for an applicable integrated plan, the MA organization must comply with 
Sec. Sec.  422.629 through 422.634 in lieu of Sec. Sec.  422.566(c) and 
(d), 422.568, 422.570 and 422.572 with regard to the procedures for 
making determinations, including integrated organization determinations 
and integrated reconsiderations, on a standard and expedited basis.
* * * * *
0
25. Section 422.629, 422.630, 422.631, 422.632, 422.633, and 422.634 
are added to Subpart M under the center heading, ``Requirements 
Applicable to Certain Integrated Dual Eligible Special Needs Plans'' to 
read as follows:

Subpart M--Grievances, Organization Determinations and Appeals

* * * * *

Requirements Applicable to Certain Integrated Dual Eligible Special 
Needs Plans

Sec.
422.629 General requirements for applicable integrated plans.
422.630 Integrated grievances.
422.631 Integrated organization determinations.
422.632 Continuation of benefits while the applicable integrated 
plan reconsideration is pending.
422.633 Integrated reconsideration.
422.634 Effect.

Requirements Applicable to Certain Integrated Dual Eligible Special 
Needs Plans


Sec.  422.629   General requirements for applicable integrated plans.

    (a) Scope. The provisions in this section and in Sec. Sec.  422.630 
through 422.634 set forth requirements for unified appeals and 
grievance processes with which applicable integrated plans must comply.
    (1) These provisions apply to an applicable integrated plan in lieu 
of Sec. Sec.  422.564, 422.566(c) and (d), and 422.568 through 422.590 
and Sec. Sec.  438.404 through 438.424 of this chapter.
    (b) General process. An applicable integrated plan must create 
integrated processes for enrollees for integrated grievances and for 
integrated organization determinations, and for integrated 
reconsiderations.
    (c) State flexibilities. A State may, at its discretion, implement 
standards for timeframes or notice requirements that are more 
protective for the enrollee than required by this section and 
Sec. Sec.  422.630 through 422.634. The contract under Sec.  422.107 
must include any standards that differ from the standards set forth in 
this section.
    (d) Evidence. The applicable integrated plan must provide the 
enrollee a reasonable opportunity, in person and in writing, to present 
evidence and testimony and make legal and factual arguments for 
integrated grievances, integrated reconsiderations. The applicable 
integrated plan must inform the enrollee of the limited time available 
for presenting evidence sufficiently in advance of the resolution 
timeframe for appeals as specified in this section if the case is being 
considered under an expedited timeframe for the integrated grievance or 
integrated reconsideration.
    (e) Assistance. In addition to the requirements in Sec.  
422.562(a)(5), the applicable integrated plan must provide an enrollee 
reasonable assistance in completing forms and taking other procedural 
steps related to integrated grievances and integrated appeals.
    (f) Applicable requirements. The requirements in Sec. Sec.  
422.560, 422.561, 422.562, 422.566, and 422.592 through 422.626 apply 
to an applicable integrated plan unless otherwise provided in this 
section or in Sec. Sec.  422.630 through 422.634.
    (g) Acknowledgement. The applicable integrated plan must send to 
the enrollee written acknowledgement of integrated grievances and 
integrated reconsiderations upon receiving the request.
    (h) Recordkeeping. (1) The applicable integrated plan must maintain 
records of integrated grievances and integrated appeals. Each 
applicable integrated plan that is a Medicaid managed care organization 
must review the Medicaid-related information as part of its ongoing 
monitoring procedures, as well as for updates and revisions to the 
State quality strategy.
    (2) The record of each integrated grievance or integrated appeal 
must contain, at a minimum:
    (i) A general description of the reason for the integrated appeal 
or integrated grievance.
    (ii) The date of receipt.
    (iii) The date of each review or, if applicable, review meeting.
    (iv) Resolution at each level of the integrated appeal or 
integrated grievance, if applicable.
    (v) Date of resolution at each level, if applicable.
    (vi) Name of the enrollee for whom the integrated appeal or 
integrated grievance was filed.
    (vii) Date the applicable integrated plan notified the enrollee of 
the resolution.
    (3) The record of each integrated grievance or integrated appeal 
must be accurately maintained in a manner accessible to the State and 
available upon request to CMS.
    (i) Prohibition on punitive action. Each applicable integrated plan 
must ensure that no punitive action is taken against a provider that 
requests an integrated organization determination or integrated 
reconsideration, or supports an enrollee's request for these actions.
    (j) Information to providers and subcontractors. The applicable 
integrated plan must provide information about the integrated grievance 
and integrated appeal system to all providers and subcontractors at the 
time they enter into a contract including, at minimum, information on 
integrated grievance, integrated reconsideration, and fair hearing 
procedures and timeframes as applicable. Such information must include:
    (1) The right to file an integrated grievance and integrated 
reconsideration.
    (2) The requirements and timeframes for filing an integrated 
grievance or integrated reconsideration.
    (3) The availability of assistance in the filing process.
    (k) Review decision-making requirement--(1) General rules. 
Individuals making decisions on integrated appeals and grievances must 
take into account all comments, documents, records, and other

[[Page 55080]]

information submitted by the enrollee or their representative without 
regard to whether such information was submitted or considered in the 
initial adverse integrated organization determination.
    (2) Integrated grievances. Individuals making decisions on 
integrated grievances must be individuals who:
    (i) Were neither involved in any previous level of review or 
decision-making nor a subordinate of any such individual.
    (ii) If deciding any of the following, have the appropriate 
clinical expertise in treating the enrollee's condition or disease:
    (A) A grievance regarding denial of expedited resolution of an 
appeal.
    (B) A grievance that involves clinical issues.
    (3) Integrated organization determinations. If the applicable 
integrated plan expects to issue a partially or fully adverse medical 
necessity (or any substantively equivalent term used to describe the 
concept of medical necessity) decision based on the initial review of 
the request, the integrated organization determination must be reviewed 
by a physician or other appropriate health care professional with 
sufficient medical and other expertise, including knowledge of Medicare 
and Medicaid coverage criteria, before the applicable integrated plan 
issues the integrated organization determination. Any physician or 
other health care professional who reviews an integrated organization 
determination must have a current and unrestricted license to practice 
within the scope of his or her profession.
    (4) Integrated reconsideration determinations. Individuals making 
an integrated reconsideration determination must be individuals who:
    (i) Were neither involved in any previous level of review or 
decision-making nor a subordinate of any such individual.
    (ii) If deciding an appeal of a denial that is based on lack of 
medical necessity (or any substantively equivalent term used to 
describe the concept of medical necessity), are a physician or other 
appropriate health care professional who have the appropriate clinical 
expertise, in treating the enrollee's condition or disease, and 
knowledge of Medicare coverage criteria, before the MA organization 
issues the organization determination decision.
    (l) Parties. (1) The individuals or entity who can request an 
integrated grievance and integrated organization determination and 
integrated reconsideration are:
    (i) The enrollee or his or her representative;
    (ii) An assignee of the enrollee (that is, a physician or other 
provider who has furnished or intends to furnish a service to the 
enrollee and formally agrees to waive any right to payment from the 
enrollee for that service), or any other provider or entity (other than 
the applicable integrated plan) who has an appealable interest in the 
proceeding. If the provider is requesting an integrated reconsideration 
on behalf of an enrollee, the provider must provide notice to the 
enrollee. If the provider or authorized representative requests that 
the benefits continue while the appeal is pending, pursuant to Sec.  
422.632 and consistent with state law, the provider or authorized 
representative must obtain the written consent of the enrollee to 
request the appeal on behalf of the enrollee; or
    (iii) The legal representative of a deceased enrollee's estate.
    (2) When the term ``enrollee'' is used throughout this section, it 
includes providers that file a request and authorized representatives 
consistent with this paragraph, unless otherwise specified.
    (3) The parties who can request an expedited integrated 
organization determination are--
    (i) The enrollee (including his or her representative); or
    (ii) A provider.


Sec.  422.630   Integrated grievances.

    (a) General rule. In lieu of complying with Sec.  422.564, and the 
grievance requirements of Sec. Sec.  438.402, 438.406, 438.408, 
438.414, and 438.416 of this chapter, each applicable integrated plan 
must comply with this section. Each applicable integrated plan must 
provide meaningful procedures for timely hearing and resolving 
integrated grievances between enrollees and the applicable integrated 
plan or any other entity or individual through which the applicable 
integrated plan provides health care services.
    (b) Timing. An enrollee may file an integrated grievance at any 
time with the applicable integrated plan.
    (c) Filing. An enrollee may file an integrated grievance orally or 
in writing with the applicable integrated plan, or with the State for 
an integrated grievance related to a Medicaid benefit, if the State has 
a process for accepting Medicaid grievances.
    (d) Expedited grievances. An applicable integrated plan must 
respond to an enrollee's grievance within 24 hours if:
    (1) The complaint involves the applicable integrated plan's 
decision to invoke an extension relating to an integrated organization 
determination or integrated reconsideration.
    (2) The complaint involves the applicable integrated plan's refusal 
to grant an enrollee's request for an expedited organization 
determination under Sec.  422.631 or integrated reconsideration under 
Sec.  422.633.
    (e) Resolution and notice. (1) The applicable integrated plan must 
resolve standard integrated grievances as expeditiously as the case 
requires, based on the enrollee's health status, but no later than 30 
calendar days from the date it receives the integrated grievance.
    (i) All integrated grievances submitted in writing must be 
responded to in writing.
    (ii) Integrated grievances submitted orally may be responded to 
either orally or in writing, unless the enrollee requests a written 
response.
    (iii) All integrated grievances related to quality of care, 
regardless of how the integrated grievance is filed, must be responded 
to in writing. The response must include a description of the 
enrollee's right to file a written complaint with the QIO with regard 
to Medicare covered services. For any complaint submitted to a QIO, the 
applicable integrated plan must cooperate with the QIO in resolving the 
complaint.
    (2) The timeframe for resolving the integrated grievance may be 
extended by 14 calendar days if the enrollee requests an extension or 
if the applicable integrated plan justifies the need for additional 
information and documents how the delay is in the interest of the 
enrollee. When the applicable integrated plan extends the timeframe, it 
must:
    (i) Make reasonable efforts to promptly notify the enrollee orally 
of the reasons for the delay, and
    (ii) Send written notice to the enrollee of the reasons for the 
delay immediately, but no later than within 2 calendar days. This 
notice must explain the right to file an integrated grievance if the 
enrollee disagrees with the decision to delay.


Sec.  422.631   Integrated organization determinations.

    (a) General rule. An applicable integrated plan must adopt and 
implement a process for enrollees to request that the plan make an 
integrated organization determination. The process for requesting that 
the applicable integrated plan make an integrated organization 
determination must be the same for all covered benefits.

[[Page 55081]]

    (b) Requests. The enrollee, or a provider on behalf of an enrollee, 
may request an integrated organization determination orally or in 
writing, except for requests for payment, which must be in writing 
(unless the applicable integrated plan or entity responsible for making 
the determination has implemented a voluntary policy of accepting 
verbal payment requests).
    (c) Expedited integrated organization determinations. (1) An 
enrollee, or a provider on behalf of an enrollee, may request an 
expedited integrated organization determination.
    (2) The request can be oral or in writing.
    (3) The applicable integrated plan must complete an expedited 
integrated organization determination when the applicable integrated 
plan determines (based on a request from the enrollee or on its own) or 
the provider indicates (in making the request on the enrollee's behalf 
or supporting the enrollee's request) that taking the time for a 
standard resolution could seriously jeopardize the enrollee's life, 
physical or mental health, or ability to attain, maintain, or regain 
maximum function.
    (d) Timeframes and notice--(1) Integrated organization 
determination notice. The applicable integrated plan must send an 
enrollee a written notice of any adverse decision on an integrated 
organization determination (including a determination to authorize a 
service or item in an amount, duration, or scope that is less than the 
amount previously requested or authorized for an ongoing course of 
treatment) within the timeframes set forth in this section. For an 
integrated organization determination not reached within the timeframes 
specified in this section (which constitutes a denial and is thus an 
adverse decision), the applicable integrated plan must send a notice on 
the date that the timeframes expire. Such notice must describe all 
applicable Medicare and Medicaid appeal rights. Integrated organization 
determination notices must be written in plain language, be available 
in a language and format that is accessible to the enrollee, and 
explain:
    (i) The applicable integrated plan's determination;
    (ii) The date the determination was made;
    (iii) The date the determination will take effect;
    (iv) The reasons for the determination;
    (v) The enrollee's right to file an integrated reconsideration and 
the ability for someone else to file an appeal on the enrollee's 
behalf;
    (vi) Procedures for exercising enrollee's rights to an integrated 
reconsideration;
    (vii) Circumstances under which expedited resolution is available 
and how to request it; and
    (viii) If applicable, the enrollee's rights to have benefits 
continue pending the resolution of the integrated appeal process.
    (2) Timing of notice--(i) Standard integrated organization 
determinations. (A) The applicable integrated plan must send a notice 
of its integrated organization determination at least 10 days before 
the date of action (that is, before the date on which a termination, 
suspension, or reduction becomes effective), in cases where a 
previously approved service is being reduced, suspended, or terminated, 
except in circumstances where an exception is permitted under 
Sec. Sec.  431.213 and 431.214 of this chapter.
    (B) For other integrated organization determinations that are not 
expedited integrated organization determinations, the applicable 
integrated plan must send a notice of its integrated organization 
determination as expeditiously as the enrollee's health condition 
requires, but no later than 14 calendar days from when it receives the 
request for the integrated organization determination.
    (ii) Extensions. The applicable integrated plan may extend the 
timeframe for a standard or expedited integrated organization 
determination by up to 14 calendar days if:
    (A) The enrollee or provider requests the extension; or
    (B) The applicable integrated plan can show that:
    (1) The extension is in the enrollee's interest; and
    (2) There is need for additional information and there is a 
reasonable likelihood that receipt of such information would lead to 
approval of the request, if received.
    (iii) Notices in cases of extension. (A) When the applicable 
integrated plan extends the timeframe, it must notify the enrollee in 
writing of the reasons for the delay as expeditiously as the enrollee's 
health condition requires but no later than upon expiration of the 
extension, and inform the enrollee of the right to file an expedited 
integrated grievance if he or she disagrees with the applicable 
integrated plan's decision to grant an extension.
    (B) If the applicable integrated plan extends the timeframe for 
making its integrated organization determination, it must send the 
notice of its determination as expeditiously as the enrollee's health 
condition requires and no later than the date the extension expires.
    (iv) Expedited integrated organization determinations. (A) The 
applicable integrated plan must provide notice of its expedited 
integrated organization determination as expeditiously as the 
enrollee's health condition requires, but no later than 72 hours after 
receiving the request.
    (B) If the applicable integrated plan denies the request for an 
expedited integrated organization determination, it must:
    (1) Automatically transfer a request to the standard timeframe and 
make the determination within the 14-day timeframe established in this 
paragraph for a standard integrated organization determination. The 14-
day period begins with the day the applicable integrated plan receives 
the request for expedited integrated organization determination.
    (2) Give the enrollee prompt oral notice of the denial and transfer 
and subsequently deliver, within 3 calendar days, a written letter 
that--
    (i) Explains that the applicable integrated plan will process the 
request using the 14-day timeframe for standard integrated organization 
determinations;
    (ii) Informs the enrollee of the right to file an expedited 
integrated grievance if he or she disagrees with the applicable 
integrated plan's decision not to expedite;
    (iii) Informs the enrollee of the right to resubmit a request for 
an expedited integrated organization determination with any physician's 
support; and
    (iv) Provides instructions about the integrated grievance process 
and its timeframes.
    (C) If the applicable integrated plan must receive medical 
information from noncontract providers, the applicable integrated plan 
must request the necessary information from the noncontract provider 
within 24 hours of the initial request for an expedited integrated 
organization determination. Noncontract providers must make reasonable 
and diligent efforts to expeditiously gather and forward all necessary 
information to assist the applicable integrated plan in meeting the 
required timeframe. Regardless of whether the applicable integrated 
plan must request information from noncontract providers, the 
applicable integrated plan is responsible for meeting the timeframe and 
notice requirements of this section.

[[Page 55082]]

Sec.  422.632   Continuation of benefits while the applicable 
integrated plan reconsideration is pending.

    (a) Definition. As used in this section, timely files means files 
for continuation of benefits on or before the later of the following:
    (1) Within 10 calendar days of the applicable integrated plan 
sending the notice of adverse integrated organization determination.
    (2) The intended effective date of the applicable integrated plan's 
proposed adverse integrated organization determination.
    (b) Continuation of benefits. The applicable integrated plan must 
continue the enrollee's benefits under Parts A and B of title XVIII and 
title XIX if all of the following occur:
    (1) The enrollee files the request for an integrated appeal timely 
in accordance with Sec.  422.633(e);
    (2) The integrated appeal involves the termination, suspension, or 
reduction of previously authorized services;
    (3) The services were ordered by an authorized provider;
    (4) The period covered by the original authorization has not 
expired; and
    (5) The enrollee timely files for continuation of benefits.
    (c) Duration of continued or reinstated benefits. If, at the 
enrollee's request, the applicable integrated plan continues or 
reinstates the enrollee's benefits, as described in paragraph (b) of 
this section, while the integrated reconsideration is pending, the 
benefits must be continued until:
    (1) The enrollee withdraws the request for an integrated 
reconsideration;
    (2) The applicable integrated plan issues an integrated 
reconsideration that is unfavorable to the enrollee related to the 
benefit that has been continued;
    (3) For an appeal involving Medicaid benefits:
    (i) The enrollee fails to file a request for a State fair hearing 
and continuation of benefits, within 10 calendar days after the 
applicable integrated plan sends the notice of the integrated 
reconsideration;
    (ii) The enrollee withdraws the appeal or request for a State fair 
hearing;
    (iii) A State fair hearing office issues a hearing decision adverse 
to the enrollee.
    (d) Recovery of costs. In the event the appeal or State fair 
hearing is adverse to the enrollee, the applicable integrated plan or 
State agency may not pursue recovery for services provided, to the 
extent that the services were furnished solely under of the 
requirements of this section.


Sec.  422.633   Integrated reconsideration.

    (a) General rule. An applicable integrated plan may only have one 
level of integrated reconsideration for an enrollee.
    (b) External medical reviews. If a State has established an 
external medical review process, the requirements of Sec.  
438.402(c)(1)(i)(B) of this chapter apply to each applicable integrated 
plan that is a Medicaid managed care organization, as defined in 
section 1903 of the Act.
    (c) Case file. Upon request of the enrollee or his or her 
representative, the applicable integrated plan must provide the 
enrollee and his or her representative the enrollee's case file, 
including medical records, other documents and records, and any new or 
additional evidence considered, relied upon, or generated by the 
applicable integrated plan (or at the direction of the applicable 
integrated plan) in connection with the appeal of the integrated 
organization determination. This information must be provided free of 
charge and sufficiently in advance of the resolution timeframe for 
appeals as specified in this section.
    (d) Timing. (1) An enrollee has 60 calendar days from the date on 
the adverse organization determination notice to file a request for an 
integrated reconsideration with the applicable integrated plan.
    (2) Oral inquires seeking to appeal an adverse integrated 
organization determination must be treated as a request for an 
integrated reconsideration (to establish the earliest possible filing 
date for the appeal).
    (3) Extending the time for filing a request--(i) General rule. If a 
party or physician acting on behalf of an enrollee shows good cause, 
the applicable integrated plan may extend the timeframe for filing a 
request for an integrated reconsideration.
    (ii) How to request an extension of timeframe. If the 60-day period 
in which to file a request for an integrated reconsideration has 
expired, a party to the integrated organization determination or a 
physician acting on behalf of an enrollee may file a request for 
integrated reconsideration with the applicable integrated plan. The 
request for integrated reconsideration and to extend the timeframe 
must--
    (A) Be in writing; and
    (B) State why the request for integrated reconsideration was not 
filed on time.
    (e) Expedited integrated reconsiderations. (1) An enrollee may 
request, or a provider may request on behalf of an enrollee, an 
expedited review of the integrated reconsideration.
    (2) The request can be oral or in writing.
    (3) The applicable integrated plan must grant the request to 
expedite the integrated reconsideration when it determines (for a 
request from the enrollee), or the provider indicates (in making the 
request on the enrollee's behalf or supporting the enrollee's request), 
that taking the time for a standard resolution could seriously 
jeopardize the enrollee's life, physical or mental health, or ability 
to attain, maintain, or regain maximum function.
    (4) If an applicable integrated plan denies an enrollee's request 
for an expedited integrated reconsideration, it must automatically 
transfer a request to the standard timeframe and make the determination 
within the 30-day timeframe established in paragraph (f)(1) of this 
section for a standard integrated reconsideration. The 30-day period 
begins with the day the applicable integrated plan receives the request 
for expedited integrated reconsideration. The applicable integrated 
plan must give the enrollee prompt oral notice of the decision, and 
give the enrollee written notice within 2 calendar days. The written 
notice must:
    (i) Include the reason for the denial;
    (ii) Inform the enrollee of the right to file a grievance if the 
enrollee disagrees with the decision not to expedite, including 
timeframes and procedures for filing a grievance; and
    (iii) Inform the enrollee of the right to resubmit a request for an 
expedited determination with any physician's support.
    (5) If the applicable integrated plan must receive medical 
information from noncontract providers, the applicable integrated plan 
must request the necessary information from the noncontract provider 
within 24 hours of the initial request for an expedited integrated 
reconsideration. Noncontract providers must make reasonable and 
diligent efforts to expeditiously gather and forward all necessary 
information to assist the applicable integrated plan in meeting the 
required timeframe. Regardless of whether the applicable integrated 
plan must request information from noncontract providers, the 
applicable integrated plan is responsible for meeting the timeframe and 
notice requirements of this section.
    (f) Resolution and notification. The applicable integrated plan 
must make integrated reconsidered determinations as expeditiously as 
the enrollee's health condition requires but no later than the 
timeframes established in this section.
    (1) Standard integrated reconsiderations. The applicable

[[Page 55083]]

integrated plan must resolve integrated reconsiderations within 30 
calendar days of receipt of the request or as expeditiously as the 
enrollee's health condition requires for the integrated 
reconsideration. This timeframe may be extended as described in 
paragraph (f)(3) of this section.
    (2) Expedited integrated reconsiderations. The applicable 
integrated plan must resolve expedited integrated reconsiderations 
within 72 hours of receipt of the request or as expeditiously as the 
enrollee's health condition requires for the integrated 
reconsideration. This timeframe may be extended as described in 
paragraph (f)(3) of this section. The applicable integrated plan must 
make reasonable efforts to provide prompt oral notice of the expedited 
resolution to the enrollee.
    (3) Extensions. (i) The applicable integrated plan may extend the 
timeframe for resolving integrated reconsiderations by 14 calendar days 
if:
    (A) The enrollee requests the extension; or
    (B) The applicable integrated plan can show that:
    (1) The extension is in the enrollee's interest; and
    (2) There is need for additional information and there is a 
reasonable likelihood that receipt of such information would lead to 
approval of the request, if received.
    (ii) If the applicable integrated plan extends the timeframe for 
resolving the integrated reconsideration, it must make reasonable 
efforts to give the enrollee prompt oral notice of the delay, and give 
the enrollee written notice within 2 calendar days. The notice must 
include the reason for the delay, and inform the enrollee of the right 
to file an expedited grievance if he or she disagrees with the decision 
to grant an extension.
    (4) Notice of resolution. The applicable integrated plan must send 
a notice to enrollees that includes the integrated reconsidered 
determination, within the resolution timeframes set forth in this 
section. The notice of determination must be written in plain language 
and available in a language and format that is accessible to the 
enrollee, and must explain:
    (i) The resolution of and basis for the integrated reconsideration 
and the date it was completed.
    (ii) For integrated reconsiderations not resolved wholly in favor 
of the enrollee:
    (A) An explanation of the next level of appeal available under the 
Medicare and Medicaid programs, and what steps the enrollee must take 
to pursue the next level of appeal under each program; and
    (B) The right to request and receive Medicaid-covered benefits 
while the next level of appeal is pending, if applicable.


Sec.  422.634   Effect.

    (a) Failure of the applicable integrated plan to send timely notice 
of a determination. If the applicable integrated plan fails to adhere 
to the notice and timing for an integrated organization determination 
or integrated reconsideration, this failure constitutes an adverse 
determination for the enrollee. For an integrated organization 
determination, this means that the enrollee may request an integrated 
reconsideration (to the next applicable level in the appeal process). 
For integrated reconsiderations of Medicare benefits, this means the 
applicable integrated plan must forward the case to the independent 
review entity, in accordance with the timeframes under paragraph (b) of 
this section and Sec.  422.592. For integrated reconsiderations of 
Medicaid benefits, this means that an enrollee or other party may file 
for a State fair hearing, or if applicable, a State external medical 
review in accordance with Sec.  438.402(c) of this chapter.
    (b) Adverse integrated reconsiderations. (1) Subject to paragraph 
(b)(2) of this section, when the applicable integrated plan affirms, in 
whole or in part, its adverse integrated organization determination 
involving a Medicare benefit:
    (i) The issues that remain in dispute must be reviewed and resolved 
by an independent, outside entity that contracts with CMS, in 
accordance with Sec.  422.592 and Sec. Sec.  422.594 through 422.619; 
and
    (ii) For standard integrated reconsiderations, the applicable 
integrated plan must prepare a written explanation and send the case 
file to the independent review entity contracted by CMS, as 
expeditiously as the enrollee's health condition requires, but no later 
than 30 calendar days from the date it receives the request (or no 
later than the expiration of an extension described in Sec.  
422.633(f)(3)). The applicable integrated plan must make reasonable and 
diligent efforts to assist in gathering and forwarding information to 
the independent entity.
    (iii) For expedited integrated reconsiderations, the applicable 
integrated plan must prepare a written explanation and send the case 
file to the independent review entity contracted by CMS as 
expeditiously as the enrollee's health condition requires, but no later 
than within 24 hours of its affirmation (or no later than the 
expiration of an extension described in Sec.  422.633(f)(3)). The 
applicable integrated plan must make reasonable and diligent efforts to 
assist in gathering and forwarding information to the independent 
entity.
    (2) When the applicable integrated plan affirms, in whole or in 
part, its adverse integrated organization determination involving a 
Medicaid benefit, the enrollee or other party (that is not the 
applicable integrated plan) may initiate a State fair hearing no later 
than 120 calendar days from the date of the applicable integrated 
plan's notice of resolution. If a provider is filing for a State fair 
hearing on behalf of the enrollee as permitted by State law, the 
provider will need the written consent of the enrollee, if he or she 
has not already obtained such consent.
    (c) Final determination. The reconsidered determination of the 
applicable integrated plan is binding on all parties unless it is 
appealed to the next applicable level. In the event that the enrollee 
pursues the appeal in multiple forums and receives conflicting 
decisions, the applicable integrated plan is bound by, and must act in 
accordance with, decisions favorable to the enrollee.
    (d) Services not furnished while the appeal is pending. If an 
applicable integrated plan, or a State fair hearing with regard to a 
Medicaid benefit, reverses a decision to deny, limit, or delay services 
that were not furnished while the appeal was pending, the applicable 
integrated plan must authorize or provide the disputed services 
promptly and as expeditiously as the enrollee's health condition 
requires but no later than 72 hours from the date it receives notice 
reversing the determination. Reversals by the Part C independent review 
entity, an administrative law judge or attorney adjudicator at the 
Office of Medicare Hearings and Appeals, or the Medicare Appeals 
Council must be effectuated under same timelines applicable to other MA 
plans as specified in Sec. Sec.  422.618 and 422.619.
    (e) Services furnished while the appeal is pending. If the 
applicable integrated plan or the State fair hearing officer reverses a 
decision to deny, limit, or delay Medicaid-covered benefits, and the 
enrollee received the disputed services while the integrated 
reconsideration was pending, the applicable integrated plan or the 
State must pay for those services, in accordance with State policy and 
regulations. If the applicable integrated plan reverses a decision to 
deny, limit, or delay Medicare-covered benefits, and the enrollee 
received the disputed services while the integrated reconsideration was 
pending, the

[[Page 55084]]

applicable integrated plan must pay for those services.
0
26. Section 422.752 is amended by adding paragraph (d) to read as 
follows:


Sec.  422.752   Basis for imposing intermediate sanctions and civil 
money penalties.

* * * * *
    (d) Special rule for non-compliant dual eligible special needs 
plans. Notwithstanding any other provision of this section, CMS must 
impose during plan years 2021 through 2025 intermediate sanctions 
specified at Sec.  422.750(a) on an MA organization with a contract to 
operate a dual eligible special needs plan if CMS determines that the 
dual eligible special needs plan fails to comply with at least one of 
the criteria for the integration of Medicare and Medicaid benefits 
provided in the definition of a dual eligible special needs plan at 
Sec.  422.2. If CMS imposes such an intermediate sanction, the MA 
organization must submit to CMS a corrective action plan in a form, 
manner, and timeframe established by CMS. The procedures outlined in 
Sec.  422.756 apply to the imposition of the intermediate sanction 
under this provision.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
27. The authority citation for part 423 is revised to read as follows:

    Authority:  42 U.S.C. 1302, 1395w-101 through 1395w-152, and 
1395hh.

0
28. Section 423.100 is amended in the definition of ``Preclusion list'' 
by revising paragraphs (1)(i), (2)(i), (2)(ii)(C) and adding paragraph 
(3) to read as follows:


Sec.  423.100   Definitions.

* * * * *
    Preclusion list * * *
    (1) * * *
    (i) The prescriber is currently revoked from Medicare for a reason 
other than that stated in Sec.  424.535(a)(3) of this chapter.
* * * * *
    (2) * * *
    (i) The prescriber has engaged in behavior, other than that 
described in Sec.  424.535(a)(3) of this chapter, for which CMS could 
have revoked the prescriber to the extent applicable had the prescriber 
been enrolled in Medicare.
* * * * *
    (ii) * * *
    (C) Any other evidence that CMS deems relevant to its 
determination; or
    (3) The prescriber, regardless of whether the prescriber is or was 
enrolled in Medicare, has been convicted of a felony under federal or 
state law within the previous 10 years that CMS deems detrimental to 
the best interests of the Medicare program. Factors that CMS considers 
in making such a determination under this paragraph are:
    (i) The severity of the offense;
    (ii) When the offense occurred; and
    (iii) Any other information that CMS deems relevant to its 
determination.
* * * * *
0
29. Section 423.120 is amended by--
0
a. Revising paragraphs (c)(6)(i) through (v) and (c)(6)(vi) 
introductory text; and
0
b. Adding paragraphs (c)(6)(vii) and (viii).
    The revisions and additions read as follows:


Sec.  423.120   Access to covered Part D drugs.

* * * * *
    (c) * * *
    (6)(i) Except as provided in paragraph (c)(6)(iv) of this section, 
a Part D sponsor must reject, or must require its PBM to reject, a 
pharmacy claim for a Part D drug if the prescriber who prescribed the 
drug is included on the preclusion list, defined in Sec.  423.100.
    (ii) Except as provided in paragraph (c)(6)(iv) of this section, a 
Part D sponsor must deny, or must require its PBM to deny, a request 
for reimbursement from a Medicare beneficiary if the request pertains 
to a Part D drug that was prescribed by a prescriber who is identified 
by name in the request and who is included on the preclusion list, 
defined in Sec.  423.100.
    (iii) A Part D plan sponsor may not submit a prescription drug 
event (PDE) record to CMS unless it includes on the PDE record the 
active and valid NPI of the prescriber of the drug, and the prescriber 
is not included on the preclusion list, defined in Sec.  423.100, for 
the date of service.
    (iv) With respect to Part D prescribers that have been added to an 
updated preclusion list, the Part D plan sponsor must do all of the 
following:
    (A) Subject to all other Part D rules and plan coverage 
requirements, and no later than 30 days after the posting of this 
updated preclusion list, must provide an advance written notice to any 
beneficiary who has received a Part D drug prescribed by a prescriber 
added to the preclusion list in this update;
    (B) Must ensure that reasonable efforts are made to notify the 
prescriber described in paragraph (c)(6)(iv) of this section of a 
beneficiary who was sent a notice under paragraph (c)(6)(iv)(A) of this 
section; and
    (C) Must not reject a pharmacy claim or deny a beneficiary request 
for reimbursement for a Part D drug prescribed by the prescriber, 
solely on the ground that they have been included in the updated 
preclusion list, in the 60-day period after the date it sent the notice 
described in paragraph (c)(6)(iv)(A) of this section.
    (v)(A) CMS sends written notice to the prescriber via letter of 
their inclusion on the preclusion list. The notice must contain the 
reason for the inclusion on the preclusion list and inform the 
prescriber of their appeal rights. A prescriber may appeal their 
inclusion on the preclusion list under this section in accordance with 
part 498 of this chapter.
    (B) If the prescriber's inclusion on the preclusion list is based 
on a contemporaneous Medicare revocation under Sec.  424.535 of this 
chapter:
    (1) The notice described in paragraph (c)(6)(v)(A) of this section 
must also include notice of the revocation, the reason(s) for the 
revocation, and a description of the prescriber's appeal rights 
concerning the revocation.
    (2) The appeals of the prescriber's inclusion on the preclusion 
list and the prescriber's revocation shall be filed jointly by the 
prescriber and, as applicable, considered jointly by CMS under part 498 
of this chapter.
    (C)(1) Except as provided in paragraph (c)(6)(v)(C)(2) of this 
section, a prescriber will only be included on the preclusion list 
after the expiration of either of the following:
    (i) If the prescriber does not file a reconsideration request under 
Sec.  498.5(n)(1) of this chapter, the prescriber will be added to the 
preclusion list upon the expiration of the 60-day period in which the 
prescriber may request a reconsideration.
    (ii) If the prescriber files a reconsideration request under Sec.  
498.5(n)(1) of this chapter, the prescriber will be added to the 
preclusion list effective on the date on which CMS, if applicable, 
denies the prescriber's reconsideration.
    (2) An OIG excluded prescriber is added to the preclusion list 
effective on the date of the exclusion.
    (vi) CMS has the discretion not to include a particular prescriber 
on (or, if warranted, remove the prescriber from) the preclusion list 
should it determine that exceptional circumstances exist regarding 
beneficiary access to prescriptions. In making a determination as to 
whether such circumstances exist, CMS takes into account--
* * * * *
    (vii)(A) Except as provided in paragraphs (c)(6)(vii)(C) and (D) of 
this

[[Page 55085]]

section, a prescriber who is revoked under Sec.  424.535 of this 
chapter will be included on the preclusion list for the same length of 
time as the prescriber's reenrollment bar.
    (B) Except as provided in paragraphs (c)(6)(vii)(C) and (D) of this 
section, a prescriber who is not enrolled in Medicare will be included 
on the preclusion list for the same length of time as the reenrollment 
bar that CMS could have imposed on the prescriber had the prescriber 
been enrolled and then revoked.
    (C) Except as provided in paragraph (c)(6)(vii)(D) of this section, 
a prescriber, regardless of whether the prescriber is or was enrolled 
in Medicare, that is included on the preclusion list because of a 
felony conviction will remain on the preclusion list for a 10-year 
period, beginning on the date of the felony conviction, unless CMS 
determines that a shorter length of time is warranted. Factors that CMS 
considers in making such a determination are--
    (1) The severity of the offense;
    (2) When the offense occurred; and
    (3) Any other information that CMS deems relevant to its 
determination.
    (D) In cases where a prescriber is excluded by the OIG, the 
prescriber must remain on the preclusion list until the expiration of 
the CMS-imposed preclusion list period or reinstatement by the OIG, 
whichever occurs later.
    (viii) Payment denials under paragraph (c)(6) of this section that 
are based upon the prescriber's inclusion on the preclusion list are 
not appealable by beneficiaries.
* * * * *
0
30. Section 423.153 is amended by revising the section heading and 
adding paragraph (g) to read as follows:


Sec.  423.153   Prescription drug plan sponsors' access to Medicare 
Parts A and B claims data extracts.

* * * * *
    (g) Parts A and B claims data extracts--(1) General rule. (i) 
Beginning in plan year 2020, a PDP sponsor may submit a request to CMS 
for the data described in paragraph (g)(2) of this section about 
enrollees in its prescription drug plans.
    (ii) CMS will make the data requested in paragraph (g)(1)(i) of 
this section available to eligible PDP sponsors, in accordance with all 
applicable laws. The data will be provided at least quarterly on a 
specified release date, and in an electronic format to be determined by 
CMS.
    (iii) If CMS determines or has a reasonable belief that the PDP 
sponsor has violated the requirements of this paragraph (g) or that 
unauthorized uses, reuses, or disclosures of the Medicare claims data 
have taken place, at CMS' sole discretion, the PDP sponsor may be 
denied further access to the data described in paragraph (g)(2) of this 
section.
    (2) Data described. The data that may be requested under paragraph 
(g)(1) of this section are standardized extracts of claims data under 
Medicare parts A and B for items and services furnished under such 
parts to beneficiaries who are enrolled in a plan offered by the PDP 
sponsor at the time of the disclosure.
    (3) Purposes. A PDP sponsor must comply with all laws that may be 
applicable to data received under this provision, including state and 
federal privacy and security laws, and, furthermore subject to the 
limitations in paragraph (g)(4) of this section may only use or 
disclose the data provided by CMS under paragraph (g)(1) of this 
section for the following purposes:
    (i) To optimize therapeutic outcomes through improved medication 
use, as such phrase is used in paragraph (d)(1)(i) of this section.
    (ii) To improve care coordination so as to prevent adverse health 
outcomes, such as preventable emergency department visits and hospital 
readmissions.
    (iii) For activities falling under paragraph (1) of the definition 
of ``health care operations'' under 45 CFR 164.501.
    (iv) For activities falling under paragraph (2) of the definition 
of ``health care operations'' under 45 CFR 164.501.
    (v) For ``fraud and abuse detection or compliance activities'' 
under 45 CFR 164.506(c)(4)(ii).
    (vi) For disclosures that qualify as ``required by law'' 
disclosures at 45 CFR 164.103.
    (4) Limitations. A PDP sponsor must comply with the following 
requirements regarding the data provided by CMS under this paragraph 
(g):
    (i) The PDP sponsor will not use the data to inform coverage 
determinations under Part D;
    (ii) The PDP sponsor will not use the data to conduct retroactive 
reviews of medically accepted indications determinations;
    (iii) The PDP sponsor will not use the data to facilitate 
enrollment changes to a different prescription drug plan or an MA-PD 
plan offered by the same parent organization;
    (iv) The PDP sponsor will not use the data to inform marketing of 
benefits.
    (v) The PDP sponsor will contractually bind its contractors that 
have access to the Medicare claims data, and any other potential 
downstream data recipients, to the terms and conditions imposed on the 
PDP Sponsor under this paragraph (g).
    (5) Ensuring the privacy and security of data. As a condition of 
receiving the requested data, the PDP sponsor must attest that it will 
adhere to the permitted uses and limitations on the use of the Medicare 
claims data listed in paragraphs (g)(3) and (4) of this section.
0
31. Section 423.182 is amended in paragraph (a) by adding the 
definitions of ``Absolute percentage cap'', ``Cut point cap'', 
``Guardrail'', ``Mean resampling'', ``Restricted range'', and 
``Restricted range cap'' in alphabetical order to read as follows:


Sec.  423.182   Part D Prescription Drug Plan Quality Rating System.

    (a) * * *
    Absolute percentage cap is a cap applied to non-CAHPS measures that 
are on a 0 to 100 scale that restricts movement of the current year's 
measure-threshold-specific cut point to no more than the stated 
percentage as compared to the prior year's cut point.
* * * * *
    Cut point cap is a restriction on the change in the amount of 
movement a measure-threshold-specific cut point can make as compared to 
the prior year's measure-threshold-specific cut point. A cut point cap 
can restrict upward movement, downward movement, or both.
* * * * *
    Guardrail is a bidirectional cap that restricts both upward and 
downward movement of a measure-threshold-specific cut point for the 
current year's measure-level Star Ratings as compared to the prior 
year's measure-threshold-specific cut point.
* * * * *
    Mean resampling refers to a technique where measure-specific scores 
for the current year's Star Ratings are randomly separated into 10 
equal-sized groups. The hierarchal clustering algorithm is done 10 
times, each time leaving one of the 10 groups out. The method results 
in 10 sets of measure-specific cut points. The mean cut point for each 
threshold per measure is calculated using the 10 values.
* * * * *
    Restricted range is the difference between the maximum and minimum 
measure score values using the prior year measure scores excluding 
outer fence outliers (first quartile -3 * Interquartile Range (IQR) and 
third quartile + 3 * IQR).
    Restricted range cap is a cap applied to non-CAHPS measures that 
restricts movement of the current year's

[[Page 55086]]

measure-threshold-specific cut point to no more than the stated 
percentage of the restricted range of a measure calculated using the 
prior year's measure score distribution.
* * * * *
0
32. Section 423.184 is amended by adding paragraphs (f)(1)(iv), 
(g)(1)(ii)(M), and (h) to read as follows:


Sec.  423.184   Adding, updating, and removing measures.

* * * * *
    (f) * * *
    (1) * * *
    (iv) CMS will exclude any measure that receives a measure-level 
Star Rating reduction for data integrity concerns for either the 
current or prior year from the improvement measure(s).
* * * * *
    (g) * * *
    (1) * * *
    (ii) * * *
    (M) CMS will reduce a measure rating to 1 star for the applicable 
appeals measure(s) if a contract fails to submit Timeliness Monitoring 
Project data for CMS's review to ensure the completeness of the 
contract's IRE data.
* * * * *
    (h) Review of sponsors' data. (1) A request for CMS or the IRE to 
review a contract's appeals data must be received no later than June 30 
of the following year.
    (2) A request for CMS to review a contract's Complaints Tracking 
Module (CTM) data must be received no later than June 30 of the 
following year.
0
33. Section 423.186 is amended by revising paragraph (a)(2)(i) and 
adding paragraph (i) to read as follows:


Sec.  423.186   Calculation of Star Ratings.

    (a) * * *
    (2) * * *
    (i) The method maximizes differences across the star categories and 
minimizes the differences within star categories using mean resampling 
with the hierarchal clustering of the current year's data, and a 
guardrail so that the measure-threshold-specific cut points for non-
CAHPS measures do not increase or decrease more than the value of the 
cap from one year to the next. The cap is equal to 5 percentage points 
for measures having a 0 to 100 scale (absolute percentage cap) or 5 
percent of the restricted range for measures not having a 0 to 100 
scale (restricted range cap). New measures that have been in the Part C 
and D Star Rating program for three years or less use the hierarchal 
clustering methodology with mean resampling with no guardrail for the 
first three years in the program.
* * * * *
    (i) Extreme and uncontrollable circumstances. In the event of 
extreme and uncontrollable circumstances that may negatively impact 
operational and clinical systems and contracts' abilities to conduct 
surveys needed for accurate performance measurement, CMS will calculate 
the Star Ratings as specified in paragraphs (i)(2) through (8) of this 
section for each contract that is an affected contract during the 
performance period for the applicable measures.
    (1) Identification of affected contracts. A contract that meets all 
of the following criteria is an affected contract:
    (i) The contract's service area is within an ``emergency area'' 
during an ``emergency period'' as defined in section 1135(g) of the 
Act.
    (ii) The contract's service area is within a county, parish, U.S. 
territory or tribal area designated in a major disaster declaration 
under the Stafford Act and the Secretary exercised authority under 
section 1135 of the Act based on the same triggering event(s).
    (iii) As specified in paragraphs (i)(2) through (8) of this 
section, a certain minimum percentage (25 percent or 60 percent) of the 
enrollees under the contract must reside in a Federal Emergency 
Management Agency (FEMA)-designated Individual Assistance area at the 
time of the extreme and uncontrollable circumstance.
    (2) CAHPS adjustments. (i) A contract, even if an affected 
contract, must administer the CAHPS survey unless exempt under 
paragraph (i)(2)(ii) of this section.
    (ii) An affected contract will be exempt from administering the 
CAHPS survey if the contract completes both of the following:
    (A) Demonstrates to CMS that the required sample for the survey 
cannot be contacted because a substantial number of the contract's 
enrollees are displaced due to the FEMA-designated disaster identified 
in paragraph (i)(1)(iii) of this section in the prior calendar year.
    (B) Requests and receives a CMS approved exception.
    (iii) An affected contract with an exception defined in paragraph 
(i)(2)(ii) of this section will receive the contract's CAHPS measure 
stars and corresponding measure scores from the prior year.
    (iv) For an affected contract with at least 25 percent of enrollees 
in FEMA-designated Individual Assistance areas at the time of the 
extreme and uncontrollable circumstance, the contract will receive the 
higher of the previous year's Star Rating or the current year's Star 
Rating (and corresponding measure score) for each CAHPS measure.
    (3) New measure adjustments. For affected contracts with at least 
25 percent of enrollees in a FEMA-designated Individual Assistance area 
at the time of the extreme and uncontrollable circumstance, CMS will 
apply a hold harmless provision by comparing the result of the 
contract's summary and/or overall rating with and without including all 
of the applicable new measures. If the ``with'' result is lower than 
the ``without'' result, then CMS will use the ``without'' result as the 
final rating.
    (4) Other Star Ratings measure adjustments. (i) For all other Part 
D measures except those measures identified in this paragraph 
(i)(4)(ii) of this section, affected contracts with at least 25 percent 
of enrollees in a FEMA-designated Individual Assistance area at the 
time of the extreme and uncontrollable circumstance will receive the 
higher of the previous or current year's measure Star Rating and then 
use the corresponding measure score.
    (ii) CMS will not adjust the scores of the Star Ratings for the 
Part D Call Center--Foreign Language Interpreter and TTY Availability 
measure, unless the exception listed in paragraph (i)(4)(iii) of this 
section applies.
    (iii) CMS will adjust the measure listed in paragraph (i)(4)(ii) of 
this section using the adjustments listed in paragraph (i)(4)(i) of 
this section for contracts affected by extreme and uncontrollable 
circumstances where there are continuing communications issues related 
to loss of electricity and damage to infrastructure during the call 
center study.
    (5) Exclusion from improvement measures. Any measure that reverts 
back to the data underlying the previous year's Star Rating due to the 
adjustments made in paragraph (i) of this section will be excluded from 
both the count of measures and the applicable improvement measures for 
the current and next year's Star Ratings for the affected contract.
    (6) Missing data. For an affected contract that has missing data in 
the current or previous year, the final measure rating will come from 
the current year unless an exception described in paragraph (i)(2)(ii) 
of this section applies.
    (7) Cut points for non-CAHPS measures. (i) CMS will exclude the 
numeric values for affected contracts with 60 percent or more of their 
enrollees in the FEMA-designated Individual Assistance area at the time 
of the extreme and uncontrollable

[[Page 55087]]

circumstance from the clustering algorithms described in paragraph 
(a)(2) of this section.
    (ii) The cut points calculated as described in paragraph (i)(7)(i) 
of this section will be used to assess all affected contracts' measure 
Star Ratings.
    (8) Reward factor. (i) CMS will exclude the numeric values for 
affected contracts with 60 percent or more of their enrollees in the 
FEMA-designated Individual Assistance area at the time of the extreme 
and uncontrollable circumstance from the determination of the 
performance summary and variance thresholds for the reward factor 
described in paragraph (f)(1) of this section.
    (ii) All affected contracts will be eligible for the reward factor 
based on the calculations described in paragraph (i)(8)(i) of this 
section.
0
34. Section 423.568 is amended by revising paragraph (b) to read as 
follows:


Sec.  423.568   Standard timeframe and notice requirements for coverage 
determinations.

* * * * *
    (b) Timeframe for requests for drug benefits. When a party makes a 
request for a drug benefit, the Part D plan sponsor must notify the 
enrollee (and the prescribing physician or other prescriber involved, 
as appropriate) of its determination as expeditiously as the enrollee's 
health condition requires, but no later than 72 hours after receipt of 
the request. For an exceptions request, the Part D plan sponsor must 
notify the enrollee (and the prescribing physician or other prescriber 
involved, as appropriate) of its determination as expeditiously as the 
enrollee's health condition requires, but no later than 72 hours after 
receipt of the physician's or other prescriber's supporting statement 
or 14 calendar days after receipt of the request, whichever occurs 
first.
* * * * *
0
35. Section 423.570 is amended by revising paragraph (d)(1) to read as 
follows:


Sec.  423.570   Expediting certain coverage determinations.

* * * * *
    (d) * * *
    (1) Make the determination within the 72-hour timeframe established 
in Sec.  423.568(b) for a standard determination. The 72-hour period 
begins on the day the Part D plan sponsor receives the request for 
expedited determination. For an exceptions request, the Part D plan 
sponsor must notify the enrollee (and the prescribing physician or 
other prescriber involved, as appropriate) of its determination as 
expeditiously as the enrollee's health condition requires, but no later 
than 72 hours after receipt of the physician's or other prescriber's 
supporting statement or 14 calendar days after receipt of the request, 
whichever occurs first.
* * * * *
0
36. Section 423.572 is amended by revising paragraph (a) to read as 
follows:


Sec.  423.572   Timeframes and notice requirements for expedited 
coverage determinations.

    (a) Timeframe for determination and notification. Except as 
provided in paragraph (b) of this section, a Part D plan sponsor that 
approves a request for expedited determination must make its 
determination and notify the enrollee (and the prescribing physician or 
other prescriber involved, as appropriate) of its decision, whether 
adverse or favorable, as expeditiously as the enrollee's health 
condition requires, but no later than 24 hours after receiving the 
request. For an exceptions request, the Part D plan sponsor must notify 
the enrollee (and the prescribing physician or other prescriber 
involved, as appropriate) of its determination as expeditiously as the 
enrollee's health condition requires, but no later than 24 hours after 
receipt of the physician's or other prescriber's supporting statement 
or 14 calendar days after receipt of the request, whichever occurs 
first.
* * * * *

PART 438--MANAGED CARE

0
37. The authority for part 438 is revised to read as follows:

    Authority: 42 U.S.C. 1302.

0
38. Section 438.210 is amended by--
0
a. Revising paragraphs (c) and (d) introductory text;
0
b. Adding paragraph (d)(4); and
0
c. Revising paragraph (f).
    The addition and revisions read as follows:


Sec.  438.210   Coverage and authorization of services.

* * * * *
    (c) Notice of adverse benefit determination. Each contract must 
provide for the MCO, PIHP, or PAHP to notify the requesting provider, 
and give the enrollee written notice of any decision by the MCO, PIHP, 
or PAHP to deny a service authorization request, or to authorize a 
service in an amount, duration, or scope that is less than requested. 
For MCOs, PIHPs, and PAHPs, the enrollee's notice must meet the 
requirements of Sec.  438.404. For Medicaid contracts with an 
applicable integrated plan, as defined in Sec.  422.561 of this 
chapter, in lieu of the provisions in this paragraph governing notices 
of adverse benefit determinations, the provisions set forth in 
Sec. Sec.  422.629 through 422.634 of this chapter apply to 
determinations affecting dually eligible individuals who are also 
enrolled in a dual eligible special needs plan with exclusively aligned 
enrollment, as defined in Sec.  422.2 of this chapter.
    (d) Timeframe for decisions. Each MCO, PIHP, or PAHP contract must 
provide for the following decisions and notices:
* * * * *
    (4) For Medicaid contracts with an applicable integrated plan, as 
defined in Sec.  422.561 of this chapter, timelines for decisions and 
notices must be compliant with the provisions set forth in in 
Sec. Sec.  422.629 through 422.634 of this chapter in lieu of 
Sec. Sec.  438.404 through 438.424.
* * * * *
    (f) Applicability date. (1) Subject to paragraph (f)(2) of this 
section, this section applies to the rating period for contracts with 
MCOs, PIHPs, and PAHPs beginning on or after July 1, 2017. Until that 
applicability date, states are required to continue to comply with 
Sec.  438.210 contained in the 42 CFR parts 430 to 481, edition revised 
as of October 1, 2015.
    (2) Provisions in this section affecting applicable integrated 
plans, as defined in Sec.  422.561 of this chapter, are applicable no 
later than January 1, 2021.
0
39. Section 438.400 is amended by adding paragraph (a)(4) and revising 
paragraph (c) to read as follows:


Sec.  438.400   Statutory basis, definitions, and applicability.

    (a) * * *
    (4) Section 1859(f)(8)(B) of the Act requires that the Secretary, 
to the extent feasible, establish procedures unifying grievances and 
appeals procedures under sections 1852(f), 1852(g), 1902(a)(3), 
1902(a)(5), and 1932(b)(4) of the Act for items and services provided, 
by specialized MA plans for special needs individuals described in 
section 1859(b)(6)(B)(ii), under Titles XVIII and XIX of the Act.
* * * * *
    (c) Applicability. (1) Subject to paragraph (c)(2) of this section, 
this subpart applies to the rating period for contracts with MCOs, 
PIHPs, and PAHPs beginning on or after July 1, 2017. Until that 
applicability date, states, MCOs, PIHPs, and PAHPs are required to 
continue to comply with subpart F contained in the 42 CFR parts 430 to 
481, edition revised as of October 1, 2015.
    (2) Provisions in this section affecting applicable integrated 
plans, as defined

[[Page 55088]]

in Sec.  422.561 of this chapter, are applicable no later than January 
1, 2021.
0
40. Section 438.402 is amended by revising paragraph (a) to read as 
follows:


Sec.  438.402   General requirements.

    (a) The grievance and appeal system. Each MCO, PIHP, and PAHP must 
have a grievance and appeal system in place for enrollees. Non-
emergency medical transportation PAHPs, as defined in Sec.  438.9, are 
not subject to this subpart F. An applicable integrated plan as defined 
in Sec.  422.561 of this chapter is not subject to this subpart F, and 
is instead subject to the requirements of Sec. Sec.  422.629 through 
422.634 of this chapter.
* * * * *

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT 
AFFECT THE PARTICIPATION OF ICFs/IID AND CERTAIN NFs IN THE 
MEDICAID PROGRAM

0
41. The authority for part 498 is revised to read as follows:

    Authority: 42 U.S.C. 1302, 1320a-7j, and 1395hh.

0
42. Section 498.5 is amended by revising paragraph (n)(1) to read as 
follows:


Sec.  498.5   Appeal rights.

* * * * *
    (n) * * *
    (1)(i) Any individual or entity that is dissatisfied with an 
initial determination or revised initial determination that they are to 
be included on the preclusion list (as defined in Sec.  422.2 or Sec.  
423.100 of this chapter) may request a reconsideration in accordance 
with Sec.  498.22(a).
    (ii)(A) If the individual's or entity's inclusion on the preclusion 
list is based on a Medicare revocation under Sec.  424.535 of this 
chapter and the individual or entity receives contemporaneous notice of 
both actions, the individual or entity may request a joint 
reconsideration of both the preclusion list inclusion and the 
revocation in accordance with Sec.  498.22(a).
    (B) The individual or entity may not submit separate 
reconsideration requests under paragraph (n)(1)(ii)(A) of this section 
for inclusion on the preclusion list or a revocation if the individual 
or entity received contemporaneous notice of both actions.
* * * * *

    Dated: October 17, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: October 18, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-23599 Filed 10-26-18; 4:15 pm]
 BILLING CODE 4120-01-P